German VC firm Hasso Plattner Ventures has launched a new seed fund for small-ticket, non-equity investments in very early stage companies. Startups can apply for investments of either €50,000 or €100,000 and will receive a “yes” or “no” within 24 hours of pitching.
HPV Analyst Lina Chong, who is responsible for running the new initiative, told us that Germany, and Berlin in particular, is missing this kind of fund. The selling point is that startups receive funding quickly without having to prove extensive due diligence and do not need to give a large chunk of their shares to investors.
The new fund is targeting startups that solve “real problems” and can prove that an investment of either €50,000 or €100,000 will be able to get them to a “milestone”, Chong told us. This milestone could be an Alpha version or getting a Series A round. The investment is purely convertible debt – a loan with a low interest rate that can eventually be converted to shares – she said, though Chong admits the VC probably won’t see the money again.
The first recipient of the new seed funding has already been announced – one week ago VersionEye, a software library for developers, received €100,000 from HPV. The Berlin and San Francisco-based B2D startup provides information to make sure developers are not using unlicensed code.
When asked why HPV is launching the new fund: “At the moment, the right money isn’t going to the right companies,” she said.
The new fund will make investments faster and more accessible – within 10 days of receiving a “yes”, startups will be transferred the cash. Unlike the many incubators in Berlin, HPV will not take equity or any control of the companies and its funds, but will play a supportive role when they seek larger investments from other VCs. The focus will be on Berlin-based companies, but the fund is open to applications from startups internationally. HPV aims to invest in ten companies this year from the seed fund.
The VC firm wants to strengthen its network in Berlin, so it can bridge the gap between German startups and top-tier American VCs. HPV has already collaborated with Battery Ventures on an investment in Berlin travel planning startup GoEuro.
Image credit: Flickr users Images_of_Money
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