Menorca Millennials Offers Startups a Pricey Summer CampBy
Menorca, a 270-square-mile Spanish island about an hour’s flight from Barcelona, is known for its undeveloped beaches, aromatic gin, and rich lobster stew. In June the island will play host to 20 teams of startup founders, plus tech industry veterans and venture capitalists, for a retreat aimed at supplying funding to promising companies.
Menorca Millennials—an all-ages program, despite the name—is the brainchild of Marcos Martín, a lobbyist for the European bioenergy industry, and Ricard Garriga, director of strategy at YouNoodle, a San Francisco startup that runs business contests. Garriga says they’re pitching the 20-day retreat as a “distraction-free paradise” where participants can refine their products and business models and raise money faster than they could with a conventional startup accelerator. “This is not an executive program with whiteboards,” he says. “It is a personal experience that gives you time to work on your company in front of the sea with no mental noise.”
To apply, startups have to have received funding for a previous venture and demonstrated that their current enterprise is developing a product capable of reaching a billion people. The program’s investors and advisers will choose the teams spending three weeks on Menorca. At least 30 people will be on hand to lead workshops and provide advice, including Di-Ann Eisnor, a vice president at Waze, the Israeli mapping startup that Google bought for about $1 billion in 2013; John Malloy, co-founder of Silicon Valley fund BlueRun Ventures, an early backer of Waze and PayPal; Jerry Engel, founder of the entrepreneurship center at the University of California at Berkeley; and Sam Friend, an angel investor who helped engineer the successful initial public offering of Australian travel booker Wotif Group, now owned by Expedia. “The relationships people get to form and the networks they get access to are what create real value,” Friend says.
The founders say a typical day at the retreat might start with an IPO workshop led by Friend, followed by a seaside chat about acquisitions with Eisnor, then a quick team snorkel and a return to a hotel on Menorca’s southeast tip. The final week, they say, will culminate in a day of closing presentations to investors, who will then agree on which companies they’ll collectively bankroll. (Garriga says each startup is eligible for as much as €2 million, or $2.3 million.) From there, Menorca Millennials will coordinate travel for the top 10 picks to Barcelona, Berlin, London, and Paris, where they’ll woo venture firms for additional money. The startups have to agree to hand over 3 percent equity stakes to Menorca Millennials if they receive funding during the retreat or roadshow.
That’s not cheap, and neither are the upfront costs. Each startup team has to cover its own travel to and from Menorca and pay Garriga and Martín a €4,000 fee for food, lodging, and activities. The founders say they’ll front some of those costs for standout companies that can’t afford the trip and argue that equity is the cost of doing business. Y Combinator takes 7 percent of a company in exchange for $120,000 of funding.
Some accelerators don’t take any equity. MassChallenge, a nonprofit sponsored by companies such as Microsoft and Oracle, doesn’t ask for equity and has helped companies raise more than $700 million, according to its founder and chief executive officer, John Harthorne. A “massively increasing number” of accelerators require equity, he says, but that model can hurt startups.
On Jan. 20, Menorca Millennials began taking applications on its website. Garriga has been searching for promising entrants in the database for business contests that YouNoodle administers.
Pablo Villalba raised more than $20 million for San Francisco startup Redbooth, which sells project management software, and last year started fitness-app maker 8fit. He says he plans to apply to Menorca Millennials, but because 8fit has already raised $200,000 at a $5 million valuation, he’ll carefully weigh the price of further investment. “It’s a challenge a lot of accelerators are facing,” Villalba says. “How to make the deal fair for everybody.”
The bottom line: A Mediterranean fundraising boot camp is looking for 20 teams of startup founders with proven track records.