Perhaps best known globally for sunny vacations, folkloric Flamenco and savory Paella, Spain is also home to one of the fastest growing technology ecosystems in Europe.
According to data from Dealroom, last year, Spanish startups were collectively worth around €100 billion (USD $111 billion), outpacing countries like Norway and Denmark, but still well behind more established ecosystems like the United Kingdom, Germany and The Netherlands.
The country ranked seventh in Europe in terms of attracting venture capital and had the fourth highest number of funding rounds, according to the report which was made in collaboration with BBVA.
And while cities like Madrid and Barcelona lead the country for development on Startup Genome’s Global Ecosystems report, other cities like Valencia are also playing a big role in transforming Spain into an innovation hub on the continent.
Valencia, a startup hub
Valencia, Europe’s fifth busiest port city, is located in Eastern Spain on the Mediterranean sea. It’s the third most populated municipality in the country and in addition to being one of Spain’s most important cities for export and logistics, it also houses a strong manufacturing sector and is a tourism hotspot.
The city’s blend of old-world architecture (it was believed to be founded in 138 B.C.) with the futuristic buildings of one of its most famous children, renowned architect Santiago Calatrava, make for an aesthetic ripe for technological innovation. And founders are taking note.
According to Startup Genome data, the city’s estimated startup ecosystem value – which measures exits and startup valuations – is over USD $5 billion, and the city saw 12 exits in 2022 and five in 2023.
Particularly strong are startups innovating in AI. According to data from Startup Valencia, a non-profit dedicated to promoting startups in the city, over 20% of Valencian startups are powered by AI.
What’s more, nearly 35% of startup companies in the city count at least one female co-founder, and 81% of startups surveyed say they align with the United Nations Sustainable Development Goals (SDGs).
Overall, the non-profit reported that the city’s startup sector is growing at a rate of 16%.
One big initiative from Startup Valencia that is helping to fuel that growth is their annual technology conference, VDS (formerly Valencia Digital Summit). The two-day gathering, which will host its seventh edition on October 23 and 24 under the theme “Embracing Evolution: Invest in the Leaders of Tomorrow,” convenes some of the world’s leading technology thought leaders to southern Europe.
According to a company statement, the event is expected to bring together over 2,500 startups, and over 12,000 attendees from more than 100 countries. Also in attendance will be 700 investors, including representatives from global funds like Softbank and Techstars.
Startups will also have a chance to pitch to investors on the demo stage, and featured speakers include Steve Chen, co-founder and former Chief Technology Officer of YouTube, Randi Zuckerberg, founder and CEO of Zuckerberg Media and HUG, Juan Antonio Samaranch, Vice President of the International Olympic Committee, among many others.
Other initiatives too are driving the startup ecosystem forward in Valencia. Recently, Startup Valencia announced a partnership with German research institute The Center for Digital Technology and Management, which aims to help the center scale in Spain and help foment local entrepreneurship. Also, Invest in Valencia, which promotes foreign investment into the city, is creating initiatives to promote Valencia’s 5G, cybersecurity and innovation sectors.
Spain’s nation-wide support of startups
On a national level, Spain has been taking steps in recent years to help foster startups and the tech sector.
In December of 2022, the country passed its Startups Law, which aimed to cut some bureaucratic processes for starting companies, as well as tax incentives for startups and investors, as well as lowering barriers for foreigners to enter the country to start a business or work with a startup.
Earlier this year, the government announced the creation of a National Entrepreneurship Office (ONE), which focuses principally on prompting startups. The platform offers information for founders that want to recruit international talent, provides spaces for networking and startup events, information on grants and accelerators, and other information relevant to entrepreneurs.
And in May, the government approved its AI strategy, which will deploy a total of €2.1 billion to help shore up the country’s AI sector. The strategy includes more funding for homegrown supercomputing, a structure for building a sustainable network of data centers to power AI, as well as investments and loan opportunities for companies innovating in AI.
Taken together, the push from Spain as a whole, but also from Valencia as a startup hub, aims to help propel the country to be a leader in tech in southern Europe in the years to come. At least, that is the hope.
Disclosure: This article mentions a client of an Espacio portfolio company.
