Tomorrow a new breed of investment firm called Prototype Invest will officially launch, though the site is available now. Prototype Invest is a unique type of early stage investment firm. Rather than put money into startups, Prototype supplies technology in exchange for equity. This is an investment firm for anyone who has ever been told, "Ideas are a dime a dozen, kid. Come back when you have a working prototype."
Founded by web developer and Denmark native Michael Christensen, Prototype Invest will provide people who have an idea but don't possess programming or design skills a way to take their idea and turn it into a prototype to show investors. "Think of us as a Venture Capital firm providing software, web applications and guidance, instead of money," says the company on the site. "All we ask for is equity in your idea - you don't have to pay anything for our services."
The company has a network of developers and designers which it will employ to create prototypes or full products based on ideas submitted by entrepreneurs. In return, it will take an equity stake in the app it helps create. Prototype Invest will evaluate ideas submitted to it based on merit as well as the character of the entrepreneur who pitched it.
"There are so many great ideas wasted for the wrong reasons - we are here to change the rules of the game," Christensen told me. According to Christensen, any entrepreneur who is unhappy with the results of their relationship with Prototype Invest can walk at any time.
Prototype Invest has a lot riding on trust -- in fact they say on their front page that "without trust we simply can't exist" -- which means that ideally, anyone willing to fork over an idea to the service has not only been told that ideas are a dime a dozen, but also truly believes it. Prototype will work out contracts and the amount of equity taken on a case by case basis, and Christensen tells me that they're open to signing an NDA with entrepreneurs prior to being pitched.
But there will need to be a certain amount of trust on both sides that ideas won't be stolen or misappropriated.
Along with development services, Prototype Invest also offers to help entrepreneurs pitch their idea (and newly minted prototype) to investors, which makes sense given that Christensen and team will only make money if the app is a success. At some point in the future the team is also considering offering Y Combinator-style microfunding.
Will Prototype Invest work? It's hard to say, but there is little doubt that they won't lack for ideas being sent their way -- they are a dime a dozen, after all.
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Very Interesting Concept. As an entrepreneur I love the idea. Since it usually takes a prototype to get a meeting with potential investors I can see this really taking off. All Prototype Invest needs is one or two homeruns and they will be very successful.
Posted by: PartnerUp Bill | April 28, 2008 2:10 PMWell this idea has the potential as we are also in the same space. Zigron Inc is a technology services company and over the last one year we have invested into different startups as technology partners.
This also helps startups to have access to readily available resources when needed.
Posted by: Haris | April 28, 2008 6:09 PMI'M really glad you like the concept.
Posted by: Michael Christensen | April 28, 2008 11:30 PMWe would really like to be seen as the entrepreneurs best friend.
Hope to make a lot of new friends :-)
A very interesting concept, but as I posted here there are some areas that need to be understood better. Like, who owns the IP. How does this setup work in a global environment (legal/tax complications)?
Posted by: Sameer Agarwal | April 29, 2008 2:10 AMWe have won some very interesting clients by taking equity stakes.
Posted by: Charles Dalton-Moore | April 29, 2008 4:48 AMThis is a great concept.
But, before sending an executive summary, I would expect from the Prototype Invest website some more information about the legal structure behind this team, how do they get funded, and what are their typical equity expectation.
Posted by: Emmanuel Chriqui | April 29, 2008 7:37 AMI am a game designer. I had designed a new type of board game, which consists of dice play and playing skill. This game is first of it's type and can be not only popular but a trend setter. I wish to open its web site and I wish this web site should be a business with USA partner, because I am trying to immigrate to USA. I had send requests, applications to some USA based venture capitalist funds.If you can accept the equity stake for providing necessary technology(developing software for my designed game), then I can convince VC funds more easily then before. Will you like to accept the stakes?
Posted by: Chandrakant Deshpande | May 1, 2008 12:59 AMIf your company is ready to accept primary offer, then I will be glad to send you my detailed Business plan for studying and scrutinizing. Please inform me about your policies and views. Also send me an e mail address, where I should send my Business plan and future correspondence?
With best regards from
Chandrakant Deshpande
30, Minal heights, 282/64 Tanaji nagar,
Chinchawad, Poona, 411033, India.
Brilliant idea, i think this is the first concept that been introduce in the web 2.0/3.0..good luck
Posted by: Nat | May 5, 2008 5:57 PMNat
www.workersinc.com