Tech Ecosystem in Spain: Why Spain is the New Silicon Valley of Europe

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Spain, once primarily associated with its vibrant culture, stunning landscapes, and rich history, has quietly emerged as a prominent player in the European technology ecosystem. This transformation is a testament to the country's growing number of startups, accelerators, and venture capital firms, which are attracting global attention for their innovation and entrepreneurial spirit. The 2023 EU Start-Up Ranking places Barcelona and Madrid in the top 10 biggest start-up hubs (with London and Paris leading the way - check out our previous article on the French tech ecosystem).

Spain's emergence on the tech scene is not only due to its favourable business climate, but also its lifestyle that attracts more entrepreneurs. In fact, according to La Vanguardia Survey 2024, Spain ranks as the seventh happiest country in terms of sustainable well-being (just behind Vanuatu, Sweden, Costa Rica and tied with Denmark).

Key Drivers behind Spain’s Success in Tech Industry

Well, when thinking of the most successful tech hubs, it always comes down to key factors having a great infrastrucure, talent pool, government support and culture of innovation, and Spain ticks all these boxes.

The country has invested significantly in modernising its transportation with its vast network of high-speed trains (AVE), connecting major cities across the country, facilitating business travel, tourism, and the movement of goods, fostering economic growth and connectivity. Additionally, Spain's numerous international airports, including major hubs in Madrid, Barcelona, and Malaga, provide excellent connectivity to other European and global destinations, facilitating trade, tourism, and business travel.

Digital infrastructure has also been a key focus in Spain. The country has invested heavily in expanding broadband internet access across the country, enabling businesses and individuals to connect to the digital world and facilitating remote work, online education, and e-commerce. Furthermore, Spain has a growing number of data centres, providing essential infrastructure for hyperscalers in cloud computing, data storage, and internet services, supporting the operations of tech companies and other businesses that rely on digital technology.

A Magnet for Foreigners and Entrepreneurs

In recent years, the country has also emerged as a thriving hub for entrepreneurs, attracting individuals from around the world who are drawn to its favourable business environment, affordable cost of living, and welcoming atmosphere.

The Top Reasons for Moving to Spain

A recent survey by Numbeo found that the top reasons for moving to Spain were:

  • Better quality of life (44%)
  • Lower cost of living (36%)
  • Pleasant climate (27%)
  • Job opportunities (21%)
  • Family reasons (18%)

A Cost of Living Advantage

One of the primary factors attracting foreigners to Spain is its relatively low cost of living compared to other Western European countries. While prices have risen in recent years, especially in major cities like Madrid and Barcelona, Spain still offers a more affordable lifestyle than many other popular destinations.

This affordability is particularly appealing to entrepreneurs who are looking to establish businesses on a budget. In fact, Spain is the most popular destination for British expats with well over 350,000 British citizens officially registered as living there (although it is estimated that up to 1 million Brits are living in Spain).

A Mediterranean Paradise

Spain's Mediterranean climate is another major draw for foreigners. The country enjoys warm summers and mild winters, making it an ideal place to live for those seeking a sunny and pleasant lifestyle. The Mediterranean coast, with its beautiful beaches, charming towns, and relaxed atmosphere, is particularly popular among expats.

Here's what expats have told the HSBC survey about living in Spain.

“Be prepared to slow down. Get ready for a more relaxed pace of life. If it doesn’t get done today, it'll get done tomorrow, or maybe the day after! Stressing about it will not get it done any faster.”

A Welcoming Culture

Spain is known for its friendly and welcoming culture. The Spanish people are generally warm and hospitable, making it easy for foreigners to integrate into society. The country's long history of immigration has also contributed to its multiculturalism and tolerance, making it a welcoming place for people from all walks of life.

A Thriving Tech Ecosystem

In recent years, Spain has emerged as a thriving hub for entrepreneurs and startups. The country's favourable business environment, talented workforce, and growing tech ecosystem have attracted individuals from around the world who are looking to start their own businesses. Cities like Barcelona and Madrid have become particularly popular destinations for tech entrepreneurs.

A Growing Expat Community

The number of foreigners moving to Spain has been steadily increasing in recent years. According to the Spanish National Statistics Institute (INE), there were approximately 4.5 million foreigners residing in Spain as of 2021. This represents a significant increase from previous years.

Emerging Tech Hubs

The Spanish tech ecosystem has witnessed remarkable growth in recent years. Several factors have contributed to this ascent:

Government Support: The Spanish government has played a pivotal role in fostering a favourable environment for tech startups. Through initiatives like the Startup Law and the Digital Economy Plan, the government has provided tax incentives, funding, and regulatory support to encourage entrepreneurship.

Talent Pool: Spain boasts a highly skilled workforce with a strong emphasis on STEM education. The country's universities and research institutions produce a steady stream of talented graduates who are fueling the growth of the tech sector.

Cost-Effective Environment: Compared to other European tech hubs like London and Berlin, Spain offers a more affordable cost of living for both startups and individuals. This has made it an attractive destination for entrepreneurs seeking to establish and grow their businesses.

Strategic Location: Spain's geographic location at the crossroads of Europe and North Africa provides a strategic advantage for businesses seeking to expand into new markets.

While the entire country is experiencing a tech boom, certain regions have emerged as particularly vibrant hubs:

Barcelona: The capital of Catalonia, Barcelona has become the epicentre of Spain's tech scene. Its vibrant culture, beautiful beaches, and affordable cost of living have attracted a diverse community of entrepreneurs, developers, and investors. The city boasts a thriving startup ecosystem with numerous coworking spaces, accelerators, and venture capital firms. Notable Barcelona-based startups include Wallapop, Cabify, and Factorial.

Madrid: Spain's capital, Madrid, is also experiencing a significant tech boom. The city's strong corporate presence and proximity to major European markets have made it an attractive destination for startups and investors. Madrid is home to several tech hubs, including the Campus de Moncloa and the Madrid Science Park. 

Valencia: Located on Spain's eastern coast, Valencia has been steadily gaining momentum as a tech hub. The city's focus on sustainable innovation and digital transformation has attracted startups in sectors such as renewable energy, artificial intelligence, and biotechnology. Valencia's vibrant cultural scene and high quality of life have also contributed to its growing appeal to entrepreneurs.

Bilbao: Situated in the Basque Country, Bilbao has undergone a remarkable transformation in recent years, becoming a thriving cultural and economic centre. The city's focus on innovation and technology has attracted a growing number of startups and tech companies.

Malaga: A coastal city in southern Spain, Malaga has emerged as a popular destination for digital nomads and tech startups. The city's affordable cost of living, pleasant climate, and growing tech ecosystem have made it an attractive option for entrepreneurs.

Tech Unicorns

Spain's tech ecosystem has witnessed a remarkable surge in recent years, with several companies achieving unicorn status, valued at over $1 billion. These unicorns represent the pinnacle of success in the Spanish tech landscape and are driving innovation and economic growth.

Jobandtalent: 

One of Spain's most prominent tech unicorns, Jobandtalent is a workforce-as-a-service platform that connects businesses with freelance workers. The company has experienced rapid growth both domestically and internationally, expanding its operations to the United States. Jobandtalent has raised over $1.3 billion and continues to be a major player in the global gig economy.

Idealista: 

Idealista is a leading online real estate platform in Spain, providing a comprehensive marketplace for buying, selling, and renting properties. The company has achieved unicorn status following significant funding rounds and has expanded its services to other countries in Europe and Latin America. Idealista's success is attributed to its user-friendly interface, extensive property listings, and valuable data analytics tools.

Fever: 

Fever is a live-entertainment discovery platform that connects users with unique events and experiences in cities around the world. The company has demonstrated resilience, continuing to grow even during the pandemic. Fever's recent funding round valued it at $1 billion, highlighting its potential for further expansion and innovation in the entertainment industry.

TravelPerk: 

TravelPerk is an online platform for business travellers, offering a suite of tools for booking flights, hotels, and other travel services. The company has joined the ranks of Spanish unicorns, securing significant funding and expanding its operations internationally. TravelPerk's success is driven by its focus on providing a seamless and efficient travel experience for corporate clients.

Wallbox: 

Wallbox is a manufacturer of home charging systems for electric vehicles. Founded in Barcelona, the company has expanded rapidly internationally and recently went public through a SPAC. Wallbox's success is attributed to its innovative charging solutions and growing demand for electric vehicles.

Cabify: 

Cabify is a ride-hailing platform similar to Uber, operating in several countries in Latin America and Europe. The company has secured substantial funding rounds and continues to be a major player in the transportation industry. Cabify's success is driven by its focus on providing a safe and reliable transportation service.

Spotahome: 

Spotahome is an online platform for renting apartments and rooms, primarily targeting international students and professionals. The company has experienced significant growth, expanding its operations to several cities around the world. Spotahome's success is attributed to its user-friendly platform, extensive property listings, and focus on providing a seamless rental experience.

Edraak: 

Edraak is an online learning platform offering free courses from top universities around the world. The company has gained popularity among students seeking affordable and accessible education. Edraak's success is driven by its commitment to providing high-quality education content and a user-friendly platform.

These are just a few examples of the many successful tech unicorns that have emerged from Spain's vibrant tech ecosystem. These companies are driving innovation, creating jobs, and contributing to the country's economic growth. As Spain's tech scene continues to evolve, we can expect to see even more unicorns emerge and make a significant impact on the global stage.

A Catalyst for Growth in South America

Spain's thriving tech ecosystem has emerged as a powerful catalyst for the growth of Spanish-enabled tech companies in South America. With a strong focus on innovation, a talented workforce, and a strategic geographic location, Spain is well-positioned to support the expansion of South American tech startups and scale-ups.

Shared Cultural Ties and Language

One of the key factors driving the growth of Spanish-enabled tech companies in South America is the shared cultural ties and language between Spain and many Latin American countries. This cultural affinity makes it easier for Spanish companies to understand the local market dynamics, adapt their products and services, and build relationships with customers and partners.

Strong Network of Spanish-Speaking Entrepreneurs

Spain has a vibrant community of Spanish-speaking entrepreneurs who are actively engaged in supporting the growth of tech startups and scaleups. These entrepreneurs often have deep connections with their counterparts in South America, facilitating collaboration, investment, and knowledge sharing.

Access to Global Markets

Spain's strategic location in Europe provides Spanish-enabled tech companies with easy access to global markets. This allows them to leverage their expertise and technology to serve customers around the world, including South America.

Government Support and Incentives

The Spanish government has implemented various policies and initiatives to support the growth of the tech sector, including tax incentives, funding programs, and regulatory reforms. These measures create a favourable environment for tech companies to thrive and expand their operations, including into South American markets.

Challenges and Opportunities

Despite its significant progress, Spain's tech ecosystem still faces certain challenges. These include:

Venture Capital is on the rise

Compared to other European countries, Spain has a relatively smaller venture capital market. Although this has recently changed with Spain witnessing a substantial surge in VC investment during this period. In 2023, the country recorded a total of €5.7 billion in VC deals, surpassing the previous record of €3.6 billion in 2021. This growth indicates a rising confidence among investors in the Spanish startup ecosystem. Notable mega-rounds, such as the €450 million raised by Glovo and the €175 million secured by Wallbox, have contributed significantly to the overall increase in VC investment. These large funding rounds demonstrate the potential for Spanish startups to attract substantial capital and scale their operations.

Several specialised funds have emerged in Spain, catering to specific sectors such as fintech, edtech, healthtech, and sustainability. This focus on niche areas allows investors to leverage their expertise and provide targeted support to startups within these domains. What’s more, large corporations in Spain have become increasingly active in VC investing, establishing their own CVC funds or participating in external VC funds.

Competition from Larger Tech Hubs and regulatory hurdles

Spain competes with larger tech hubs like London and Berlin for talent and investment. This can make it challenging to attract top-tier entrepreneurs and venture capital firms. While the Spanish government has made efforts to create a favourable environment for startups, there are still regulatory hurdles that can hinder business growth.

Leveraging Networking Opportunities

Networking is crucial for building relationships and finding potential partners. Attend industry events, conferences (check out our guide for top 40 partnership events worldwide) and meetups to connect with other tech professionals. Here are some of the top 10 tech events in Spain:

Mobile World Congress (MWC)

Held annually in Barcelona, MWC is the world's largest mobile industry event. It brings together the latest innovations in mobile technology, from 5G and AI to IoT and wearables.

South Summit

This Madrid-based event focuses on tech-driven solutions for sustainable development. It attracts entrepreneurs, investors, and policymakers from around the world.

J On The Beach

A tech conference focused on web development and design, J On The Beach takes place in Malaga each year. It features workshops, talks, and networking opportunities for developers and designers.

T3chFest

This Madrid-based festival celebrates technology and innovation. It features a variety of events, including workshops, talks, hackathons, and exhibitions.

CommitConf

A conference for software developers, CommitConf takes place in Madrid and focuses on agile development, DevOps, and cloud computing.

Codemotion

This international conference series has events in several cities, including Madrid. Codemotion brings together developers, designers, and entrepreneurs to discuss the latest trends in technology.

PyConES

This conference is for Python developers and focuses on the latest developments in the language and its ecosystem. It takes place in various locations in Spain.

Europython

This annual conference is the largest Python conference in Europe. It takes place in a different city each year, and has recently been held in Madrid and Bilbao.

Tech Spirit Barcelona

This event brings together entrepreneurs, investors, and developers to discuss the future of technology in Barcelona.

AI & Big Data Congress

Held in Barcelona, this conference focuses on artificial intelligence and big data. It brings together experts from academia, industry, and government to discuss the latest trends and challenges in these fields.

Engaging with Tech Associations and Communities

Spain has a vibrant network of tech associations and communities that can provide valuable resources and support. Some of the most prominent include:

  • Asociación Española de Startups (Adigital): The Spanish Association of Startups is a leading organisation representing the interests of tech startups in Spain.
  • Barcelona Tech City: A non-profit organisation focused on promoting Barcelona as a global tech hub.
  • Madrid Tech Hub: A community of tech professionals and startups based in Madrid.
  • Start-Up Valencia: A network of tech companies and organisations in Valencia.

These associations often organise events, workshops, and networking opportunities, providing a platform for tech companies to connect and collaborate.

Collaborating with Research Institutions

Spain has world-class research institutions that are actively engaged in cutting-edge research and development. Partnering with these institutions can provide access to talent, expertise, and intellectual property. Some notable research institutions in Spain include:

  • Consejo Superior de Investigaciones Científicas (CSIC): The Spanish National Research Council is one of the largest research organisations in Europe.
  • Universitat Politècnica de Catalunya (UPC): A leading technical university with a strong focus on engineering and technology.
  • Universidad Complutense de Madrid (UCM): A prestigious public university offering a wide range of academic programs.

Exploring Public-Private Partnerships

Public-private partnerships (PPPs) can be a powerful tool for driving innovation and economic growth. Collaborating with government agencies and municipalities can provide access to funding, resources, and policy support. Some areas where PPPs are common in Spain include:

  • Smart Cities: Developing technology-driven solutions to improve urban living.
  • Digital Health: Implementing digital technologies to improve healthcare outcomes.
  • Education Technology: Using technology to enhance education and learning.

Final Remarks

Building strong relationships is key to successful partnerships. Take the time to understand the needs and goals of potential partners and demonstrate how your collaboration can benefit both parties. Be transparent, communicate effectively, and be willing to compromise to reach mutually beneficial agreements.

Technology partnerships in the Spanish tech market can be a rewarding experience but requires careful consideration of cultural differences, language barriers, and regulatory compliance. Understanding cultural nuances and adapting to different communication styles is crucial for successful interactions. While English is widely spoken, language barriers can still pose challenges. Navigating the Spanish regulatory landscape can be complex, necessitating careful planning and compliance. To overcome these obstacles, seeking guidance from local experts is essential.

When doing business in Spain, it's important to be mindful of the country's cultural norms. Spaniards tend to respect hierarchy and authority, so it's crucial to follow the chain of command. Additionally, building long-term relationships is a priority for Spanish businesses. Focus on creating mutually beneficial and sustainable partnerships. Finally, Spanish negotiations often involve a strong emphasis on building relationships. Be prepared to discuss personal and professional interests as part of the negotiation process. When negotiating partnerships in Spain, preparation is key. Research potential partners thoroughly to understand their business, products, and market position. Clearly define your objectives for the partnership and communicate them effectively. Listen attentively to the other party's needs and concerns, and be willing to make concessions when appropriate.

Looking to expand your tech business into Spain? Let Journeybee guide you through the vibrant Spanish tech ecosystem and show how a Two-Way PRM software can help you build strategic partnerships globally.  

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