Regardless of a troublesome 12 months for the worldwide financial system, Spanish tech remained sturdy in 2022. New unicorns had been minted, the nation launched extra cutting-edge startups than ever earlier than and massive funding rounds went to thrilling younger corporations everywhere in the nation.
However that doesn’t imply Spain will escape the tough financial headwinds that lie forward in 2023. Funding will probably be more durable to safe than in earlier years, corporations which have grown quick may have to put off employees and startups might want to present a clearer path to profitability than they’ve up to now.
So what’s in retailer for Spain’s up-and-coming tech sector? Sifted requested founders, traders, authorities and non-profits to provide their predictions for the 12 months forward.
Right here’s what they needed to say.
Javier Suarez — cofounder, Oliva: “Expectations are at the least thrice increased”
2023 will probably be a tough 12 months for startups in Spain and past. Other than early-stage offers, there was an unimaginable decline in capital raised for Sequence A and above in contrast with earlier years. Valuations have dropped considerably and VC expectations are at the least thrice increased. In brief, sustainable unit economics and strong development are the secret now.
And sadly, these powerful instances will proceed till public markets begin to present indicators of stability. Relying on how lengthy this takes, we would see an enormous wave of useless startups fixing “nice-to-have” issues versus “core” issues.
However though it might sound like doomsday and all of us hate to see startups die, on the finish of the day nearly all of capital must be funnelled in the direction of corporations fixing actual issues at scale with sustainable fashions. The world wants it.
On a optimistic notice, there’s a huge quantity of dry powder that must be deployed and the perfect will proceed to get funded. My recommendation to all founders: put your power into changing into best-in-class and funding will fly your manner.
Carina Szpilka — basic companion, Okay Fund: “A sport with new guidelines”
Regardless of a frozen 2022, 2023 will see a restoration in funding exercise. There’s loads of capital to be put to work and Spain has many good tasks and nice potential to proceed being an exporter of expertise. That is notably true in sectors like synthetic intelligence, knowledge science and local weather tech.
Nevertheless, we will already see an important change in standards in the case of selecting funding targets. It’s not solely exponential development that’s required, but additionally a transparent path to profitability and a confirmed ESG technique.
In brief, we will probably be enjoying a sport with new guidelines, however expertise will proceed to be the important thing to fixing the main issues we face as a society in 2023 so there will probably be strong funding urge for food.
Oriol Juncosa — managing companion, Encomenda VC: “An increase within the round financial system”
In 2023 expertise produced by startups will create important productiveness development throughout all sectors for the good thing about corporations, workers and customers.
As an illustration, AI will more and more be utilized by corporations to resolve huge real-life issues in sectors like finance, well being, HR and local weather, because of the launch of ChatGPT and different simply accessible fashions.
As the straightforward cash cools down, we are going to see a rise within the utilization of round financial system fashions (recycling, leasing and repairing) and automation applied sciences with a major optimistic impression on the atmosphere.
Lastly, there will probably be a transition of blockchain consultants from the “crypto winter” to begin tackling transparency, traceability, decentralisation and effectivity points in sectors like finance, well being, provide chain administration and media with blockchain applied sciences.
Enrique Linares — cofounder, LetGo: “An period of generation-defining startups”
In the identical manner that Idealista and eDreams — two of essentially the most profitable Spanish startups — or Uber and Airbnb within the US got here out of recessions, 2023 will convey a number of the nice successes within the coming years.
We’ll see an growing variety of new founders coming from prime positions in profitable startups. They may convey related experience, information and an important community that can maximise the possibilities of success.
Founders will give attention to constructing strong and extremely environment friendly startups that may stand up to a recession. Attaining early founder and product-market match, strong income fashions and money effectivity will probably be paramount.
These will in all probability lead, as occurred in prior crises, to the start of generation-defining startups and nice investments, fuelling new development into the Spanish ecosystem.
Marta-Gaia Zanchi — managing companion, Nina Capital: “Spain’s constructing groups at a fraction of the associated fee”
Subsequent 12 months, each corporations and VC corporations will come again to market in an unforgiving atmosphere. I count on a troublesome fundraising time for entrepreneurs and fund managers alike by mid-year. Crossover LPs [those who don’t only invest in VC funds] might retreat from the sector for a while, and over-allocated LPs requested to re-up [reinvest in a VC fund] at ranges above 2023 budgets might rethink their commitments or skip follow-on funds completely.
For rising managers beginning model new funds, it’ll be particularly arduous to launch — established managers with early-stage methods will probably be in a privileged place to boost new funds.
It’s not all dangerous information although, and Spain might show to be the place to be for startups. We’ve seen little or not one of the fundraising exuberance that came about within the US, the UK and a few western European international locations in 2021. Prudent valuations coupled with the power to construct sturdy technical groups at a fraction of the price of these different international locations make native corporations higher in a position to make it by the 12 months, and maintain their development.
Helena Torras — managing companion, Paocapital: “Spain has an enviable place”
There was already a slowdown on choice making and decreased tickets and valuations in late 2022, and 2023 is not going to be completely different. Furthermore, traders must care for their overexposed portfolio, limiting new investments to solely distinctive alternatives. 2023 will probably be a 12 months of polarisation: will probably be summer time for the excellent startups which have environment friendly development, extraordinary metrics and the very best expertise — and will probably be winter for all the remainder.
With traders getting extra selective and searching for environment friendly development, I need to convey some optimism. The very best classic years of enterprise capital are those in powerful moments, akin to 2010. 2023 has all of the substances to help a number of the most profitable startups within the coming years and Spain has an enviable place with its rising and consolidated entrepreneurial tradition and an important mixture of expertise, firms, startups, funds and public help.
Being particular, sustainability tasks could have a superb outlook within the years to return as extra traders are placing a watch on them.
Aquilino Peña — managing companion, Okay Fund: “Much less noise, decreased price base and laser-focused corporations”
General in Spain, traders have continued to be energetic. 2022 has been a humorous 12 months, with some traders passing on offers that may have been completed a 12 months in the past. Nevertheless the steadiness stays optimistic, with new unicorns added to the listing, akin to Factorial, and a few good exits.
2022 has additionally been the 12 months of the long-awaited “startup regulation” with some essential (albeit considerably conservative) laws on visas, inventory choices, enterprise angels and carried curiosity tax remedy.
We have a look at 2023 with unchanged perception within the energy of tech to vary society for the higher, whereas creating very massive alternatives to convey worth for our traders. Much less noise, decreased price base and laser-focused corporations will produce an important classic of founders. And on the regulation entrance, the business will give attention to the altering limits for pension funds to spend money on different property (comisiones in cascada) which can unlock swimming pools of capital to the enterprise asset class. We consider these are all good substances to maintain a optimistic outlook regardless of worldwide gloomy sentiment.
Mar Galtés — journalist and company improvement director at Tech Barcelona: “The rising significance of a human contact in tech”
At Tech Barcelona we consider that the industries that make sense to foster most are those that have an effect and rework the way in which folks stay and work and work together in cities, like well being and wellness, mobility, retail and fintech.
Optimistic impression is changing into the brand new black within the tech business — corporations can not keep away from having an moral and sustainability goal.
We’ll additionally begin to see the rising significance of a human contact in creating expertise, such because the ethics debates which can be surrounding synthetic intelligence. Europe, and particularly Barcelona, can play a task as a pacesetter on this transformation and revolution as we construct new applied sciences.
Laura Urquizu — CEO, Pink Factors: “We’ll see a spike in cybercrime”
All financial indicators make us suppose that the macroeconomic atmosphere received’t get higher within the brief time period. It’ll stabilise at finest. This, along with difficult-to-access enterprise funding, will pose a major problem for rising digital corporations. There will probably be a pure discrimination between those that may turn into strong companies and those that can’t function with out capital injections.
Nevertheless, these instances additionally create nice alternatives for these startups that leverage innovation and flawless execution to face out and truly turn into essential for his or her shoppers.
One other pattern that comes with financial uncertainty and recession, and that I observe very carefully because of the area Pink Factors operates in, is cybercrime persevering with to spike. As patrons are extra delicate to cost, scammers use faux gives so as to add confusion into {the marketplace} and steal purchases away from legit corporations, which may turn into a very severe menace to companies’ on-line gross sales.
Francisco Polo — excessive commissioner, Spain Entrepreneurial Nation (authorities physique): “Some of the engaging locations for entrepreneurs”
Spain will turn into one of the crucial engaging locations for revolutionary entrepreneurship.
With the approval of the Startups Act in December 2022, Spain has accomplished a brand new regulatory framework that’s going to revolutionise the entrepreneurial sector.
To start with, we’re going to revolutionise the attraction of expertise with the very best inventory choices scheme in Europe, prolonged three-year visas for entrepreneurs, traders, professionals and their households and a brand new visa for digital nomads.
We’re additionally going to revolutionise the attraction of funding to the nation, with measures to cut back forms for worldwide traders, a brand new regulation for funds and new tax deductions for enterprise angels.
And all of this accompanied by a revolution within the public sector, which is now by the facet of entrepreneurs. In Spain will probably be doable to launch a startup with just one euro of capital in simply six hours.
Due to all of this, in 2023 Spain will turn into one of the crucial engaging locations for professionals, traders, entrepreneurs and innovators from everywhere in the world.
Tim Smith is Sifted’s Iberia correspondent. He tweets from @timmpsmith
