Spanish Start-ups Form Chamberí Valley Alliance

Chamberí Valley: Spain's Startups Form Alliance

Spanish Start-ups Form Chamberí Valley Alliance

Spanish start-ups are flourishing as savvy entrepreneurs become increasingly aware that new technologies and innovation are the cornerstone of the country’s future economic growth.

While start-ups are risky by their very nature – a small team of people developing a new idea, with limited financial backing – their growth potential is significant. They are also more flexible than larger corporations, can adapt their structure to meet changing market demands and tailor their products more easily to customers.

Raising financing is no easy task for start-ups, however, against the backdrop of the economic crisis and the stranglehold on bank lending.

Some of Spain’s top companies like telecommunications giant Telefónica and power company Endesa have lent a helping hand over the last few years, setting up venture capital funds specifically to invest in innovative projects. But there is still a lot of work to be done before new technologies can become a sustainable engine of economic growth.

So a small group of start-ups have taken matters into their own hands, taking their inspiration from a US success story.

SPAIN’S SILICON VALLEY

Around 30 Spanish start-ups with annual revenues of more than one million euros have joined forces to create a mini Silicon Valley in Madrid’s Chamberí neighbourhood. The companies’ goal is to create a hub for high technology innovation and development, pooling resources in many areas like financing and personnel.

Firms involved in the Chamberí Valley alliance include ticketing portals Entradas.com and Ticketea, online automobile concessionary Coches.com and Internet solutions company Madpixel. Founded in 2000, Madpixel has already made its mark in Silicon Valley and counts Google and Facebook amongst its admirers!

StepOne, a start-up which helps Spanish companies establish themselves in Silicon Valley, is also part of the Chamberí alliance.

A SOURCE OF FUTURE M&A

The driving force behind Chamberí Valley is the mutual support existing between the entrepreneurs and their ambition to grow their businesses. In this environment, the potential for M&A is significant. A merger provides opportunities for synergies, increased market share and improved financing possibilities even in tough times. For small enterprises who want to stay in the game and not see their businesses fail, mergers are a good solution.

As the members of the Chamberi Valley alliance increase their collaboration and team up on investments as well as the development of new technologies, consolidation amongst sector peers is inevitable. And as the Spanish stock exchange gradually recovers momentum, some of these start-ups may also consider an initial public stock offering (IPO), which delivers the greatest potential return on investment for entrepreneurs.

For more information on mergers and Spanish start-ups, contact corporate law firm Argali Abogados.

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