A serial entrepreneur who set up networking site Xing is driven by curiosity and rewards in his hunt for undiscovered tech pioneers, writes EMMA JACOBS

LARS HINRICHS, ultra-white pressed shirt tucked into his jeans, is disclosing his penchant for nerdy techies, in particular the ones who hunker down in their bedrooms, programming into the early hours of the morning, their faces lit by the bluish light of the computer screen. Yet he has no desire to become one himself.

“I’m a geek, I always want the latest gadgets,” he says. “I understand [tech] trends earlier than others. But [I am] a geek who can’t programme.” A big grin spreads across his boyish face. The founder of Xing, the European professional networking site, whose business card says “geek executive”, wants to harness his geeky curiosity to forge tech businesses.

His latest project, HackFwd, aims to give European programmers a year’s salary and support in product development, marketing and finance to help them turn tech ideas into businesses. In exchange, HackFwd gets a 27 per cent equity stake.

Based in Hamburg, Hinrichs is today in Clerkenwell, home to a new-media cluster on the edge of the City of London, speaking in the offices of a consultancy helping to finesse HackFwd’s business model. He sets out his mission: “To free the best developers across Europe from their day jobs and help them create successful companies.”

To achieve this, HackFwd employs six people across Europe, and has more than 30 affiliates. Hinrichs’ entrepreneurial zeal is deep-rooted – both his parents were entrepreneurs, as was his grandfather who established Hamburg’s biggest bakery.

It was in 1989, at the age of 13, while his friends were discovering girls that he became fascinated by the nascent internet. But there was a downside to this new hobby – huge phone bills. To pay back his parents, he decided to make money by helping businesses connect to the internet. These entrepreneurial ambitions were reinforced by military service, after which he “never wanted to work in a big company with lots of politics”.

His first venture was an online journalism project that still exists, but the second was a public relations company for tech start-ups that ultimately went into administration.

“We did every single business mistake you can,” he says. “We got way too much funding . . . Too much money gets you into too much trouble. It was a mess, a disaster.”

After making a list of 100 lessons from the experience, he went travelling and returned in 2003 to set up Xing. Since HackFwd’s launch in June, the 33-year-old German has seen hundreds of ideas, funded five and hopes to finance another five by next June. Loved.by, a web service to share products, the first investment to go live, launched last month.

Hinrichs says HackFwd is different from venture capitalists or business angels because the contractual relationship is straightforward. “When [a programmer] comes to us, they already know everything via the website. They know how much money they get, how much percentage they [get], what the contract looks like . . .” The single financing contract, called a “Geek Agreement”, is in “plain English” says Hinrichs and does not need to be adapted for each company he backs. “Lawyers laughed at me and said, ‘It’s not possible’, but somehow we managed it.”

He explains his aim is to fund innovative tech developers. He could not care less whether they can write a business plan. This seems a baffling position for an investor. Surely such people are just good programmers, lacking entrepreneurial ambition? He disagrees. “It is much easier to find a business guy for a working prototype than a great geek who wants to work for a business guy . . . The internet is at a stage where you can just try something and see if it works or doesn’t . . . You don’t need much money.”

Adrian Drury, media, broadcast and telecoms senior consultant at Ovum, the technology consultancy, says: “The difference is Lars Hinrichs wants to sponsor strong technical engineers who are able to develop their ideas. Whereas a lot of early-stage technology investment is in people with strong ideas that haven’t got beyond being a PowerPoint presentation.”

Yet isn’t there something commendable about geeks forging innovation through enthusiasm rather than trying to monetise their developments? “Fair point,” grins Hinrichs, “but it doesn’t help them. They still have to work for big companies and do things they’re not happy with. The geeks know things much earlier than the rest, like what works, what doesn’t, what is the newest technology.”

Too many tech companies, he says, are led by business people who want the geeks to copy what is already out there. HackFwd provides developers with an “opportunity” to make them “feel entrepreneurial” .

In addition, early-stage tech companies in Europe are hampered by funding, he says. What about initiatives such as Seedcamp, the competition that attracts money for European early-stage tech companies? That is “absolutely amazing, but is for later in the process”, he says.

Some of the projects he backs will be small. "We don't have to discover the next Google, we just need to discover a few [small businesses]. But if you finance many companies, it is mathematically more likely that you find the next Google." Curiosity more than money drives his projects, says Hinrichs: "The reason I started Xing was I wanted to know the contacts of my contacts." Profitability is a bonus, he says. Quite a big one it turns out – last year he sold his stake in Xing for €50 million to Burda Digital. – (Copyright The Financial Times Limited 2010)