Lately I’ve been hearing people talk more and more about international investors, and how they’re increasingly looking to Barcelona for interesting projects.

These rumors confirms a feeling I’ve been having for quite some time. It’s always scary to predict the future, but sometimes you just see a pattern so clear that you need to share it with people.

We’re all tired of comparing different tech hubs around the world, so I will focus on the elements inside the city, and not compare too much to other places.

There are four (probably more..) reasons why I think investors increasingly are looking to Barcelona for investment:

  1. Funding rounds are growing fast
  2. High degree of innovation
  3. City brand
  4. Successful entrepreneurs are giving back

(1) Money, money, money

One of the big challenges of fast-growing startup hubs in Europe are the lack of Venture Capital, and a couple of years ago, this was also a huge problem in Barcelona.

Investors was still licking their wounds from the 2008 financial meltdown, and few were willing to risk their money on new technology.

Last year Barcelona broke all records in terms of funding with €535 million invested in Catalunya. That’s an increase of 87% compared with the year before, according to numbers from Mobile World Capital Barcelona.

It was a also a record year when it comes to international VC’s investing in Spanish companies. Barcelona startup Typeform did a round of $15 million without a single Spanish investor.

Even though many of the big rounds of investment has been coming from abroad, there’s also a growing number of active investors in Spain.

Last year Barcelona ranked as number 8. in concentration of local business angels in Europe, according to the report; The State of European Tech 2015.

We’ve seen many, both big and huge investments in companies like Letgo ($100 million), Jobandtalent ($42 million), Typeform ($15 million). I think that 60% of the startups in Barcelona is operating abroad is one of the reasons why more and more international VC’s are coming to the region.

The FOMO is growing for every big startup getting funded in Barcelona.

(2) Top tier on innovation

According to a new report from European consultancy Science|Business, Barcelona ranks as one of Europe’s most innovative city’s and also one of the places in Europe where people are some of the earliest adopters of new technologies.

According to the study, Barcelona ranks as the fourth best city in Europe for scientific production. Only one year ago the city was ranked as the smartest city in the world in 2015 by Juniper Research.

Even though these types of reports doesn’t necessarily mean that there’s a better environment for tech startups, Barcelona are home to several world famous universities and business schools, and also have Europe’s 5th biggest army of mobile developers.

For startups a big pool of developer talent and tech savvy early adopters are two vital keys in growing fast, and the city is providing both.

In other words, a VC investing in Barcelona knows that the startup aren’t dependent on outside talent, but can hire premium developers from the region, at a much lower cost than other European city’s.

(3) The city brand

The last decade Barcelona has built one of Europe’s strongest city brands, both among tourists and business people.

The last two years the city brand has been ranked as number 4. and 6. in the world, according to The Guardian and The Place Brand Observer,

Tourists come for the lifestyle, the food, beaches and other leisure activities. And professionals enjoys big conferences such as the Mobile World Congress, Barcelona Games World and 4YFN.

4 Years From Know is the annual startup conference that’s runs alongside the Mobile World Congress.

When you combine these two aspects and sprinkle it with the worlds best football club, the famous Modernista architectureand one of Europe’s biggest ports, you end up with an extremely strong brand both among professionals and tourists.

It’s no wonder why big tech companies like Amazon, HP and Telefónica I+D, (the research and development arm of the Telefónica Group), have big headquarters here with thousands of employees.

It’s actually one of the city’s in Europe with most technology oriented Meetups, as much as 13,500 people attended last years events, according to a report.

Investing in a city you don’t know anything about is scary, but the brand of Barcelona makes the city a safer choice for a VC who’s planning to risk millions of his fund on a local startup.

(4) Giving back

One of the most important thing a successful entrepreneur can do after selling his company or running it with profit, is to give back to the community he created the company in.

Without comparing, many of us know the Paypal or the Skype “Mafia”, and what kind of projects they have gone on to support or create.

That experienced entrepreneurs give back through funding new projects, like Bernat Farrero here, is essential for a startup ecosystem to grow.

Luckily we also have people like this in Barcelona (again, without comparing..): Miguel Vicente, Bernat Farrero, Carlos Blanco, and other alike who all have launched or still are running successful companies, but also have chosen to give back to the community through investing and supporting new projects.

However, giving back is an area where Barcelona have potential to grow, and hopefully we’ll see more examples of this the next years as more entrepreneurs succeed in their projects.

If VC’s see success stories, and then again see the same entrepreneurs involved in new interesting projects, they’ll be intrigued to invest.

If you can think of any other reasons, or disagree with some of mine, please let me know below!

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V.

VCs come into action — Breakdown of Spanish investment activity of January 2018

January closes with €195.3 million investments in Spanish startups within 24 operations

  • The Spanish entrepreneurial ecosystem is maturing thanks to investment rounds of more than €10 millions.
  • Barcelona and Madrid continue leading the Spanish ecosystem.


This is the first in a series of posts in which we will do an analysis of the Spanish startup investment landscape. We will look at the overall funding numbers and trends in the country month by month and compare it with data of the previous year.

What are the Spanish investment activities like on a month to month basis? What deals and volumes are we talking about? At what stages are startups prone to search investment and which regions in Spain attract the most funding?

The year 2017 brought us plenty in terms of innovation and investment activity within the area of technological startups, although Spain has been driven by political problems. The developments we have seen in 2018 so far are picking up at just the same fast pace.

January has closed with €195.3 million investments in Spanish startups within 24 operations. Of these funding rounds, highlights are the round of Cabify, Hawkers and Redpoints :

  • Cabify: The ride-hailing app that competes against Uber, has raised €143.3 million ($160) Series E funding round from a mix of previous and new investors, including Rakuten Capital, TheVentureCity, Endeavor Catalyst, GAT Investments, Liil Ventures and WTI, as well as prominent local investors from Spain and Latin America.

When analyzing the structure of financing deals, the increase in venture capital activity in Jan-18 is noticeable in comparison with Jan-17.

#Deals and volume in the Spanish startup investment landscape in January


In terms of the number of deals closed, we have seen a slight downward trend in the country. With a broad participation of Venture Capital, there have been less deals but more capital invested in each transaction. The reason for such a boost is mostly the gigantic financing round of Cabify with participation of giants’ VCs like Rakuten Capital, TheVentureCity and others.

The entry of European, American and Japanese funds investing in Spanish startups are accounting for a large percentage of the growth of the investments in Spain. At the same time, this global investment rise is making the average value of the financial rounds soar up to more than 1.5 times that of the previous year (without taking account of Cabify’s investment, that would turn this factor to more than 6 times the previous year)

The differences between January-2017 and January 2018 in terms of the increase in venture capital activity is shown below:

Startup investment deals by size of round


As we expected to see, the number of operations closed by investment size tends to a larger number in larger deals. While the number of deals of €500k or less have decreased considerably, the number of larger deals have gone up notably. This might be understood as an increasing number of companies maturing and reaching later stages of funding.

To properly ensure the aforementioned, in the following figure we show the breakdown of the investment activity by year of foundation of the company:

Startup investment activity (Jan-18) by year of foundation


Our previous statement is reinforced by this figure. The large transactions take place on established companies. In general, the more years a startup survives, the more established it is. As we observed, in average, the startups that were previously founded are those who raised more funding. That makes sense because normally an older startup has a bigger team and unless it has reached breakeven, it will need more funds to survive.

Startup investment deals by Region



Regarding the breakdown of startup investments by region, Barcelona, Madrid and Valencia bolster their position in the top of Spanish regions:

  • Cataluña (mostly in Barcelona) stands with 9 deals closed and an investment of €19 millions
  • Madrid gathers 7 deals and an investment of €148 million (€143 million in Cabify)
  • Valencia up to 3 deals and €23 million (€20 million in Hawkers)

Operations January 2018: