An interesting new Y Combinator like model out of Europe. HackFwd takes a lot more equity than existing models (27% vs 2-10%) but also offers quite a bit more money and a much more flexible model.
Startups will get funding for one year, with the aim of roughly matching the founder’s current yearly salary. Founders keep 70% equity, with 3% going to advisors and 27% to HackFwd. However, that said, they then take care of “legal and admin stuff… so you can focus on your product.” Help is given with UX, marketing and brand “through us or our partners”. Since it is not an incubator, the startups they invest in are created wherever the founders are. “Quarterly un-conferences in cool places so everyone can share and learn,” are arranged instead to allow everyone to meet up. That should appeal to the distributed nature of European startups where distances are an issue.
Funding amounts to up to €191,000 (depending on the size of the team).
—XING founder Lars Hinrichs launches HackFwd, a product-oriented pre-seed fund
Check out their excellent intro video which explains the concept better.
What I find brilliant about this model is that it allows people with financial obligations to start companies. I mean people with mortgages and fixed monthly expenses. The YC money doesn’t help them get started.
Having one year to deliver might backfire though. What’s great about YC is that you start the project in a panic: you’ve got to do a demo in a few weeks. http://blog.tchoupani.com/what-really-inspires-creativity-tummy-busines
The HackFwd folks seem smart and the project seems well thought out, so I’m sure they will have mechanisms to help prevent procrastination…
Thanks for sharing.
I agree. I find 30% is pretty high though, even with the larger amounts involved.
In terms of the length of the program; I guess it depends on the deadlines they set, there is so little money in Y Combinator that they need a very tight schedule so they have something to show after three months, to get a first round of funding. The Hackboxes should be able to take a bit more time and then go a few more iterations of products under the funding/time they have.