A geographical breakdown of the Spanish investment landscape in 2017: what regions attracted most VC funding?

In the first post in our series about the Spanish startup ecosystem, we looked at the overall funding numbers and trends in the country. Last year there were 195 rounds in Spain, combining for more than €780 million.

Whilst those numbers give an idea of the current health of the Spanish tech market, there’s much more information that can be extracted from the data we’ve been manually collecting since 2013.

As VCs, one of the question we often face from our colleagues from outside the country is: if I’m going to Spain for a few days to meet interesting companies, should I go to Madrid or Barcelona? Or maybe both? What other cities should I visit?

With this post we’ll try to answer some of these questions while giving readers an idea of what Spanish regions attracted most VC funding last year.

Barcelona and Madrid, Madrid and Barcelona

It should come as no surprise to anyone that’s familiar with the Spanish tech sector that Barcelona and Madrid are the two cities that dominate the country’s investment ecosystem.

Both cities accounted for 75% of all funding rounds in Spain and 94% of all investment volume. This has been true for many years now.

What’s also been true since 2013 is that Barcelona (and Cataluña in general) has been the leading Spanish region.

Barcelona-based tech companies closed 98 investment rounds in 2017, half of the total number for the country and pretty much the same number as in 2016. What increased significantly for Catalan startups on a year-on-year basis was the total investment volume, with local companies combining for more than €500 million (Letgo, with its two rounds, accounted for 50% of the total).

On the other hand, in Madrid there were 51 rounds that accounted for almost €240 million, with companies such as Cabify, Logtrust or Fintonic completing investments of more than €20 million each.

Where does the difference between both cities come from?

If we look at investment activity in both cities based on the size of the deals, there are a couple of facts that come to light.

Barcelona saw a significant increase in activity at the seed and pre-seed stage, with almost 50 deals of €500,000 or less, 15 more than in the previous year. Madrid-based companies also experienced an uplift in this bracket, but to a lesser degree.

When it comes to the Spanish capital, what’s interesting is the massive increase in investments between €1 and €5 million compared to a year ago. A total of 19 (the same as in Barcelona) vs. just 5 in 2016; a sign that points to a more mature Series A environment in Spain.

Overall, in 2017 there were 23 rounds in Spain of €5 million or more; 13 of those companies were based in Cataluña versus 8 in Madrid.

No Spanish company outside of Madrid and Barcelona closed an investment of at least €5 million in 2017.

Life beyond the two main cities

As the aforementioned figures and facts present, activity in Madrid and Barcelona dwarfs the rest of the country.

However, we truly believe that good companies can be born in any city, and that’s why we spend a lot of time in regions such as Valencia, Euskadi, Andalucía or Galicia looking for great teams and products.

We put our money where our mouth is, and our biggest investment to date in terms of ticket size took place in a Salamanca-based company (Beonprice), and we’ve also invested in two companies out of the Comunidad de Valencia (Lucera and Iristrace).

Valencia is, in fact, the third Spanish region in terms of investment activity, with 17 deals that combined for €17 million in 2017.

We think that closely looking at Spain’s two main markets makes a lot of sense, but so does keeping a close eye on companies such as Genera Games, Bitnami, Mr Jeff, Resultados Futbol, Blinkfire Analytics, Freepik, Flywire and many others. None of those were born in Madrid or Barcelona, and you never know what kind of companies their employees or founders might create in the future.