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I think we usually put 'hence' at the beginning of a result clause - hence the second one sounds better to me too. I think the first one would be OK, if more formal, if you used 'therefore' instead (marked off with commas). For me the problem is with the rest. My feeling is we usually use 'hence' with quite a simple clause, or even just a noun - 'I fell off my bike - hence the bruises' (Oxford Advanced Learner's Dictionary). – RandomIdeaEnglishJan 12 '11 at 13:57