Lars Hinrichs about HackFwd:
"The mission of HackFwd is simple: Free Europe’s best developers from their day jobs to help them build their own game-changing companies.
Technology prices have fallen dramatically in the past 10 years. There are plenty of valid monetization options as well as proven ecosystems upon which to build. With 2 billion people online, anyone can get real-time feedback on the idea in a second, and with luck, go global quickly. And with innovations like cloud computing at your fingertips, you can build companies with close to zero capital expenditure.
So we looked carefully at current VC models and realized they didn't really cater to very early stage businesses. VCs can’t support small investments, which leaves a finance gap. Also, VCs don't have the time or expertise to give strategic or creative input. This leaves an advice gap.
We also believe in the power of beta, so we started prototyping and testing our approach right away. After all, HackFwd is itself a start-up, so we fully expect our approach to change and grow over time. We began with 4 start-ups — we call them HackBoxes — and experimented with every aspect of the experience to see what resonated and what needed more iterations.
Going forward, I’ve assembled a great board of super experienced tech entrepreneurs. I’m still looking for more! I also teamed up with some of the smartest tech investors I know, each of whom adds tremendous value and expertise -- far beyond what you could get from an anonymous pension or insurance fund.
So watch the intro video to see how the HackFwd experience works. If you have comments, feel free to tweet us, leave comments on our pages on all social networks, or come over to Hamburg and visit us in person.
The time is right. The future is waiting. And we’re honored to help Europe build it."
Answers for most of your questions by Lars Hinrichs:
- Q: Why the name HackFwd?
- A: Above all else we value hacking and hackers, in fact we think hacking is a mindset. All of the team have had their greatest successes by either hacking something out themselves or by working with great hackers. With the name HackFwd (i.e. hacking forward) we hope that it reflects what’s most important to us - offering our startups the opportunity to progress by doing what they love, whether coding or generally hacking it out.
- Q: Who is our competition and why are we different?
- A: We don’t think of Y Combinator, Techstars or Seedcamp as competition. In fact we’re excited to work with all of these groups, particularly Seedcamp, also based in Europe. We think our offer will prove to be highly complementary - after all we both want to grow the European tech startup ecosystem which has lagged behind the US for too long now.
Some of our differentiators (from the perspective of our startups) include:
1. We offer a year long programme that includes a salary package for 1-3 person geek teams (offer details PDF)
2. We take on boring admin (payroll & accounting) and specialist tasks (hiring & corporate finance), allowing the startup to focus 100% on building out its product
3. We offer a pan-European network of experts to advise the startups. Experts include HackFwd staff, the referrers and the board of HackFwd Capital
4. We offer Quarterly events when the whole community gets together in Berlin for shared learning and inspiration
5. We look for geeks with ideas pre-Beta (we hope that some will go on to enter Seedcamp once launched)
6. We offer equity for the startups to give to their advisors - we believe this will bond our community together
7. We have tried to simplify the whole process (for example by writing all contracts (PDF) in plain English)
8. Our terms and legal documents are completely transparent which means you know exactly what you will get prior to making any commitment
- Q: Why we take 27%?
- A: We have spent a long time thinking through this issue - particularly since we invest a huge amount in our startups both directly and indirectly. Given the length of the list above, we think these terms are reasonable, particularly since our startups are pre-Beta. In addition, we expect many of our startups will not pursue a second round of financing and rather will continue their growth organically, after all scaling tech businesses is lower cost than ever before. We are offering advice, support and exposure via a pan-European network that money simply cannot buy. We will be marketing the companies through our platform and when necessary, we will ensure they are well positioned for a second round of financing. Quite simply, we think it’s fair.
- Q: Are we like a Klingon Warship?
- A: In this cool article on TechCrunch, Mike Butcher wrote that we were “Like a Klingon starship de-cloaking in the middle of Europe, Lars Hinrichs is putting his efforts onto a new startup investment vehicle dubbed HackFwd.”
We love the simile and that it has provoked an amazing dialogue on Hacker News. We have to acknowledge that cloaking devices were first introduced and used by the Romulans (rather than the Klingons) in the original Star Trek episode “Balance of Terror”. That being said if any of our startups crack cloaking technology we’ll definitely volunteer as first Beta users.
And unlike the Klingons we come on a friendly mission but eager to disrupt the European technology landscape. We promise to break the Star Fleet Prime Directive - we aim to disrupt the ecosystem’s status quo!
Qapla’ batlh je
This last question will be tough to beat but keep them coming!!!
- Q: What does 'geek' mean to you?
- A: Geek (noun, verb): gék, from latin.
- Someone who is deeply passionate and gets things done.
- Someone who isn't satisfied with it can't be done.
- Someone who will continue to push after others have given up.
- Q: Why an investment company and not a 'fund'?
- A: We believe in the long term, not in 10 year cycles. Often funds invest for 5 years, manage for another 5 years and then wind everything down. In contrast we don't need to conform to artificial timelines and we're not dependent on grand exits. We also don't charge management fees, everything is 100% success based. We are looking for constant dividends.
- Q: How much has been invested?
- A: The investors are all private individuals. And we are not communicating the actual size. But we have enough liquidity to support companies for the coming years.
- Q: How many investments will you make?
- A: We are targeting around 10 this year to optimize all processes, we will then significantly increase the amount per year.
- Q: What kinds of startups are you targeting?
- A: Game-changing technology companies – we’re just as interested in amazing up and coming technology with no business model as we are in simpler ideas that generate revenue for years without needing an exit. We’re not interested in short-term flips.
- Q: Why are you based in Europe?
- A: We need a mental shift. In Europe, people are scared by the risks involved in a start-up. Failure is frowned upon -- there is almost no upside. And we don’t have a financial culture that backs people. Financiers want a business plan from a business guy, not some crazy geek with a technology they’ve never seen before and don’t understand.
- Q: Why are you limiting this to Europe?
- A: There is greater opportunity in Europe: in the US the financial support exists and it's too competitive. We know Europe by heart. And actually I don't like flying long haul. Europe has over 500m people, therefore we have enough geeks to serve and help them go global.
- Q: Why now?
- A: Why not now? Technology development cycles and costs are dropping (Moore's Law), the need for capex has been eliminated e.g. by cloud computing. And there are plenty of established ecosystems on which to build , e.g. Facebook, Google Adsense and plenty of proven monetization options (the global internet user-base is now over 2bn). Finally, there's more talent than ever before (45,000 computer science graduates every year in the EU each year and a similar number gain deep computer science experience within companies). So now seems a great time!
- Q: Are you an incubator?
- A: No we are not. Incubators are typically based around certain geographics, like university campuses or certain areas. We don't want everybody to move to Hamburg, we believe in virtuality and that people deliver best results where they feel comfortable. In line with this our team itself is distributed across Europe, including Belgium, France, Germany and the UK.
- Q: What happens after 1 year?
- A: After the HackFwd year we tailor our approach to the specific circumstances of each startup. The good news is by then we will have real consumer feedback on which to base our decision.
- Q: In summary, why is HackFwd different?
- A: We invest very early stage - pre-seed.
We have no fixed funding cycle.
We put geeks' needs first - remove the burden of tasks that don't drive real value e.g. book-keeping and give them a year to focus
We provide strategic and creative input - reinventing the VC model
We assist our investments in marketing their products
We're community-centered - quarterly events and collaboration tools improve communication and inspire
- Q: Why are you doing this venture?
- A: I’ve already had great success. I realized that what I really wanted to do was to help other people succeed. It’s core to my beliefs that if you help others you get back more than you ever could have dreamt yourself.
- Q: Will HackFwd be bigger than XING?
- A: I simply don't know. And it's hard to compare the completely different business models. We won't employ as many people, that's for sure. And we are not depending on short term results, we believe in helping others to succeed and make a difference.