Madrid, widely considered to be one of the most beautiful cities in the world, is experiencing a major increase of interest in entrepreneurship. The Eurozone Crisis convinced many that starting a business may be preferable to the uncertainty one may experience at a large company during tough economic times. With plenty of local institutions that support the ecosystem, Madrid is catching up to Barcelona and Berlin in terms of reputation and resources. Seasoned entrepreneurs who previously moved to more developed ecosystems (ie London) are returning to Madrid and bringing with them added experience and knowhow. Major corporations like Telefónica and BBVA are beginning to take notice and lend their support and investment. Despite these promising developments, Madrid still faces challenges ahead. Chief among these is that the majority of Spanish venture capital goes to Barcelona due to its longer startup history. Madrid’s emerging wave of entrepreneurs need attention to shift in order to fuel their growth.

In This Market

These businesses offer industry expertise and are a source of startup talent and potential customers. They help fuel the local startup community.


  • The presence of one of the best business schools in the world, IE Business School, means a constant stream of talented young people.
  • The number of startups is increasing, along with the amount of capital invested in the ecosystem.
  • A world class banking and financial sector, but at a fraction of the cost of living of traditional clusters in NYC and London.
  • Presence of global multinationals who bring with them talent and opportunities for exits and partnerships.
  • As a result of the recent economic crisis, people are realizing that starting businesses could be a more viable option to working for large companies.
  • Startups that had previously left Madrid for more developed ecosystems in London and Berlin are returning, armed with experience and knowhow.
  • Promising verticals include fintech, smart cities, greentech, and eCommerce.

Risk Factors

  • Most Spanish VCs are headquartered in Barcelona due to its mercantile tradition, which can make it challenging for Madrid’s emerging wave of entrepreneurs.
  • Compared to Madrid, Barcelona is more attractive to foreigners who bring with them VCs from abroad and outside expertise.
  • The business talent and technical talent in Madrid do not interact well, causing both groups to look elsewhere for expertise.
  • Exits have generally been relatively small, creating fewer potential investors. This makes raising seed-stage investment more difficult.
  • Spanish investors take too much equity when investing in early stage startups. While Madrid is in its startup infancy, the inexperience of investors and unreasonable expectations can hurt startups and inhibit follow-on rounds. Still, terms and practices should improve with time and greater outside attention.

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