Investment in Start-ups remains stable in the first quarter of this year

Fundación Innovación Bankinter is committed to support the Spanish entrepreneurs. Therefore, they have created the Observatorio sobre el Ecosistema de Startups en España (Observatory on the Ecosystem of Startups in Spain) to act as a barometer of the entrepreneurial sphere within the economy. Likewise, it seeks to provide the entrepreneurs a tool of information and detection of useful trends.  

This report is only up to March, so the significant impact of the COVID-19 crisis in the start-ups is not included. However, we can guess the prospects thanks to the results of the “COVID-19 Start-up Impact”  survey launched by Fundación Innovación Bankinter.  

The main conclusions of this report are:  

We can barely see a decrease of the investment activity in start-ups, although higher volume operations are dropping.  

Regarding last quarter, the investment volume acquired by the Spanish start-ups has dropped 50,1% during the first quarter of 2020. Despite that, it is still 22,2% higher than the sum collected during the same period in 2019. 

This means, although there has only been one mega round in the first quarter of the year (Flywire, which affected the investment volume), the volume of the activity in the sector has barely decreased.  

The Fintech sector attracts most of the investment 

This sector, closely followed by Tourism and Travel sector (the most active one), attracts most of the investment.  

By sectors, Fintech is the one that has collected the most investment, with 7 operations that worth €127,28M. But, if we exclude the mega round of the Flywire period, the most active sector and the one that has captured more investment (€21,7M in 9 operations) is tourism and travel, ironically one of the most affected by the COVID-19 crisis.  

Valencia, the city that attracts most investment 

Even though Valencia is the city that attracts most investment, Barcelona and Madrid are still the ones that makes the most operations.   

In terms of cities, Valencia is the one that captures most investment (€114.28M in 3 operations, which represents a growth of the 1.4441,2% compared to the previous quarter). It is followed by Barcelona (€54,97M in 23 operations, which drops by 72.6% compared to the previous quarter), and Madrid (€18,13M in 16 operations, which decreases 89.8% compared to the previous quarter). 

However, if we don’t take Flywire’s operation into account (as it is based in USA), the order by investment volume is Barcelona, Madrid, Córdoba, Salamanca and A Coruña 

Conclusions of the “COVID-19 Start-up Impact” survey 

  1. The level of concern among investors and entrepreneurs is high. They believe that the impact of the situation will be prolonged. 
  2. 85% of the entrepreneurs in the round have been affected in some way. 
  3. Half of the start-up’s founders are going to maintain or increase their teams. 
  4. There is a consensus among investors and entrepreneurs that start-ups valuations will fall between 20% and 60%. 
  5. Most respondents believe it is time to prioritize revenue over growth
  6. Telecommuting is consolidated and only 13% consider returning to the office without any change

In short, although the trends identified in the report speak of a scenario of a general decline in investment activity, this is not yet directly attributable to the COVID-19 situation, and we will have to wait for the following quarters to be able to identify and consolidate trends. Even so, there are opportunities amid the current situation, and it is important to remember that some of the best start-ups in the world have been forged in severe crisis like this one.  

Source: Fundación Bankinter 

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