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Madrid, Spain — Start-ups spawned from economic crisis, by Financial Times

Madrid, Spain — Start-ups spawned from economic crisis, by Financial Times


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August 24, 2016 11:55 am

Madrid, Spain — Start-ups spawned from economic crisis

Tobias Buck, Financial Times

The economic downturn has provided plentiful and cheap engineers


fac99c77.jpg
iStock

Population (city / metropolitan area): 3.3m / 6.5m
Private funding for Spanish start-ups 2015: €659.4m
Fundraising for start-ups 2015: €3.36bn

The Spanish capital is famous for many things — the nightlife, the food, the football, the paintings. But as a location for start-ups and the high-tech industry? Not so much. Madrid has long been Spain’s business and financial hub, but the corporate scene is dominated by traditional sectors such as banking, energy and construction.

More recently, however, there have been encouraging signs of change. Last year, Google opened one of its innovation campuses in Madrid — one of only three in Europe. Amazon last month set up a tech hub in the city, and is planning to hire 100 software engineers by the end of the year, while BBVA, the Spanish banking group, has a fintech incubator in the capital. There is also a rapidly growing number of Madrid-based start-ups — such as ride-hailing app Cabify — that are raising both money and interest across the continent and in the Americas.

The case for: Spain’s economic crisis has been terrible for the country. For budding high-tech entrepreneurs, though, the downturn and property bust has not been altogether bad: housing and office space are cheap and relatively plentiful, the cost of living is a fraction of that in London or San Francisco. More importantly, there is an abundance of well-trained engineers and IT specialists willing to work for salaries that would seem derisory elsewhere. Javier Cámara, co-founder of social network beBee, says a good IT engineer can be hired in Madrid for an annual salary of about €30,000 — in London the average yearly salary for a software engineer is £64,917, according to Reed, a UK employment agency. The Spanish capital is also home to three first-rate business schools, IE, IESE and Esade, so there is no shortage of managerial talent.

The case against: Tech founders tend to complain about the same trio of problems: bureaucracy, taxes and lack of funding. Spain’s conservative government has taken some modest steps towards easing the path for new businesses — but the process remains cumbersome all the same. Taxes are comparatively high, especially for early-stage ventures that are still lossmaking. And Spain’s venture capital scene is severely under-developed, often forcing start-ups to seek funding in the UK, Germany or even the US.

Local heroes: beBee is a fast-growing professional social network that allows users to relate with one another through shared hobbies and affinities. Founded only last year, it has now completed two rounds of financing, raising €5.6m in the process. It has 11m users, and is aiming for 40m users two years from now.

Milan, Italy’s biggest start-up hub

Renzi government aims to foster innovative young companies but the red tape remains daunting

Cabify, a taxi-booking service, has won funding from Rakuten, the largest Japanese ecommerce company by sales. As one of several Uber rivals around the world, it has a particular focus on Spain and Latin America.

Show me the money: Spain’s venture capital scene is perhaps the most obvious Achilles heel. According to the latest annual report from Ascri, the Spanish association for capital, growth and investment, “2015 was a record year as regards financing of Spanish start-ups”. It pointed out that 200 investors participated in 1,527 transactions, spending €659.4m in total. That was an increase of 83 per cent compared with the previous year — but still only a fraction of the funds that are raised and invested in other European countries.

What the locals say: “There is a lot more entrepreneurial spirit in Spain since the crisis. There is less work so people want to go out and start their own project,” says Mr Cámara.

Adam Sedó from Amazon Spain says: “Tech talent in Spain is abundant and of high quality, but most importantly [it is] available.”


Read on https://on.ft.com/2bmz9K2



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What is beBee?

beBee is the next big thing in professional social networking. Our mission is to create a professional world that is more open and connected. beBee is disrupting professional social networking by establishing connections through passions and common interests that create more professional engagement and deeper and more successful business relationships.




Comentarios
Marta Carretero Garcia

Milos Djukic

hace 7 años #18

#21
Thank you very much Lisa Gallagher, my good friend from USA.

Pascal Derrien

hace 7 años #17

We have witnessed a similar scenario here in Ireland post recession I guess the commonality between the two countries it that they were hit hard in the main components of their GNP leaving no choice to choice except either rebound in some shape or form or emigrate, well done Bebee :-)

Lisa Gallagher

hace 7 años #16

#19
I believe we will too and I so understand your comment Milos Djukic, our good friend from Serbia!!

Lisa Gallagher

hace 7 años #15

#15
So many regulations Javier beBee, the data comparing other Countries was quite interesting too. Maybe I'll move to Singapore, Denmark or N.Zealand ;-) Well I see beBee and it's growth as major positive for Madrid. I hope they loosen the ropes.

Milos Djukic

hace 7 años #14

Very interesting article Javier beBee. Thanks, I believe that we will win. You know I am from Serbia :)

Lisa Gallagher

hace 7 años #13

#15
Thanks Javier beBee, will read it after dinner!

Gert Scholtz

hace 7 años #12

Javier beBee The article refers to beBee as a local hero. I think beBee is becoming and international hero. As for the entrepreneurial spirit of beBee, the words of the song applies: "When the going gets tough, the tough get going".
#13
Lisa Gallagher it is not only about taxes. It's about how difficult is to set a company here... Here you can find details http://www.thelocal.es/20151028/spain-ranks-among-worst-nations-for-starting-a-business
#12
Paul \ you are right.... That is a good point

Lisa Gallagher

hace 7 años #9

#11
What is the tax rate on businesses in Spain Javier beBee? I'm sure it's more complicated than just the tax rate? At any rate, good for you and beBee, you're doing this! Hopefully, your company may set a new precedence​?!
#10
I am proud of having been an important IT guy for Oracle.... I really think Spaniards are creative and really great. But.... As Paul \ says, Spanish politicians are not so smart... They don't understand anything. Entrepreneurship is a high risk sport in Spain.

Lisa Gallagher

hace 7 años #7

#6
Must visit Madrid one day!
Top European Scaleups chosen for prestigious Silicon Valley program https://www.bebee.com/content/736498/743332
We will keep our IT FACTORY in Madrid , We say " De Madrid al cielo" , that means “From Madrid to heaven.” Once you’ve been to Madrid, the only place to top it is heaven.:-)
Tech talent in Spain is abundant and of high quality !

Lisa Gallagher

hace 7 años #3

Excellent article about beBee. Its great to hear Madrid, Spain is becoming Techie! Great write up about beBee and you Javier beBee. I also learned something about your economy as well!

Mamen 🐝 Delgado

hace 7 años #2

Qué artículo tan estupendo de Financial Times!! Qué bien contado... Great article by FT!! Very well explained...
cathal Morrow

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