Continuing on the subject of alternative models for investment in early stage startups, ReadWriteWeb recently covered the launch of Prototype Invest. Prototype Invest is interesting because they don’t invest money into early stage ventures - rather, they provide the venture with technology in exchange for equity. As they state on their web site, “Think of us as a Venture Capital firm providing software, web applications and guidance, instead of money.”

Founded by Denmark web developer Michael Christensen, according to ReadWriteWeb, the company has a network of developers and designers to provide prototypes and products based on the ideas submitted by entrepreneurs. The article also provides additional details on their services:

“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.”

This is not the first time design and development firms have tried this approach. Well known design firm Adaptive Path has a New Ventures program that offers services to seed/early stage-ventures for equity. According to their site, they select three to four ventures per year “and offer … help working through ideation and design, implementation and subsequent iteration. [They] provide sustained support through the rapidly changing life of an early-stage venture.” A few portfolio ventures are listed on the site, as well.

It will be very interesting to see how many entrepreneurs take these firms up on their services-for-equity model, especially considering the ever decreasing costs of deploying web applications, through outsourcing models.