As we at K received Endeavor Insight’s report on the state of Spain’s tech and startup sector, comments started arising on how well the overall view of the sector had been shown. Here are our seven takeaways.
The financial crisis hit hard on Spain and Europe’s economic development, but it also showed how technology and entrepreneurship progress could be key for the following recovery. As people lost their jobs and faced financial complications, entrepreneurship rose as a powerful solution. From 2008 to 2013, GDP decreased by 8.5% while the tech sector added more than 200 companies creating more than 13,000 jobs between 2008 and 2016.
María Benjumea’s statement in the report summarizes the situation perfectly: “In the years following the financial crisis there was a complete transformation of people’s mentality to know that Spain can be entrepreneurial. We can all play a part because a startup project is not just one person with one concept. It’s about collaboration and cooperation. The entrepreneur, as a global risk innovator, is decisive and the new player for innovation. It is key that entrepreneurs are playing hand-in-hand for the benefit of all.”
Mafias, in the startup sector, refer to groups of people coming from the same company that extend the knowledge acquired in those early companies to go on to develop their own startups and contribute to the growth of the ecosystem. The influence of mafias in Spain’s entrepreneurial ecosystem has been critical to make the sector thrive, as early tech startup members have continued founding, investing, and mentoring the new wave of Spanish tech companies.
When talking about mafias, it all traces back to early days at eDreams, Tuenti and other several iconic Spanish tech companies. As an example, the founders of Tuenti have been actively involved as mentors and investors in the sector that has been developed afterwards. Jobandtalent is the greatest example of this influential position Tuenti has had for many years. Jobandtalent’s cofounders agree that J&T was “born in Tuenti’s office”; Felipe Navío, one of them, even worked as a consultant at the mobile network company.
Apart from Tuenti, there have been plenty of other startup mafias. The report highlights the cases of Glovo and Cabify: as well as the launching of a handful of companies by former employees of these companies, Oscar Pierre (former Glovo CEO) announced last week the launch of his €50 million VC fund, while Juan de Antonio (Cabify CEO) is a founding member of the EU Unicorns Group, a group of members aiming to boost European tech innovation. Both of these companies are also present in EsTech, a new consortium of scaled companies’ founders trying to help in the introduction of policies helpful for the entrepreneurial ecosystem.
As part of the evolution of the sector, the Spanish Government has presented Spain’s first dedicated startup law, which is expected to be passed by the end of the year. This law wants to incentivize investment through tax breaks as well as talent acquisition by means of a new digital visa for international workers. Another highlight is the improvement in business set up, by both decreasing time costs and establishing an online platform for entrepreneurs to do so in one step.
Another government step towards the stimulus of the ecosystem consists in the setup of Next Tech Fund (investors in Leadwind). It is great to see actions taking place where the entrepreneurs ask for the most help, given that along the report it is repeated how the sector does not have options for larger rounds of funding. The government (and us at K through our investment vehicle Leadwind) are trying to change this issue.
The Spanish investor ecosystem has evolved substantially in the past few years: there now are more than 400 VC funds in Spain, with more than 170 located in Madrid and 120 of those in Barcelona. Moreover, during 2021 Spain attracted €1.9B in venture capital funding, and during the first half of 2022 this number has increased to €5.1B.
Although the number of local VC firms has increased, Spanish startups do still travel abroad for funding. OECD’s Foreign Direct Investment Regulatory Restrictiveness Index ranks Spain as ninth in foreign funding received. Throughout the report, some founders discuss the lack of very early funding (no “super-BAs” makes things more difficult) and later stage capital(from Series A onwards). However, this is slowly but surely changing. We can proudly say that our new vehicle Leadwind tries to solve this problem, as well as other initiatives from different funds such as Seaya’s Andromeda and the new Next Tech Fund. We're proud to say that at K we can now invest from €100K to €10M.
It's no secret that Spanish universities provide top-notch education. More and more junior professionals are joining international tech companies because of how well-prepared they come out of school. A founder told Endeavor Insight: “The quality of the workforce is high. I worked for a Silicon Valley startup, and I’d say that our quality here is higher on average than in Silicon Valley.” Universities such as Universitat Politècnica de Catalunya, ESADE, and Universidad Politécnica de Madrid are commonly found when looking at founders' previous education.
Spain’s active tech companies labeled as scale ups are usually older companies that have gone through a long road to reach that size. The road can be messy and the obstacles discouraging, but having somebody that has made that same trip is much easier. The graph shows how scale up founders have usually been linked to a previous scale up in some way, which helps in acquiring the needed perspective to get a fresh startup to scale up to that level.
These businesses that have more financial stability are great for the ecosystem as they keep increasing their workforce, attracting great talent and capital, and intrinsically motivating employees and newer startups.
Spain is in a great position to keep developing its entrepreneurial ecosystem because of the advantage of having two very important hubs such as Madrid and Barcelona. Smaller hubs (Valencia, Basque Country, Andalucía), sometimes influenced by small mafias, have been thriving lately and supporting the overall growth of the sector. This connectivity has to be a strategic point in Spain’s roadmap of becoming an important country for tech companies in Europe and the whole world.
As startups, scale ups, mentors, angel investors, funds, institutions, etc. come together in pushing for the ecosystem expansion, we will keep doing our job from K by trying to influence as much as possible this progress towards a better and technological future.
As we at K received Endeavor Insight’s report on the state of Spain’s tech and startup sector, comments started arising on how well the overall view of the sector had been shown. Here are our seven takeaways.
The financial crisis hit hard on Spain and Europe’s economic development, but it also showed how technology and entrepreneurship progress could be key for the following recovery. As people lost their jobs and faced financial complications, entrepreneurship rose as a powerful solution. From 2008 to 2013, GDP decreased by 8.5% while the tech sector added more than 200 companies creating more than 13,000 jobs between 2008 and 2016.
María Benjumea’s statement in the report summarizes the situation perfectly: “In the years following the financial crisis there was a complete transformation of people’s mentality to know that Spain can be entrepreneurial. We can all play a part because a startup project is not just one person with one concept. It’s about collaboration and cooperation. The entrepreneur, as a global risk innovator, is decisive and the new player for innovation. It is key that entrepreneurs are playing hand-in-hand for the benefit of all.”
Mafias, in the startup sector, refer to groups of people coming from the same company that extend the knowledge acquired in those early companies to go on to develop their own startups and contribute to the growth of the ecosystem. The influence of mafias in Spain’s entrepreneurial ecosystem has been critical to make the sector thrive, as early tech startup members have continued founding, investing, and mentoring the new wave of Spanish tech companies.
When talking about mafias, it all traces back to early days at eDreams, Tuenti and other several iconic Spanish tech companies. As an example, the founders of Tuenti have been actively involved as mentors and investors in the sector that has been developed afterwards. Jobandtalent is the greatest example of this influential position Tuenti has had for many years. Jobandtalent’s cofounders agree that J&T was “born in Tuenti’s office”; Felipe Navío, one of them, even worked as a consultant at the mobile network company.
Apart from Tuenti, there have been plenty of other startup mafias. The report highlights the cases of Glovo and Cabify: as well as the launching of a handful of companies by former employees of these companies, Oscar Pierre (former Glovo CEO) announced last week the launch of his €50 million VC fund, while Juan de Antonio (Cabify CEO) is a founding member of the EU Unicorns Group, a group of members aiming to boost European tech innovation. Both of these companies are also present in EsTech, a new consortium of scaled companies’ founders trying to help in the introduction of policies helpful for the entrepreneurial ecosystem.
As part of the evolution of the sector, the Spanish Government has presented Spain’s first dedicated startup law, which is expected to be passed by the end of the year. This law wants to incentivize investment through tax breaks as well as talent acquisition by means of a new digital visa for international workers. Another highlight is the improvement in business set up, by both decreasing time costs and establishing an online platform for entrepreneurs to do so in one step.
Another government step towards the stimulus of the ecosystem consists in the setup of Next Tech Fund (investors in Leadwind). It is great to see actions taking place where the entrepreneurs ask for the most help, given that along the report it is repeated how the sector does not have options for larger rounds of funding. The government (and us at K through our investment vehicle Leadwind) are trying to change this issue.
The Spanish investor ecosystem has evolved substantially in the past few years: there now are more than 400 VC funds in Spain, with more than 170 located in Madrid and 120 of those in Barcelona. Moreover, during 2021 Spain attracted €1.9B in venture capital funding, and during the first half of 2022 this number has increased to €5.1B.
Although the number of local VC firms has increased, Spanish startups do still travel abroad for funding. OECD’s Foreign Direct Investment Regulatory Restrictiveness Index ranks Spain as ninth in foreign funding received. Throughout the report, some founders discuss the lack of very early funding (no “super-BAs” makes things more difficult) and later stage capital(from Series A onwards). However, this is slowly but surely changing. We can proudly say that our new vehicle Leadwind tries to solve this problem, as well as other initiatives from different funds such as Seaya’s Andromeda and the new Next Tech Fund. We're proud to say that at K we can now invest from €100K to €10M.
It's no secret that Spanish universities provide top-notch education. More and more junior professionals are joining international tech companies because of how well-prepared they come out of school. A founder told Endeavor Insight: “The quality of the workforce is high. I worked for a Silicon Valley startup, and I’d say that our quality here is higher on average than in Silicon Valley.” Universities such as Universitat Politècnica de Catalunya, ESADE, and Universidad Politécnica de Madrid are commonly found when looking at founders' previous education.
Spain’s active tech companies labeled as scale ups are usually older companies that have gone through a long road to reach that size. The road can be messy and the obstacles discouraging, but having somebody that has made that same trip is much easier. The graph shows how scale up founders have usually been linked to a previous scale up in some way, which helps in acquiring the needed perspective to get a fresh startup to scale up to that level.
These businesses that have more financial stability are great for the ecosystem as they keep increasing their workforce, attracting great talent and capital, and intrinsically motivating employees and newer startups.
Spain is in a great position to keep developing its entrepreneurial ecosystem because of the advantage of having two very important hubs such as Madrid and Barcelona. Smaller hubs (Valencia, Basque Country, Andalucía), sometimes influenced by small mafias, have been thriving lately and supporting the overall growth of the sector. This connectivity has to be a strategic point in Spain’s roadmap of becoming an important country for tech companies in Europe and the whole world.
As startups, scale ups, mentors, angel investors, funds, institutions, etc. come together in pushing for the ecosystem expansion, we will keep doing our job from K by trying to influence as much as possible this progress towards a better and technological future.
