What is happening with Spanish Startups?
“Spanish startups do not convince the corporate” Or at least that is the idea that appears with increasing force in despite of the entrepreneurial ecosystem that we have in Spain, with many entrepreneurs increasingly professionalized, with a high number of projects competing as equals in international markets, with many potential investors willing to assume higher doses of risk,… At Fellow Funders we have many doubts about this idea, but we do not think it is a crazy statement.
In recent days we have come across two news addressing the subject, an interview published by Jesús Monleón (founder of SeedRocket) in the newspaper Expansión “I miss that Spanish startups stay here” and an interesting article published in Economía Digital “Spanish entrepreneurs do not convince the banks”. Coincidentally, both articles seem to focus on the same idea: large Spanish corporations rarely bet on entrepreneurship, and when they do, they invest in non-Spanish projects.
At Fellow Funders we are always in contact with Investment Funds and Spanish Corporations. In both cases our goal is to actively collaborate with these potential investors to try to develop and professionalize the entrepreneurship ecosystem. However, in recent times we are coming across comments from some of these big players that have surprised us:
- “We only invest in very early stages because that allows us to get a lower valuation of the company and take a significant stake”. What about mentoring and synergy generation? Is this a way to positively incentivize entrepreneurs? Is this venture funding or pure speculation? At Fellow Funders we do have answers to these questions. What is your answer?
- “We invest in startups but preferably foreign ones, in Spain we do not find differential projects that bring us added value”. So what is the point of the entrepreneurship ecosystem in Spain? To reduce unemployment statistics? Why do Spanish startups have access to European funding far superior to all other countries? What are the European institutions seeing that the big Spanish corporates are not recognizing?
- “In Spain there is a lot of fintech but with little sense. I prefer to invest in the UK, USA and even in Latin America”. So all the ex-managers of the financial sector who have bet on developing fintech companies are really wasting their time? Can ideas generated in countries with a radically different idiosyncrasy to the Spanish one be directly implemented in our market?
At Fellow Funders we believe that if Spain really wants to develop a strong entrepreneurial ecosystem with sufficient added value, which will allow it to position itself properly in the new industrial revolution we are witnessing, there must be a great agreement between all those who interact in this ecosystem:
Public Administrations, Entrepreneurs, Investors, …. And a very important part of this ecosystem must be the large corporations. How can an entrepreneurial ecosystem be developed in Spain if the large companies consider that Spanish startups do not provide them with innovation, differentiation with respect to the competition, synergies, … in short, do not generate sufficient added value?
At Fellow Funders we believe that Spanish entrepreneurs are moving in the right direction by increasingly professionalizing their startups, developing business models where technology is a differentiating factor but not the only one, and where the end customer and the market are the ultimate goal of their company. Does this business vision not fit with the vision of the managers of large Spanish corporations? At Fellow Funders we believe it does, so what’s the problem?
At Fellow Funders we believe that perhaps the time is coming when large Spanish corporations begin to see entrepreneurship as a support and not pure competition, and even a cheap way for others to do the R&D they need.
In a startup everything is discussed, there are no immutable truths, the structures are extremely flexible, the business model can be adapted according to the circumstances, … Is this bad “per se”? Couldn’t large corporations rely on these new entrepreneurs to develop new lines of business and even to help transform their organizations?
Supporting entrepreneurship does not mean organizing contests, providing grants and facilitating coaching. Supporting entrepreneurship means allowing new startups to coexist with large corporations in a symbiotic and non-parasitic way.
If the business models that Spanish startups are developing are not to the liking of large corporations (we should ask ourselves why), large corporations and entrepreneurs should create formal and informal channels of communication, where they can find common ground to help the development of the entrepreneurial ecosystem and, ultimately, the reindustrialization of Spain.
At Fellow Funders we want to help large corporations and entrepreneurs find common ground and provide mutual support. We remain committed to helping Spanish startups and SMEs to regenerate the industrial fabric, but properly assessing the risks and demanding a return appropriate to the risks assumed. Large Spanish corporations must play a key role in this process.