In the last few years, Spain has been put on the map for having two excellent startup hubs: Madrid and Barcelona. With the launch of Google’s newest Campus in Madrid earlier this year and fantastic accelerators like Wayra and SeedRocket located in Barcelona, it’s no question why these cities are increasingly popular destinations for entrepreneurs.
These cities are great -- but today I’m going to introduce you to a philanthropic accelerator making waves in Spain’s third largest city, Valencia. I know what you’re thinking, the words ‘philanthropic accelerator’ kind of contradict each other.
Can Startup Investors be Philanthropic?
One of the key denominators for startups, accelerators, and investors is return on investment. We expect our hard work, teachings, or investment to result in an outcome that is mutually beneficial. What’s more, entrepreneurship and philanthropy are terms rarely used in the same sentence. However, one of the leading accelerators in Spain does not expect a financial return on its investments into startups. Rather, this accelerator considers its reward to be the value that is given back to society as a result of the startups they support. Through a loan of up to 200,000 euros with incredibly favourable terms, no demand for equity, and invaluable hours of training and mentoring, Lanzadera is one of the few institutions where philanthropy and entrepreneurship are truly intertwined.
Lanzadera, the Philanthropic Accelerator
Lanzadera is a Spanish accelerator established in 2013 by Juan Roig, the man who built the nation’s renowned supermarket chain Mercadona. This chain boasts 1,540 stores throughout the country and dominates 14.4% market share of Spain’s food industry.
Juan Roig set up Lanzadera in his hometown of Valencia with the vision of giving something back to the community. He is a firm believer that “true success comes from the generosity of sharing with your community and society the knowledge, skills and resources that we have at our disposal. It is an obligation that should be voluntarily taken on by each and every one of us.” Considering the recent economic crisis that Spain went through, Juan Roig stresses that it is the “responsibility of every member of society to contribute to its well being through the conservation, creation, and multiplication of wealth.”
Spain took an extremely heavy hit in 2008 with the collapse of its enormous housing bubble, which that inevitably lead to the fierce economic downturn and bankruptcy of major companies. In 2012, the country had to apply for a €100 billion rescue package from the European Stability Mechanism (ESM), to bail out its toppled financial sector. Some even refer to this period as the Great Spanish Depression. As a result, unemployment was and is still at a record high. Nationwide, joblessness reached almost 30% in 2013, and youth unemployment was at a staggering 54% in 2014 (currently still at 49%). Compare that to Germany, which had an average unemployment rate of 5% during the crisis. The difference is shocking. There were simply no jobs. This is still is a difficult situation for many, especially for university graduates, who have only two options: leave the country to search for a job, or create their own job.
This is where Lanzadera comes in. Juan Roig and the Lanzadera team are firm believers that entrepreneurship can nourish a community and start a positive growth cycle because it triggers creativity, jobs and wealth. The startup I am part of, ValorTop, is one of the 32 fortunate teams to be selected for their third edition this year and so far it has been an incredible, eye-opening experience.
The Lanzadera Support System
Their support system is built completely on the notion of giving. Specifically, giving startups the support, teachings, facilities, and resources that they need.
Lanzadera does not ask for equity. In fact, via the program, Juan Roig offers each team a loan of up to 200,000 Euros with very flexible repayment terms. The interest rate is EURIBOR + 0%, without commission and personal guarantees. In the inauguration speech he explained they do not ask for equity as a way of encouraging entrepreneurs to focus on the bigger picture of entrepreneurship: how a startup can provide true value to society.
Impressive, but that’s not all. Lanzadera shares with each startup the ‘Modelo de Calidad Total’; the business model that brought Mercadona to success. Each week we receive courses on the model and how to apply it to our own businesses. They also organise deep dives on key entrepreneurial topics, all led by Spanish industry experts. Every month we take away substantial knowledge that goes directly into making our work more effective and impactful.
The facilities they offer are also fantastic. Not to imply that a good accelerator needs to have top-notch office space but, after speaking to some of the other startups here, it does seems to have a certain effect on daily ambition. It feels extremely motivating to walk through the doors into a beautiful space where other like-minded entrepreneurs are working to achieve their dreams and to give something back to the society we live in.
What I also find invaluable to the Lanzadera experience is that they assign a project director to each startup. This person is your mentor and your go-to, regarding anything from corporate strategy to administration. They are by your side at all times. Lanzadera makes a serious effort to integrate and be up-to-date with every one of us. Since day 1 it has been a very strong support system.
Investing in Return on Impact
Looking at the entrepreneurial ecosystem objectively there are, without a shred of doubt, many awesome accelerators that any startup would be beyond grateful to be a part of. However, there is a key factor that differentiates Lanzadera from the rest, and that is their philosophy of giving.
The act of giving is ingrained into every inch their program, whether it be on a professional, financial, or personal level. Lanzadera considers the ‘reward’ of their support to be the added value that the startups provide to the Spanish community; employment, wealth and creativity. What’s more, Juan Roig uses his personal finances to support these startups on a loan basis. Personal gain is not prioritised here in contrast to, for example, the 7-10% equity that Wayra asks for or the 5-10% that Conector receives. These are all excellent institutions, and each program has a different approach. Nonetheless, there is yet to be an accelerator that is more devoted to the societal benefits of entrepreneurship, than Lanzadera.
If philanthropy is defined as “the altruistic concern for human welfare and advancement”, would you agree that Lanzadera’s efforts are philanthropic, or would you define their actions differently?
Do you believe that an accelerator can be philanthropic? Would you opt to have your venture backed under terms like these? Let us know in the comments.