A new kind of VC: prototype for equity

Today a new kind of venture capital firm was launched, called Prototype Invest. It’s an early stage investor that doesn’t provide money in exchange for equity, like usual venture capitalists. Prototype supplies technology and guidance in exchange for equity. The company was founded by Michael Christensen and can count on a very experienced team.

People with a good idea but no programming or design skills will access a network of developers and designers that will help them create prototypes or full products. Entrepreneurs won’t have to pay anything for the service, but will give equity in their start up in exchange for it.

On their website they state “think of us as a Venture Capital firm providing software, web applications and guidance, instead of money”. This is really clever, as too many great ideas and brilliant entrepreneurs get stuck, unable to get capital from venture capitalists because they lack the competences and resources to make their ideas into proper products or prototypes, that make it much easier to get financing from a VC.

More then a new kind of VC, Prototype’s activity is complementary to traditional venture capital, as will help people with the best ideas building prototypes, pitching investors and finally raise capital.