Telecoms giant Telefonica has unveiled the latest addition to a network of nine startup incubators it’s been busily building in Latin America and Spain. The latest “Wayra Academy” was announced today in London but won’t be opening its doors until May. Here’s how it’s set up: Telefonica takes around a 10% stake in a startup for up to €50,000 in funding, pocket change to a company like Telefonica. Wayra will put about 20 startups into its shiny new London building for six months, after which it will help them pitch for follow-on funding from other sources of venture capital. No VC partners have been announced yet as “the speed of action is crucial and we wanted to open all Wayra Avademies this year,” said José María Álvarez-Pallete, Chairman and CEO, Telefónica Europe at the launch.
If a startup doesn’t find other sources of funding in 6 months, Telefonica says they can stay another six months, though presumably they’d have to start paying rent, or perhaps make way for a bunch of new entrants. There’s a good upside though: If after 6 months things are not working out between Wayra and the startup, I was told that Wayra will sell back their share of the comopany to the startup for €1.
In exchange for the initial funding Telefonica gets the right of first refusal on the companies. Clearly that provides some potential security in that you’ve basically got a potential buyer before you even start, but it’s not going to be very competitive if your startup gets a better offer from some other suitor. Telefonica says it doesn’t require the startup to give it exclusivity.
However the big draw of course is that if you’re a startup that needs to have a telecom partner at the off, this is a dream come true. The ideal scenario is that Wayra startups will get PR-d amongst Telefonica companies and internally.
Applying startups will get filtered down to 30-40 and will then have to pitch during a Wayra Week in late May.
It also plans to open other Wayra’s in Berlin, Dublin and Prague. Ultimately it plans to fund around 350 startups.
At least Wayra London’s location won’t be hobbled by not being in London’s Eastern cluster of startups. Its Tottenham Court Road location means it’s about 2 minutes walk away from the 22,000 students at nearby at University College London.
Simon Devonshire will head up the London Wayra.
London is now getting seriously up to speed with coworking places and incubators. Just don’t call it a bubble…