An early-stage investment company designed to fuel tech innovation in Europe
HackFwd is an early-stage investment firm designed to accelerate tech innovation in Europe. Developers, coders, and engineers submit start-up ideas through a referral system; selections are based on criteria such as whether a concept is pioneering, scalable, and meets consumer need. If chosen, HackFwd provides comparable salaries, administrative support, and mentoring. Beta testing informs how best to proceed. Inventors own 70% of the business after launch and receive 3% to gift to advisers.
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Early-stage investments often fail. “Not all startups will work out,” HackFwd’s offering document explains. “Sometimes we get the timing wrong. However, we don’t believe in failure. Instead every HackFwd start-up benefits from an amazing learning experience and will remain in the HackFwd community as an alumnus.” All participants receive at least one year of funding and education. Even if it’s not quite business school, this approach ensures that the greatest potential downside is that Europe gains savvy new entrepreneurs.
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knowledge, network, social, technology
“Putting geeks’ needs first informs everything we do, from our brand and how we organize ourselves to how equity is shared and what tools we offer,” says Lars Hinrichs, the company’s founder. Hinrichs and IDEO designed HackFwd from scratch, rethinking the entire VC business model to accelerate European entrepreneurs’ routes to beta, profitability, and success. Every aspect of the business was approached from the perspective of the tech entrepreneur. HackFwd handles support tasks that do not drive actual start-up value, such as legal set-up, payroll, accounting, and staff recruiting. The website, marketing collateral, and basic contract feature simple designs. The process of getting funded is explained clearly, in layman’s terms. This is in stark contrast to most existing investment companies, which regard investors—not company founders—as their principal audience. HackFwd’s radically transparent approach has received accolades from the start-up community across Europe.
Providing pre-seed, evergreen venture backing, HackFwd frees top talent from their corporate jobs and helps them start their own companies. This allows developers, coders, and engineers to focus on doing what they do best--namely, inventing--and encourages tech development in Europe. HackFwd’s mission is to revolutionize the European technology scene and put Europe on the global innovation map. In exchange for financial support, creative and strategic advice, and marketing assistance, HackFwd gets 27 percent of the equity; the start-up’s founders keep 70 percent, and advisers who assisted receive up to 3 percent in options. In other words, when new ventures succeed, everybody benefits. HackFwd founded & invested in 7 start-ups in 2010 and plans to scale up in 2011. These investments have a halo effect on the broader European tech eco-system, by making potential entrepreneurs aware of career choices beyond keeping their day jobs.
Existing VC and angel investment models tend to cater to investors’ needs, even though supporting founders can dramatically increase the likelihood of a start-up’s success. HackFwd’s mentoring program and community-oriented reward system provide support founders when they need it most: during the early stages of development. Traditional fee structures encourage VCs to raise increasingly huge amounts of cash, despite the fact that new tech ventures need far less capital than ever before. This creates a funding void for smaller deals, so IDEO and Hinrichs came up with a new model. “We looked at all stages of the current VC model and turned literally every single element upside down,” Hinrichs said. “We offer fixed deal terms; fixed contracts; and you can’t apply—you need to be referred—to ensure the applicants are smart and focused. …If you have the right people and a bad idea you can correct it; if you have the wrong people and a great idea, you’ll fail."
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HackFwd founder Lars Hinrichs is one of Europe’s Internet icons. XING, the company he co-founded in 2003, was the first Web 2.0 business to go public in Europe; it now ranks among the world’s most popular social-networking sites for professionals. In 2008, the Startups Initiative named Hinrichs as the most important Web entrepreneur in Germany. In 2009, the World Economic Forum recognized him as a Young Global Leader.
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