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Spanish Startup Ecosystem
Barcelona Digital Hub Opportunity to foster the ecosystem
DIGITAL STARTUP ECOSYSTEM OVERVIEW 2015
2
STARTUPS IN SPAIN More than 20 years creating tech companies
0
1.500
3.000
4.500
6.000 NASDAQ index & founding date of Spanish startups
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
.com crisis economic crisis vs growth mobile companies
4 Source: Novobrief, Vitamina K
STARTUPS IN SPAIN Spain: The digital sector continues to grow
Digital sector to account for 3.1% of Spain’s GDP in 2016, €34.9 billion Telco-driven sector 2,638 startups +26%Year-on-Year (YoY) 3 main hubs: Barcelona: 26% of all startups,+16% (YoY) Madrid: 27%, +25% (YoY) Valencia: 14%, +32% (YoY)
5 Source: Boston Consulting Group, McKinsey, Startupxplore
STARTUPS IN SPAIN Talent in Spain: competitive workforce, hard to find
Source: AngelList
SPAIN
MADRID
Less expensive to build companies Healthy developer density BUT Technical talent at big firms Hard for startups to attract that talent Lack of big nation-wide success Source: Atomico, Stackoverflow
USD0 USD30000 USD60000 USD90000 USD120000
San Francisco
New York
UK
Europe
Ireland
Sweden
Germany
France
Italy
0 22.500 45.000 67.500 90.000
San Francisco
London
Paris
Moscow
Istanbul
Berlin
Stockholm
Lisbon
Oslo
Adam Sedó, PR Manager Amazon
Spain: “Tech talent in Spain is abundant,
but most importantly
available”
Average tech salary
Number of developers
6
Barcelona and Spain’s climate, lifestyle, talent pool, low cost structure and other factures have helped it attract significant foreign talent (founders, employees and investors)
STARTUPS IN SPAIN Spain: attracting talent from abroad
Alex Puregger (Fon)
Marek Fodor (Atrapalo, Kantox)
Philippe Gelis (Kantox)
Dominique Leca (Stuart)
Ben Askew-Renaut (Packlink)
Sacha Michaud (Glovo)
Mauricio Prieto (eDreams)
David Okuniev (Typeform)
Gustavo GBrusilovsky (BuyVIP)
Conor O’Connor (Hot Hotels)
7
Source: Novobrief
2015, RECORD YEAR €500m + raised by Spanish startups for the 1st time ever
222
286
535
122 135 149
0
150
300
450
600
2013 2014 2015
Investment received by Spanish startups
Investment (m€)
More quality and mature startups Growth capital mostly provided by international VC firms More local talent available
Steady growth in startups, exponential growth in fundraising
2015 2014
+29% (YoY)
+10% (YoY)
+87% (YoY)
+10% (YoY) Deals
Capital raised
8
MEGA ROUNDS 13 rounds bigger than €10m
2013 2014
2015
2X €10m+ rounds in 2015 vs. 2013 and 2014 combined
9
HEALTHY MIX OF INVESTOR TYPES VCs and business angels as key ecosystem drivers
Source: Venture Watch
59% (69) 43%
(69)
15% (17)
27% (37)
0%
25%
50%
75%
100%
125%
2014 2015
Distribution of deals by investor type (Q1-3 2015 vs. 2014)
Venture Capital Business Angel BA Network Public funding Corporation Corporate VC Crowdfunding Accelerator 10
WHERE DOES THE MONEY GO? An ecommerce (or mobile classifieds) country
Source: Venture Watch
0 17,5 35 52,5 70
Ecommerce
Marketing
Lifestyle
Fintech
Travel
Communications
Education
Gaming
Data
Food
Top investment sectors 2013-15 (number of deals)
€0 €100 €200 €300 €400
Ecommerce
Fintech
eGovernance
Security
Marketing
Communications
Employment
Gaming
Data
Lifestyle
Sectors that have received most investment volume 2013-15 (M€)
11
FOREIGN INVESTORS NOT ONLY COME FOR THE SUN Growth capital mostly provided by international investors
Most ever: 44 VCs Fueling growth: 73% of all capital invested in 2015 Only one round of €10m+ (Jobandtalent) with no participation of foreign VCs
35%
15% 19%
13%
17%
In what type of rounds did foreign VCs participate in in 2015?
€1 to €5m €6 to €10m €11 to €15m €16 to €20m €20+m
Source: Novobrief 12
FOREIGN CAPITAL: 3 MAIN SECTORS International investors mostly invested in these sectors
Wallapop, Letgo, Fever
Accel Partners Fidelity Growth Partners Europe Northzone VC 14W Insight VP Naspers Limited
Kantox, Novicap, peerTransfer, Digital Origin
Bain Capital Spark Capital Partech Ventures IdInvest Partners Techstars Ventures Tekton Ventures QED Devonshire Investors Accel Partners
CartoDB, Typeform, Userzoom
Earlybird VC Accel Partners Index Ventures Salesforce PNC RTA Ventures TC Growth Partners StepStone Group
MOBILE MARKETPLACES FINTECH ‘PURE SOFTWARE’
13
A DIGITAL HUB Barcelona drives digital economy
10,700 ICT companies 73,000 employees €14.5b in turnover (1/5 of Spain) €214m in R&D Barcelona startups:
Revenue: €6b Workforce: 9,500 International activity: 60% are active abroad
Source: Barcelona Activa (early 2015) & BCN Tech City survey 15
A DIGITAL HUB Barcelona startup ecosystem
Source: BCN Tech City / Startupxplore
YOUNG: 4.8 years
MARKET: 41% B2B 26% B2C 33% B2B2C
SECTORS: 13% media 12% mobile 11% enterprise 6% marketing
FUNDING: 52% have received investment from business angels 33% went through an accelerator
INTERNATIONAL: 60% active outside of Spain, in more than 50 countries
16
A DIGITAL HUB Education + entrepreneurs + funding + public institutions/coworkings = success
Education
Funding
Entrepreneurs
Accelerators
* Non representative 17
A DIGITAL HUB Barcelona’s ecommerce & mobile economy
Source: Startupxplore
0,0% 3,5% 7,0% 10,5% 14,0% 17,5%
Ecommerce
Mobile
Enterprise
Marketing
Other
Travel
Communications
Health
Consumer web
Media
Education
Sports
Gaming
Software
Most common type of startup in Barcelona (as % of total market)
Ecommerce
13.4%
Mobile
12.8%
Enterprise
10.8%
Marketing
6.2%
Travel
5.9%
Comms
5.7%
Health
5.2%
18
BARCELONA DOMINATES STARTUP INVESTMENTS 60% of all euros invested in 2015 went to Barcelona-based startups*
324
165
20
€0
€175
€350
€525
€700
Barcelona* Madrid Valencia
2015 2014 2013 2011
Source: Webcapitalriesgo, Novobrief * Barcelona and rest of Catalonia
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BIGGEST ROUNDS IN BARCELONA Explosive growth
Source: Webcapitalriesgo, Novobrief
€92
€40
€30
€15
€13
0 25 50 75 100
Letgo
Wallapop
UserZoom
Digital Origin
Typeform
Kantox
Softonic
Deporvillage
Loanbook
Marfeel
Largest investment rounds in 2015 (€m)
€264m invested in Barcelona startups Hypergrowth: +96% (YoY) 92% of all capital invested inall of Spain in 2014 (€285m)
20
€6
€10
€4 €3 €3
BARCELONA’S TOP SECTORS Mobile classifieds, ecommerce & fintech
Source: Webcapitalriesgo, Novobrief
61% 13%
10%
3% 13%
Startup sectors that attracted more investment in 2015
Ecommerce ‘Pure software’ Fintech Health Other
Wallapop, Letgo & other ecommerce/classifieds startups lead the way Enterprise technology represented by UserZoom, Typeform, comes in second Fintech (payments - Digital Origin, FX - Kantox) third 5 investment rounds of €1m+ for health startups
21
INCREASING M&A ACTIVITY Creating wealth through exits
Trovit! Akamon! La Nevera Roja*!
Founded in…! 2006! 2011! 2011!
Number of years to exit! 8! 4! 3!
Selling price! €80m! €25! €80m!
Rounds of funding!1
(€150,000)!
3+
(€2.8m)!
3+
(€10m)!
Revenue in last full fiscal year
before exit!€17.5m (2013)! €15m (2014)!
€2m
(€40m in reported restaurant sales)!
EBITDA in same period! €6.2m! €800K (profit)!
Undisclosed
(not profitable)!
Revenue multiple paid by acquirer! 4.5X! 1.6X! 40X!
Employees! 92! ~ 100! ~ 40!
Stake (%) of founders at time of
exit!~ 90%! ~ 78%! ~ 30%!
Founder earnings! €72m! €19.5m! €24m!
Investor earnings! €8m (57X)! €5.2m! €48m!
SIGNIFICANT EXITS IN RECENT YEARS Key to spark entrepreneurship, new startups and redistribution of wealth More than $155 million in exits in past two years Recent exits:
Trovit (Next Co): €80m bodas.net (Weddingwire) Akamon (Imperus): €25m Icebergs (Pinterest) Ducksboard (New Relic) Nubera (Gartner)
Source: Novobrief *Madrid-based
22
EUROPEAN CONTEXT Low density of business angels
Source: Atomico / AngelList
0 625 1.250 1.875 2.500
London Paris
Berlin Helsinki Moscow Istanbul
Amsterdam
Stockholm Munich Zurich Dublin
Copenhagen Vienna
Hamburg Brussels
Oslo
Density of business angels in Europe
BARCELONA MADRID
0 0 0 0 1
Helsinki Zurich
Brussels London
Amsterdam Dublin
Paris Stockholm
Copenhagen Berlin
Munich
Oslo
Vienna Hamburg Moscow Istanbul
Business angels per ,000 people
BARCELONA
MADRID
161
0.1
0.05
168
24
EUROPEAN CONTEXT Spain accounts for small fraction of EU exits & M&A value
93%
7%
M&A deals in Europe (Q1-3 2015)
Rest of Europe Spain
7% of all EU deals 446 in EU:
Germany: 88 UK: 62 Israel: 50 Spain: 29 France: 28
6% of all M&A value (€8b)
Telco-driven
Source: tech.eu 25
EUROPEAN CONTEXT Limited impact of Spain’s ‘Ley de emprendedores’
Spanish government approved in 2013 ‘Ley de emprendedores’, an entrepreneur-friendly law to promote startups and the creation of new companies Its impact has been very limited Spanish entrepreneurs and investors continue to face significant challenges:
High taxes at the early stage for founders
Exit tax when expanding and changing residency to a non-EU country
Lack of stock option schemes due to high taxes
High taxes for business angels
Source: tech.eu 26
CONCLUSIONS 2015: A YEAR TO REMEMBER
Record investment numbers & notable exits 2015 was a record year for Spain and Barcelona on various fronts: for the first time ever, Spanish technology companies received investment of more than €500 million, fueled by the participation of a record number of international investors (44 VC firms) and producing notable exits such as Trovit, La Nevera Roja or Akamon. Worldwide category leaders Startups such as Wallapop and Letgo -both based in Barcelona- have become category leaders in the mobile classifieds sector, becoming the two most well funded startups in the world to try to conquer the US market. Scytl, born in 2002 and the most successful spin-off in the technology history of Spain, has also consolidated its position as the leading eGovernment company in the world and plans to IPO on the Nasdaq in 2017. Things can, and should, get better Investment per capita in Spain represents a small fraction compared to other European countries, and so do the number of startup exits or business angels. This, coupled with unfriendly laws for entrepreneurs and investors (exit tax, no stock options and high taxation of business angels’ activity), pose a strong challenge for the development of the country’s technology ecosystem.
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All of the charts, tables and figures that are included in this report come from publicly available sources. Special thanks to:
METHODOLOGY
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