Spanish ecosystem confirms as one of the best performing in southern Europe. The growth has been sustained for 10 years. Investment contraction in Spanish scaleups stood at 10% compared to a 20-30% ratio on the European average.
However, the gap between Spain and the main European countries (Germany, France and Sweden) remains. Meanwhile, the United Kingdom is the biggest ecosystem which is between seven and nine times the size of the Spanish one. Spain only has 12 scaleups that have raised more than 100 million, while the United Kingdom has 92, Israel 87, Germany 46 and France 44.
In 2020 we definitively crave for good news. According to the very last Report issued by Mind the Bridge and Acciona “Tech Scaleup Spain 2020”, Spanish tech scaleup ecosystem shouldn’t be seeing its growth trend reverted by Covid-19. The country should close the year slightly below the 1 billion mark in new funding and with about 40 new scaleups.
“This represents an approximate 10% contraction versus 2019, while we are expecting a downturn in the 20-30% range at European level. It’s a good signal for Spain: it means that, despite its severe consequences on people and the global economy, there’s a hope for scaleups to go through this pandemic – commented Alberto Onetti, Chairman of Mind the Bridge – Their lean approach to market and speed to react make them more resilient. Unfortunately the same cannot be said for the seed and early stage segments that are more hit by the crisis. ”
Looking at the evolution of the Spanish scaleup ecosystem over the past 10 years, the Report tracks two main turning points: In 2014, when capital invested into scaleups moved up to $.0.5B from approximately $0.2B average for the period 2010-2013; and in 2017, when annual funding jumped to $1B per year on average. Without Covid-19, 2020 might have been a year of further consolidation for the Spanish ecosystem. Looking at the initial 9 month period (January – September 2020) Spain poured $0.6B in fresh capital with 31 new scaleups joining the national innovation landscape. Now the general slowdown of the global economy caused by the pandemic shouldn’t revert the growing trend of the Spanish tech scaleup economy.
“Spain confirms to be the most performing innovation ecosystem among the Southern Europe countries. The less good news is that the gap with the main European countries and global ecosystems still remains large”, added Alberto Onetti.
Spain ranks 6th in Europe per number of scaleups and 7th in terms of capital raised. The country hosts in total 4.4% of the total number of European scaleups (407) which attracted approximately 3% of the overall capital injected into the European tech scaleup ecosystem (€6.9B) that represents 0.35% of the country’s GDP (the European average is 0.73%). The other Southern countries lag far behind Spain. Italy ranks 10th, Portugal 15th, and Greece 18th. France, Germany and Sweden have a number of scaleups that is almost double the amount of that in Spain and overall financing is three to four times bigger. Not to mention the UK where numbers are seven or even nine times higher.
However, compared to last year, Spain increased its Scaleup Investing Ratio up to 0.35%, almost 4 times higher than Italy (0.10%), 2.5 times higher than Greece (0.13%) and 0.5 times higher than Portugal (0.25%); on the other side, the Scaleup Density Ratio raised from 0.7 to 0.86 scaleups every 100K people, that is less than European average (1.4) but higher than Italy (0.43) or Greece (0.50). As a consequence, its position on Mind the Bridge’s Matrix* furtherly moved up and right, which reflects a consistent, relative increase in the capital invested and number of scaleups in Spain.
The gap with the main European ecosystems remains huge: the UK, for example, shows a Scaleup Investing Ratio equal to 1.97% and 4.34 scaleups every 100k inhabitants.
In addition, Spain registers “only” 12 scalers, that is companies able to raise over $100M (Italy and Portugal even less than that) and (still) no super scalers ($1B+ in capital raised). As a reference, UK has 92 scalers and 6 super scalers, Israel 87 scalers, Germany 46 scalers and 3 super scalers while France 44 scalers.
“It is time for Spanish corporations to take a leap forward in financing and acquiring startups. This will be key for a further impulse of the startup ecosystem in Spain, the emersion of a more mature scaleup landscape and the dynamization of tech IPOs” – Telmo Pérez Luaces, Chief Innovation & New Business Acciona, added.
The Spanish ecosystem is relatively new: 80% of Spanish scaleups were founded in the last 10 years.
Spanish scaleups raised a total amount of $6.9B in funding, representing 4.1% of the total amount raised in Europe. The research recorded 71 scaleups that raised their last funding in 2020 and 81 in 2019.
The vast majority of the capital ($6.3B, 90% of total) comes from Venture Capital funds.
The IPO channel remains quite unexploited ($0.6B, equal to 9% of the total): the only one was recorded in 2020, the first since 2016. Marginal is also the capital raised through ICOs (1% of total).
An important role is played by corporates in scaleup financing. Companies – either through their CVC arms or directly (off-balance investments) – participated in approximately 11% of the funding rounds that equal to the 20% of the total capital raised ($1.5B). The majority are Spanish companies (such as Telefónica, Caixa, Banco Sabadell), with the exceptions of few international/global corporate players (such as Naspers, Softbank, Rakuten, Intel).
The largest contributors are US investors that accounted for 28% of the investments ($1.7B). Spanish investors, despite leading the vast majority of transactions (491, 59% of the total), contribute to only 23% ($1.4B) of all the capital poured into Spanish scaleups. UK contributed for 9%, other EU investors for 13%, South Africa for 11%.
Business & Productivity Software is the dominant specialization of Spanish tech scaleups (60 scaleups,14.7% of the total, able to raise $0.7B, equal to 10% of capital raised). E-commerce, Retail & Shopping with 44 scaleups able to cumulatively attract $1.6B, Fintech and Advertising do follow.
While European startups and scaleups tend to aggregate around one main hub per country, typically the capital city, Spain represents quite a rather unique case with two large hotspots: Barcelona (193 scaleups equal to 47% of the total and $4.1B funding raised, equal to 60% of the total) and Madrid (130 scaleups, equal to 32% of the total, able to raise $2.1B, that is 31% of the total). Valencia (22 scaleups, $0.4B raised) and other emerging hubs like San Sebastian, Bilbao, Alicante, Seville, and Malaga, follow.
On the M&A side, we registered an acceleration of startup acquisitions after 2025. 44 scaleups (85% of the total acquisitions since 2010) exited in the last 5 years. Overall, E-commerce, Retail & Shopping scaleups are the most attractive with 13 companies, the main ones being Privalia (acquired by the French Veepee for $0.6B) and Ticketbis (bought by eBay for $0.2B). Traveltech with 8 (15%). Advertising and Productivity Software (6 each, i.e. 12% of the total) do follow.
“This situation of undercapitalization Spain and Southern Europe suffer can be solved only by pouring in more capital, firstly by domestic investors – added Alberto Onetti – More VCs are needed, especially later stage funds. A second channel could be international investors, since they proved to be able to raise capital internationally. A third way could be represented by stock exchanges. Finally, by corporations: open innovation is growing in Spain and an extra push both domestically and internationally is needed to go beyond the current contributions in terms of investment”.