There are many reasons people choose to create startup companies, but why does a company choose one location over another when launching their venture? Why are some places more successful than others in attracting the attention of entrepreneurs, fresh talent, mentors and investors? The answer can be found by looking at the incentives and opportunities a city offers and whether the quality of the environment encourages a company to thrive or fizzle.
Barcelona: European Startup Hub
Barcelona has undergone a transformation in recent years. It’s always been looked upon as a city of great thinkers, artists and architects, but now it can add “smart city” and “leading startup hub” to its repertoire, rendering it a prime location to launch a startup and attracting increasing numbers of international talent to its shores. In fact, Barcelona has now secured its status as one of Europe’s hottest startup capitals.
After a financial crisis left 50 percent of youth unemployed, people in Barcelona were forced to become more innovative, creative and independent. Thanks to this wave of fresh talent, startups and small businesses took off, creating a surge of coworking spaces and a collaborative spirit that helped the city form a tight-knit sense of community, vital for the success of any business hub.
The growing number of accelerators, business angels and venture capital investments show money, for many, is no longer an issue. Investments in Spanish companies have grown steadily over the past few quarters, pointing to a relative improvement of the investment ecosystem and an abundance in private and public capital.
Barcelona is becoming increasingly integrated and developing a much broader international perspective, in part thanks to communities such as:
Barcinno, a collaborative platform for sharing news, knowledge and events surrounding Barcelona’s startup, tech and innovation communities. As Barcelona’s No. 1 English-language tech resource, it is a unique channel for the city’s rapidly growing entrepreneurial community to expand its presence locally and internationally.
The networking opportunities created by the array of conferences and events held each year are also invaluable. The Mobile Web Congress alone brings close to 100,000 entrepreneurs to the city each February.
The 22@ Barcelona Innovation District initiative has transformed the old, industrial area of Poblenou into a center for knowledge, tech, design, creativity and art.
Barcelona Activa, the city’s economic development agency, operates a business incubator program with a small seed fund, providing advice and supporting startups and entrepreneurs.
Entrepreneurs and investors have often complained that creating companies in Spain is not easy and tax incentives are part of a fairy tale that politicians like to mention in press releases and public appearances but that never truly see the light of day. Sadly, they’re not wrong; Spain is not that business and investment friendly, and personal and corporate taxes are generally much higher than in the UK.
The administrative process for opening a new business in Barcelona can also be complicated and expensive and, compared to other European countries, it’s shrouded in bureaucracy and red tape. For example; registering a company with Companies House in the UK costs £15, takes about 15 minutes and can be done online. In Spain, notary and commercial registry costs alone incur a hefty price, and a minimum startup capital of €3,000 is required from the point of company formation.
Another problem startups in Barcelona have faced over the past few years relate to a lack of global ambition and, at times, lack of capital at the early and growth stage. However, the success of companies such as Scytl, Social Point, BuyVIP, Privalia and ZED show being global from day one is both possible and scalable.
Successful Startups in Barcelona
Wallapop: This used-item trading app uses geolocation to sync sellers and buyers, and claims five million monthly active users across Spain, the United States, the UK, France and Mexico. It has received a reported $40 million in investment to aid further expansion from Insight Venture Partners, Caixa Capital Risc, Accel Partners and Bonsai.
Trip4real: Besides Airbnb’s penetration, one of the city’s big peer-to-beer success stories is trip4real. Now Europe’s market leader for P2P travel experiences and unique things to do, the Barcelona startup cleverly connects local residents directly with travelers.
Kantox: This foreign-exchange platform provides transparency, peer-to-peer trading, trade alerts and API to automate transactions. It has reached $1 billion in transactions and secured 1,000 corporate clients since being founded in 2011. In February 2014, it raised €6.5 million in investment from Partech Ventures, IdInvest and Cabiedes & Partners.
Mailtrack: This Chrome extension deploys the same ‘double-check’ principles of WhatsApp to Gmail. In 2014, the company received a seed round of $460,000 from, among others, Big Sur Ventures-Necotium.
Tiendeo: This retail marketing app brings offline content such as leaflets and catalogues to the online world, and has been downloaded four million times across 31 countries since its 2011 launch. The startup has secured €1.1 million from Cabiedes & Partners and a series of angels, claims more than 17 million users per month and has launched in Japan and New Zealand.
Social Point: Launched in Barcelona, Social Point is now one of the leading developers of social games worldwide.
Siine: Keyboard app maker Siine makes every-day digital interfaces smarter and more user-friendly.
A Success Story: David Tomas, Founder & CEO at Cyberclick
David Tomas is the General Director at Cyberclick, a group of companies specializing in advertising and online marketing. In 2012, Tomas was named one of the 20 most influential entrepreneurs in Spain by the Global Entrepreneurship Week. He actively participates in Founders Institute and SeedRocket, a leading initiative in Spain for entrepreneurs with digital projects, and he has mentored the likes of Deporvillage, Habitissimo, Captio and Social & Loyal.
Cyberclick was awarded Best Workplace 2014 in Spain, and as Founder and CEO, Tomas was appointed a Great Place to Work Ambassador. He has also published a book La Empresa Mas Feliz Del Mundo (The Happiest Company In The World).
Slow And Steady Wins The Race
The Barcelona startup scene is made up of a rapidly growing and constantly evolving community of talented professionals and forward-thinking organizations. It has all the elements of a successful and healthy startup ecosystem that should pave the way for innovative new companies for generations to come.
However, in order to continue to build on this success, the city will need to start thinking long term. Promoting entrepreneurship within the school system, the funding of tax breaks for new investors and increased focus on economic growth, are just some of the factors it needs to take into consideration if it wishes to succeed.
Although it still has some way to go before it overtakes the likes of Silicon Valley, Boulder or London, there’s no denying that Barcelona offers a tempting balance of creative inspiration, business opportunities and lifestyle, making it difficult to resist.