It’s a Great Time to Invest in Spain Startups
March 2009, Spain: With the Great Recession throttling the world, more than 3.5 million Madrileños found themselves facing record unemployment. As the national jobless rate climbed to 36%, savings disappeared and hope dwindled. While fear gripped the nation and beyond, some Madrid citizens kindled their spirit to fight.
Enter the entrepreneur.
“Four years ago there was no startup ecosystem in Spain; since then it has grown and exploded,” explained Liz Fleming. She leads Startup Spain, the The South Summit organizer-Spain’s (and one of the region’s) largest meeting point for investors and startups across Europe and the southern cone. In the depths of the recession, many unemployed Spaniards started their own businesses as a means of survival.
With a non-existent entrepreneurial ecosystem, many of these first-time entrepreneurs faced a huge learning curve. With time, a community emerged to support them. Community leaders developed small investment funds, incubators, and accelerators. Before long, multinational companies, universities, the government, and even the monarchy started their own programs to aid the nascent startup ecosystem. Some of the most notable community programs are:
In 2011, global telecom giant Telefonica launched Wayra, a startup accelerator. The accelerator has become such a successful scalable model, that Telefonica has opened 14 entities and expanded into 12 countries in Europe and Latin America.
The IE Business School launched its Venture Lab accelerator back in 2007, and as of this writing, it counts six companies that successfully raised between 0.5 and 4.6 million USD in venture capital. Around the same time it also formed Area 31, an incubator to provide ongoing support to Venture Lab participants.
One of the biggest entrepreneurship conferences in the region, The South Summit (a 7000+ people event) will hold its fifth iteration this October.
To top it off, Google has announced the opening of its campus this June in Madrid. Headed by Sofía Benjumea, Co-Founder of Spain Startup (organizers of the South Summit).The campus will serve as a community hub to support Madrid’s entrepreneurs.
But what about the investor?
To put it briefly, things are changing for the better. And they’re changing fast.
The earliest movers and shakers in the investment climate arrived in 2009. Cabiedes & Partners was the first local VC firm to focus on early stage and co-investments and in 2011 launched Madrid’s first Angel Fund of 25 million Euros for seed investing. Vitamina K was started in 2011 by active angel investors, and is considered one of the most active VC’s in Madrid today. In the same year, Faraday Ventures began active seed, early stage, and later stage investments in gaming and travel startups.
The public sector wasn’t too far behind in supporting the investment community. Beginning in 2013, the Spanish Government enacted a series of tax incentives for angel investors to support the growing startup ecosystem, including a 20% tax break on capital for angel investors.
In the same year, the government also rolled out one of the most progressive entrepreneur incentives in the region. The entrepreneurial law gave one-year residency visas for entrepreneurs and investors, making Spain part of a handful of countries in the world to actively attract foreign entrepreneurs and capital. Since 2013, the law has attracted roughly 3,800 foreign entrepreneurs and investors. They found cheaper local talent and resources like Area 31( the IE Business school incubator) as a landing place for their companies.
In addition to economic reforms and support from the European Union, many point to these policies as helping Spain grow faster than the rest of the Eurozone’s southern periphery. This momentum is only the beginning. There are a number of Spanish multinationals who are leaders in various industries (fashion, tourism, telecom, etc) who are getting involved in corporate development and innovation. Telefonica is leading the way; it’s only a matter of time before others follow suit.
Fastforward to today: Spain is finally recording growth and unemployment rates have been declining. At 23%, the lowest recorded since 2012, the unemployment rate is still high but shows a slow and steady decline thanks to job creation in the private sector. The growth of the entrepreneurship community also emerged in other cities like Barcelona and Valencia.
Spain’s story is inspiring. For these reasons and more, the Startup Angels team selected Madrid as the host city for our first-ever AngelSummit Europe. The summit brings together leaders from Spain, Europe, US, the Middle East and beyond to discuss the future of startup investing and to learn ways to expand investment activity in their communities. Investors, entrepreneurs, corporate and innovation executives and community leaders will lead conversations with the goal to enable and inspire more investors to participate.
Join us at an event near you.