Oct 11, 2022

Barcelona's work-life balance, weather, and countryside are proving alluring to tech workers. The government hopes its new Startup Law will help birth an array of new unicorns. In 2016, Lucas Carné sold his fashion marketplace startup Privalia for around 500 million euros (around $495 million) in a landmark deal for the Spanish tech ecosystem. Carné and his cofounder Jose Manuel Villanueva spent the previous decade building out their e-commerce retailer, which organized flash sales for premium clothing and homeware brands. The pair pulled in investment from high-profile US firms like Insight Partners and General Atlantic, who between them have backed Twitter, Shopify, Slack, Snap, and Airbnb. Privalia's sale to its enlarged French counterpart Ventee-Privee – since rebranded as VeePee – illustrated just how far the Spanish startup scene had changed in the space of 10 years. "Back in 2006, it was almost a dessert crossing," Carné told Insider. Nowadays, being an entrepreneur in Spain is a sought-after career path, he added. Indeed, investment in the region has soared since the days Carné started out. Spanish startups secured a record $4.1 billion in 2021 – more than double that of 2020 –, according to PitchBook data. By contrast, Portugal, which draws in headlines for its startup-friendly policies, landed $453.8 million last year. Spain is also now home to a number of unicorns, including ride-sharing company Cabify, travel management platform TravelPerk, and rapid grocery delivery company Glovo, since acquired by DeliveryHero. Such founders and their teams have become reputable role models, said Carné, whose latest business is sustainable housing startup 011h. The hope is that their wealth will trickle down and be reinvested, as seen with early employees of Spotify, Skype, and UI Path in other parts of Europe. There is already some evidence of this, with TravelPerk's cofounder Avi Meir investing in Barcelona-based digital real estate platform Wolo. Despite the substantial growth of the ecosystem, it still remains in the shadow of countries like the UK and France where startups landed seven times and three times as much from investors last year respectively. However, Spanish founders, investors, and lawmakers hope that a shift to long-term business models and a concerted effort to clamp down on red tape can help the country close the gap on its European peers. Founders switch to long-term outlook Founders used to scale companies to flip them at Series A, according to Marc Coloma, cofounder of plant-based meat startup Heura. "This has evolved and people are bringing greater support, vision, and ambition," Coloma said of the developing domestic ecosystem. The country is also drawing in impact investors keen on backing companies that can both turn a profit while also providing a tangible good for the environment. French investor Breega opened a Barcelona office earlier this year, citing the city's strong angel network, venture studios, and conferences such as 4 Years From Now and Mobile World Congress, among other things, as a draw. "With the ecosystem maturing and a few startups reaching unicorn or soonicorn status, there will also be an influx of capital and trained talent that's going to help launch the new generation of tech startups," partner Isabella Gallo told said. Nordic impact fund Norrsken is also dabbling in the ecosystem with Norrsken House, a Soho House-esque club and co-working space for up to 800 entrepreneurs that was announced in October. Spain is still lacking in later-stage funding and support, with many startups requiring foreign cash and heading overseas to scale, investors said. TravelPerk, for example, lured cash from DST Global and General Catalyst in its later rounds. Glovo's backers included Lakestar and Mubadala, while Spanish fund Seaya Ventures first handed the company a check in 2016 and has continued to double down on the investment. Meanwhile, now Boston-based fintech Flywire was born in Valencia but moved its headquarters in 2015 . Similarly, Blinkfire Analytics set up shop in Spain's third largest city but is now co-located in Chicago. Spain's largest deals over the past decade involved startups based only in Barcelona and Madrid, according to PitchBook data. However, Bilbao and Valencia are both emerging hotspots, investors and founders told Insider. Barcelona specifically is a "magnet" for second-time founders according to Marc Jordana, who is spearheading Norrsken House Barcelona. TravelPerk, for example, is headed up by Israel-born Meir. The pull is its metropolitan nature and proximity to both beaches and mountains, several sources said. The weather and work-life balance is also a plus, according to Kibo Ventures principal Jordi Vidal. Cutting through red tape