Foreign investment in Spanish Startups grows 150%

Foreign investment in Spanish Startups grows 150% b&wSpanish start-ups are receiving almost three quarters of their seed money from foreign investors signaling an agile, innovative and internationally attractive entrepreneurial population.

Figures recently published in the annual report of ASCRI, specialists in Venture Capital & Private Equity in Spain, show that between 2014 and 2015, foreign entities increased their investment in Spanish companies by 152.6 per cent, reaching a total of 388 million euros. This is the highest level of foreign investment in start-ups that Spain has ever seen and reflects 73 per cent of total seed investment. ASCRI stands for Associacion Espanola de capital, crecimiento y inversion.

At home, Spanish investors also massively increased their faith in the country’s fledgling companies with a total investment in 2015 of 659.4 million euros, an overall increase of 83 per cent compared to 2014. Reacting to this, president of ASCRI, Javier Ulecia, says, “This is a demonstration that the startups in which national funds invest first are now of international interest. Three years ago it was much rarer to see these types of investors betting on Spain. Success stories were needed to lose the fear.”

He believes that as good as the news is for start-ups is, the real barometer of success for investors is actual returns. “What matters is not so much looking at companies receiving investment, but those sold like Privalia or Ticketbis.’ These, he points out, have been acquired for large amounts allowing the investors to make significant returns on their investments.

MAKING NETWORKING WORK 

South Summit is a Madrid based organization which puts together an annual gathering of innovators, customers and investors from Spain and South American countries. Its next event is in Madrid between October 5 and 7 of this year. In June, Liz Fleming, vice president international, wrote a report entitled The EUnicorn Economy: Opportunities For Spain. It highlights start-ups like Idealistic, Trovit, Red Refrigerator, Wallapop and Cabify

In the paper she explains the reasons why Spanish startups are so attractive for foreign capital, starting with her view that the companies are generally good and cheap as the cost of operating with a technology company in Spain is significantly lower than it is in the UK. She adds: “Spain has very good engineers with more affordable costs [compared to] other neighboring countries.’ She also points to the fact that Spain has the facilities to reach Latin American markets.

JUST THE START OF STARTING-UP 

And she believes Spain still has a lot of room for growth as, although the rate of increase is high, investment in start-ups began from a very low base. “Spain is very well positioned because it has a high-level technological segment that competes internationally. In Europe, several hubs of entrepreneurship are emerging such as London, Paris, Berlin and Helsinki. Barcelona and Madrid could be among them. Why not?”

Ulecia echoes this saying, “We are far from what happens in other countries so there is much room for improvement. We are very young in the world of startups and investment is in its early stages. ”

Despite this relatively early stage, he is encouraged, adding, “Entrepreneurs, investors and the Administration are starting to believe we can launch large companies. Because of stories and references, we are demonstrating that projects are successful.”

In the overall picture, it looks like big companies are generally convinced of the need to support new business initiatives. Administrations are increasingly committed to the sector and the entrepreneurs themselves are working together in the consolidation of this exciting new frontier.

For more information, please contact corporate law firm Argali Abogados

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