Why Investors Are Looking To Barcelona For The Next Big Thing
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:
- Funding rounds are growing fast
- High degree of innovation
- City brand
- 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.
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.
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.
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!