I live in Spain. Beautiful country, good food, good weather (not today though) and most of the time good people. However, for entrepreneurs is not the greatest place.
I’ve been working on my startup for the last year and have been following the entrepreneurial activity in Spain from the sidelines. I don’t get to involved, follow key people on Twitter that are working hard to make Spain more entrepreneur friendly and from time to time comment on what’s going on.
Today is one of those days…
I was reading my Twitter TL and came across a tweet announcing a new contest for entrepreneurs (sort of an accelerator) that has prizes up to 3 million euros. I got curious.
The project is organized by a company called Infoempleo.com (a job portal in Spain). This by definition is a contradiction: a job portal that makes money placing people in jobs, promoting people create their own comapanies? I don’t see it.
Basically the contest is pretty straigtforward: they want your ideas and if they decide your idea is good they’ll give you support for two years in several areas: tech, legal, office, etc. Oh, and economic support as well: 100.000 euros to selected ideas.
This is where all kinds of red flags started to raise.
My first thought was: wait a second, 100.000 euros for two years runway seems a bit low. I mean for the idea I have in mind I need at least 3 people. My math is sketchy but things don’t seem right.
This is where I immediately started to dig deep into the contest rules:
You can submit as many ideas as you want to each on the nine categories they have
As an entrepreneur I have 1000′s of ideas, but I know where my passion stands and know the difference between a good idea and the idea I truly want to execute. Red Flag: they want all my ideas.
Then I decide to read about the financing because nowhere in the site mentions about the conditions. I doubt this lunch is going to be free.
I start digging and in point number 6 of their bases I find the following jewel: (I’ll parafrase since is in Spanish and a bit of legalese)
The mentor company has priority to assign whomever they want to direct the new company.
Ok, you want control of the board. Well I mean is your money right?
The mentor company also has priority incorporating the new company and control the whole process.
If the mentor company decides to do the above, the participants (our naive entrepreneurs) have the obligation to accept the participation of the mentor company in the stock distribution as they (the mentor company!) sees fit.
What the what?
Basically they are saying, look: we are going to give you the money and for it we are going to choose who runs the project, and also decide how much stake in the company we want and you have to take it with a smile, okthxby.
Are you kidding me? I mean what’s stoping them from saying: look here are 100K but 90% of the company is ours now work for two years and make this happen. Chop chop.
I think a more honest approach is to put a website and say: we’ll buy your ideas and their rights for 100K. Bring em!
I was talking about this with my brother the other day and it seems that all these “accelerators” want to replicate the YCombinator model.
What they don’t seem to realize is that YCombinator not only has Paul Graham but a set of high value sucessfull entrepreneurs that can pretty much improve their odds at picking a good team with a solid idea and then mentor them.
The rest is just putting money into a lot of projects hoping the numbers will favor them.