Founders’ warm welcome in Barcelona

In the FT-Statista-Sifted ranking of start-up hubs for 2024, Spain and Portugal score higher overall than all other European countries, with the exception of the UK and Germany.

And, within Spain, it is the programmes based in Barcelona that have scored best, because of their lower costs, the city’s supportive ecosystem, and a wealth of available talent.

Data provider Startup Heatmap Europe ranks it third, behind London and Berlin, while online publication EU-Startups.com ranks it sixth. In both cases, Barcelona is ahead of Madrid and, with the exception of Munich, is the only city in the top 10 that is not a financial capital.

Entrepreneurs cite the Catalan city’s welcoming and accessible programmes, and the support for them, as well as the weather, culture and lower cost of living.

“If you want to come and start something, you can because of the private support networks,” says Elliott Locke, co-founder of BCN FinTech, an non-profit organisation that aims to strengthen Barcelona’s nascent fintech community.

“Barcelona is a big city but it’s not. Maybe it’s that small town in a big city feel that means that, once you’re in the system, you can move quickly.”

According to Tech Barcelona, one of several hubs that serves the city’s thriving start-up scene, there are 2,102 start-ups in Catalonia, 4 per cent up on last year. In 2022, they had combined revenues of €2.2bn and employed 20,665 people.

There are slightly more start-ups in Madrid but, according to Miguel Ferrer of Adigital, a tech hub in the capital, these figures are open to dispute as it isn’t clear whether the definition of a start-up, as laid down in the new start-up law, is the one being applied.

The start-up law, which came into force in January 2023, aims to streamline the bureaucracy, increase the incentives, and lower the minimum capital required to set up a business in Spain.

Miquel Martí, chief executive of Tech Barcelona, lists Barcelona’s advantages as good infrastructure, existing research centres, political support, and business schools of a high standard — all of which are leading international companies to choose the city for its digital hubs.

Martí agrees that Barcelona is more accessible to outsiders than Madrid.

Madrid is more orientated to the internal and Latin American market and has a smaller international business population. The lingua franca in the Madrid start-up scene is Spanish; in Barcelona, it’s English.

“Catalans have always been entrepreneurial,” says Àlex Rodríguez Bacardit, founder and chief executive at MarsBased, a development consultancy specialising in web and mobile applications. “Before, we opened shops. Now, we do start-ups. In Madrid, there’s less pressure to create business because so much of it is already based there.”

As Ferrer points out, Madrid has the advantage of being the financial capital, with a higher concentration of venture capital groups, and is home to many of Spain’s largest companies and banks.

Catalans have always been entrepreneurial. Before, we opened shops. Now, we do start-ups

As a result, Madrid is dominated by digital services, ecommerce and real estate start-ups; whereas, in Barcelona, it’s fintech, mobility, logistics, design and, above all, health.

For the Catalans, the silver lining of the pandemic has been the rise of telemedicine and the need for tech companies aligned with health and pharmaceuticals. This is aided by the fact that groups such as Novartis are based in the city, soon to be joined by AstraZeneca.

There are downsides, however: notably, Spain’s bureaucracy; unhelpful tax law; and punitive social security regime. For these reasons, many start-ups are registered outside the country. “If Spain really wants to compete with Germany, France, and the Netherlands, it has to fix the bureaucracy that slows everything down and accept that it might lose some revenue in the short term,” says Locke — even after certain improvements under the new start-up law.

Meanwhile, the Portuguese capital Lisbon is also rising up the rankings, though is far from realising its potential, according to Barcelona-based Portuguese entrepreneur Julieta Rueff. She has just completed a funding round for FlamAid, a personal defence gadget for women that, as well as sending out a 110 decibel alarm, sends GPS coordinates to police and emergency services.

“Barcelona is very welcoming and people are prepared to help you,” says Rueff. “Portugal is much more conservative. There’s less support than here.”

While tax breaks have made Lisbon attractive for digital nomads, Rueff says “it’s also difficult to get support if your company isn’t based in Portugal. It makes sense because it means the money stays in Portugal but it also means investors are looking elsewhere.”

Barcelona boasts successes, despite the bureaucracy. One example is Glovo, the now global food delivery company established in the city in 2015 and currently valued at $1.2bn.

But Rodríguez laments that Glovo is seen by some as a role model for Barcelona start-ups when so many others are trying to make a more positive social impact. “So you can get a burger delivered at 2am, but where’s the innovation in that?” he asks. “What does it contribute to society?”

He prefers to speak about Parlem, a telecoms start-up that communicates primarily in Catalan, thus cutting itself out of global markets, but succeeding in the city precisely because of its local appeal.

Rodríguez accepts, however, that such fierce independence can curb growth: he does not think Barcelona will ever overtake London, Paris or Amsterdam as Europe’s leading start-up centre.