'It's possible to find great talent for a fraction of the cost of elsewhere'
The Local · 21 Sep 2015, 10:29
Published: 18 Sep 2015 15:49 GMT+02:00
Updated: 21 Sep 2015 10:29 GMT+02:00
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What is the startup environment like in Spain?
On the one hand there is incredible technical talent here and brilliant facilities that train very smart people, on the other hand there just are not comparable opportunities to tech clusters like London, or in the States, for that talent when they complete their training.
Although there's little unemployment for computer programmers, an upside for the entrepreneur is that it is possible to employ great talent for a fraction of the cost incurred in a more competitive environment.
Spain has a lower cost of living and therefore provides a better quality of life for a bootstrapping entrepreneur, but there are negative factors also. There seems to be pervasively antiquated attitudes throughout the business culture and practice. This is gradually changing.
From what I've observed, access to finance is problematic, as is attracting foreign investors. Spanish investors have been risk averse and have preferred to put money into Spaniards executing business models that have been proven elsewhere.
As the economy has been growing, so too has the volume of capital flowing into startups and the number of VC backed companies has started to increase exponentially.
Aside from these factors, the fragmentation between types of people who'd be better off collaborating, and between hubs like Barcelona and Madrid is beginning to erode, and the entire ecosystem feels as though it is beginning to unite, gaining a groundswell of confidence.
It is now possible to see the possibilities the economic downturn has facilitated in creating potentially fertile ground for new companies to grow and create badly needed jobs. All the factors are present to build scalable innovative companies from Spain, they could now just do with a reduction in some of the bureaucratic red tape and taxation sooner rather than later.
Tell us a bit about Start Ups Made in Spain. What do you do to help startups?
We are developing a resource for foreign founders arriving in Spain, and as a vehicle to help Spanish startups internationalise, by showcasing their products and services abroad to customers and investors alike.
Start Ups Made in Spain recently partnered with Think Young, a Brussels based think tank that is running an entrepreneurship school in Madrid this week. It is focusing on the education of those that might otherwise be excluded from the world of startups and also young women.
I recently also founded Silicon Drinkabout Madrid with five other people, in order to provide a relaxed social context for people from the world of Startups, both Spanish and international to get to know each other better socially.
Thomas Evans (right) at Silicon Drinkabout Madrid. Photo: Thomas Evans
With many different startup hubs to choose from why should international startups consider Spain as a base? Is Spain a good place to do business?
I think there could be a tipping point where founders just get fed up with how expensive it is in London and elsewhere. With articles appearing recently suggesting that buying a flat in Madrid or Barcelona and flying to the UK for work, is cheaper than living in Britain's capital, the cost of living differential could be the difference between starting a business or not for some people.
Then also compared to other places like Berlin, the weather and quality of life play a factor to make Spain more appealing whilst comparable on cost. The transport infrastructure is good, as are the availability of underused resources more generally.
One doesn't need to sell to the domestic market only, and it is theoretically perfectly possible to undercut competition on price, by having a tech team based in Spain (where there are lower overheads), while having a business and marketing team based where the customer is.
The Spanish market is a natural jumping off point for Latin America, while it has proximity to a developing economic block in Africa. The number of tourists each year exceeds the population and it is the #1 destination for British holidaymakers. If this is your market and people return home having downloaded your app, it could be a way for it to spread internationally through word of mouth.
I think Spain is a good place to do business if you know the right people, but then it is also very often what you know about who you know and how they perceive you. As a foreigner If you arrive with your own resources and co founders in place, fine.
If not I would say it is not impossible to achieve one’s objectives here, but establishing oneself and building a reputation will take a while longer, and require effort. It probably helps for a first time founder, if you are arriving to attend a recognised and respected course from which you can build a network and launch.
The pace at which things happen in business here, and the debates in advance of decision making take longer, and again the traditional culture means that sometimes a business meeting can feel unusually formal. All things considered it is not a bad place to do business, and the market is improving rapidly.
Are there industries/sectors that do particularly well in Spain? Why?
The sharing economy does well with companies based in areas not mutually exclusive to tourism, such as Blablacar and Airbnb, having made progress selling to consumers, as have startups based within the social space of advertising and media.
The Spanish are gregarious, impulsive and fun loving, and whilst they have had to watch every penny in the financial downturn, services such as these have allowed them to carry on enjoying random, spur of the moment adventures with the resources they have.
I think Blablacar has worked here as it is a big country, with three times as much space for every person as the UK. Familial ties mean people like to visit home often, which at distance becomes a cost which is suddenly reduced by pooling resources with people online.
Thomas Evans is the founder of Start Ups Made in Spain