Despite the implementation of specific programs aimed at encouraging entrepreneurial projects in the different Autonomous Communities of the country, it is the large cities of Madrid and Barcelona that continue to concentrate more than half of the investment movements that take place in the Spanish territory.
Following the analysis of the startup ecosystem in Catalonia and the latest study published by EAE Business School on the Entrepreneurial Ecosystem in Spain, In today's article, we analyze the national situation in terms of the main metrics related to everything related to investments and investors.
The hubs of Madrid and Barcelona account for 74% of investment, and they lead the ecosystem both in terms of investment volume (Barcelona) and in the number of investors able to attract (Madrid). The study also highlights the figures that other cities such as Valencia and Bilbao achieve in terms of the number of startups per capita. -According to the Investment Trends in Spain Q1 2021 Report of the Bankinter Innovation Foundation, investments in foreign-funded startups (led by the United States and followed by the United Kingdom) reached more than 900M euros in a single quarter, equivalent to 84% of the total invested.During the second quarter of the year, startups also achieved record numbers in terms of investment volume. Specifically, a total of 1,066 M euros among the 99 investment transactions carried out in Spanish companies. In total, during the first half of 2021, startups in the country raised 2,170 million euros, much higher than the 578 million euros obtained during the same period in 2020.
Despite the effects of Covid-19 entrepreneurial intention is growing again in Spain. As demonstrated by the EAE Business School study, in Spain, entrepreneurial intention is sensitive to the economic cycle. Faced with the shortage of employment, and just as it happened during the financial crisis experienced in Spain between 2008 and 2012 when this figure registered its highest figure (around 12%), entrepreneurial intention, during the health crisis caused by Covid-19, has managed to keep rising. Continuing, thus, with the positive trend experienced since 2016. Although, according to INE data, the cumulative net creation of companies in the first half of 2021 is positive (during this month of July the figure corresponding to the creation of new companies only fell in Navarra (-35.5%) and Cantabria (-32.0%) compared to that achieved in July 2020), there is one fact to take into account: Spain is the first country to fear failure at the international level, in relation to other high-income economies. Although it is true that currently the main motivation for entrepreneurship is to create wealth or achieve a very high income, the figures show that the new entrepreneur profile is much more social, with more and more products or services being launched on the market with the intention of improving people's quality of life.
The sector where most businesses are undertaken is services and consumption, at 70%, followed by industries such as health, artificial intelligence and Proptech, who have managed to overcome the effects of Covid-19 on the entire ecosystem and get out Beneficiaries. On the contrary, in recent months, sectors such as fashion, marketing and blockchain have lost momentum when it comes to creating innovation projects.
Why start a business in Spain?
In previous articles, we analyzed the main advantages and disadvantages of entrepreneurship in Spain. In addition to attractions such as good weather, the good gastronomic offer offered by the country, a cheaper cost of living compared to most European cities, and despite the fact that the level of opportunities offered by private funding for entrepreneurial projects (both in Spain and in Europe in general) is well below other markets such as Asia or the United States; from European Institutions and, in the case of Spain, also national and regional institutions, there are numerous funding lines for startups with Grants for non-refundable funds, soft loans and endorsements to provide them with access to credit.
In addition, according to the latest issue of the magazine FDi Intelligence, a publication belonging to the Financial Times, which analyzes the European cities with the best prospects for the creation of startups, Madrid is ranked as the sixth most attractive city, followed by Barcelona in seventh place. Despite the advantages and facilities mentioned above, during the years 2019 and 2020, only 38.5% and 34.6% of the population, respectively, stated that it is easy to start an entrepreneurial project in Spain. In addition, in the near future and in accordance with the Draft Law for the Promotion of the Emerging Enterprise Ecosystem approved last July, startups will see a 10 percentage point reduction in the tax rate to be applied both to corporate tax and to income tax for non-residents during the first tax period whose tax base is positive and for the three periods that follow, as long as the company continues to meet the characteristics of an emerging company or startup.
As a result of the same Draft Bill, it is expected that startups can apply for deferral of your tax debts (both corporate tax and income tax for non-residents, for a period of 12 and 6 months, respectively) during the first two years in which their tax base is positive and, therefore, they manage to obtain benefits derived from their activity. In this way, Spain, characterized for years by high fiscal costs that affect both the will to undertake and the will to invest, is taking a step forward in encouraging the creation of entrepreneurial projects, stimulating, in turn, investment and the attraction of talent.
