Spain’s innovation ecosystem, with its vibrant regional hubs, is becoming a powerful player at European level. Major companies now need to get in on the act.
In February the European Commission published an improved forecast for the Spanish economy, including a fall in unemployment and an increase in growth to 2.3% for 2015. So what is happening there as regards the country’s innovation ecosystem? ‟It’s growing, and fast”, says Liz Fleming, Vice-President in charge of international relations at co-investment fund Spain Startup. In the second quarter of 2014, Spanish startups raised €179 million in capital, i.e. an increase of 153% year-on-year. Although most investments in the fourth quarter came in at the seed stage, 10 of the 29 deals recorded surpassed the €1 million mark. And these days you can hardly count the number of incubator and accelerator programmes and shared workspaces that have been set up in Spain, along the lines of Impact Hub Madrid.
When it comes to startup funding, five years ago you could count the number of Spanish venture capital funds on the fingers of one hand, but now new players such as Seaya Ventures and Swanlaab Ventures have emerged, on a mission to consolidate seed funding flows. ‟The real value of Spanish startups is beginning to be appreciated”, argues Carmen Bermejo, head of Tetuan Valley, an organisation that has been helping to create startups and teaching entrepreneurs for the last five years. Moreover, the Startupxplore blog listed 20 startup acquisitions during Q1 2014, five of which were sizeable. ElTenedor – the Spanish version of LaFourchette.com (TheFork) –was acquired for somewhere between €80 and €100 million by American travel website company TripAdvisor. Liz Fleming sees Spain becoming more open to experimentation. ‟Entrepreneurs and investors are learning to feel comfortable with risk-taking”, she underlines.
Number of deals and sums invested in 2013 and 2014 in the Spanish innovation ecosystem: Startxplore.
Madrid, Barcelona, Valencia and Bilbao are innovation hubs
The favourite areas of the Spanish economy in terms of innovation are the agrifood sector, tourism, fashion and some fields of manufacturing. Innovation is unsurprisingly particularly dynamic in the fashion tech, fintech and travel tech sectors, but also in agrifood and gastronomy. Carmen Bermejo explains in addition that the collaborative economy has also taken root in Spain, which traditionally has a strong sharing culture. The economic crisis has now enabled many firms to turn this into as asset. Examples here are concert/event/football match ticket resale platform Ticketbis and Sherpandipity, which puts tourists and occasional visitors in touch with city residents.
Against all expectations however, it is not the capital city Madrid which is most dynamic when it comes to innovation but Barcelona, the capital of Catalonia, the historical hotbed of Spanish industrialisation. The innovation market in Barcelona, which is more mature than in other cities in Spain, has focused on smart city technology and environmental technology solutions. Every year the city hosts the world’s largest fair dedicated to mobile technology, the Mobile World Congress, which took place this year on 2-5 March. In contrast Madrid boasts a younger ecosystem and this is where the country’s tech community is based. This community is well-known for being highly active in ‘fintech’ – mainly e-commerce and payments software. Meanwhile Valencia continues to maintain its historical links with the textile industry through innovation, while the industrial port town of Bilbao is proving very dynamic when it comes to the manufacturing industries of tomorrow and also media. These innovation hubs do interact with one another, but ought to do so more, insists Carmen Bermejo, who argues that ‟we should have more communication and interaction between our innovation centres in Spain.” However, many initiatives of various sizes are now beginning to connect these cities, such as BetaBeers, a community of developers which meets on a monthly basis in different places to discuss new technology, and the South Summit, one of the largest startup events in southern Europe.
The South Summit, a major networking event focusing on innovation in southern Europe
Dynamic startups that know how to retain talented staff
There is now an increasing number of Spanish success stories. Liz Fleming points to Jobandtalent, a website plus app which provides its subscribers with job offers in line with their profiles, AlienVault, whose all-in-one platform is designed to ensure that mid-market organisations are able to defend themselves effectively against today’s advanced cyber-threats, and CartoDB, a website which enables users to create dynamic maps for the purpose of visualising data. With low-cost manpower, and a quality of life that is far superior to that of many large European cities, Spain has some major advantages when it comes to attracting talented people and keeping them in the country.
Nevertheless, Spain also needs to overcome a number of obstacles if the innovation ecosystem is to really take off. ‟Spanish multinationals ought to be playing a larger role in innovation by becoming customers of the startups in their sector. This could really help the fledgling firms to work in the most effective way. And they also need to pump more liquidity into the innovation market by undertaking strategic acquisitions of startups,” argues Liz Fleming. The State also needs to change its approach to the field of innovation, she insists. Citing the example of Uber, which has been banned from providing its core service in Spain, Fleming underlines that ‟this kind of attitude doesn’t encourage innovation.” However, a series of laws passed in 2013 designed to encourage the creation of firms in Spain, plus the setting up of the FOND-ICO Global fund of funds for the purpose of fostering venture capital investment, are certainly welcome steps in the right direction, points out the Head of International Relations at Spain Startup.
Example of using CartoDB to visualise data. Here online payment traffic is being tracked before and during the 2012 Mobile World Congress in Barcelona.