From Madrid to startup heaven: an analysis of the capital of entrepreneurship

Big businesses, universities and research centres are based in the Community of Madrid, where a strong network of support for entrepreneurs has been woven. Lucas, eCustoms and Trucksters are just some of the startups that have come to the fore in a region that is attracting both Spanish and international investors.

In the Madrid district of Villaverde, an imposing concrete complex was erected in the 1940s, nicknamed the Cathedral. This former lift factory has become a symbol of innovation in the Spanish capital – it now houses La Nave, an urban innovation centre promoted by Madrid City Council and home of the South Summit, one of the world’s most important events for entrepreneurs, of which BBVA is a global partner.

La Nave is only one example of the many players in the entrepreneurial ecosystem in the Community of Madrid, which hosts some 1,500 startups, 120 venture capital investment groups and 50 accelerators and incubators, according to the startup guide by the Madrid Business Forum and reports and the Startup Radar platform from the Fundación Madri+d. With figures like these, the region is considered, alongside Barcelona, to be the main hub of entrepreneurship in Spain.

An established ecosystem that can keep growing

Madrid has a privileged position to be the setting for startups. Its location in the centre of the Iberian Peninsula, its economic influence (home to the headquarters of over half of the companies listed on the IBEX 35) and the importance of its transport network (Madrid-Barajas airport is the busiest in Spain by volume of passengers) all contribute to this.

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Also, its educational infrastructure promotes the development of talent and boosts entrepreneurship – there are six public and nine private universities, seven science parks, almost 40 Spanish National Research Council institutes (CSIC) and seven Madrid Institutes of Advanced Studies.

“Madrid has a solid support network, forms a bridge with Latin America and has a mature ecosystem”, says the Director of the Fundación Madri+d’s Office of the Technology-Based Entrepreneur, Eduardo Díaz. It is not a leader in Europe, but it does occupy a prominent position.

  • A hub that attracts international investorsIn 2020 €277 million were invested in the region’s startups in 140 rounds of financing. With those numbers, Madrid ranks as the eleventh European ecosystem by investment volume and fifth by number of rounds, one behind Barcelona in both rankings, which are topped by London, Paris and Berlin. It is noteworthy that more than half of the venture capital investors involved in the transactions (89 of 166) were overseas investors.
  • Stronger, more established startups. In 2020 Madrid was the fourth European hub for ‘exits’ (disinvestment operations, mainly due to the sale of startups or them going public on the stock market), with 34. The acquisition of Idealista by EQT Partners, the biggest tech company sale in Spain, is worth highlighting. It is also the birthplace of companies with a great growth trajectory, such as Cabify, a unicorn valued at €1.2 billionFintonic and Jobandtalent. “Because of the size of the city it could grow further still, so it’s important to attract funds that invest in high-growth startups,” Díaz notes.
  • A good place to find talent. The Community of Madrid leads the talent ranking drawn up by the COTEC Foundation in 2020, outstanding for attracting and retaining professionals, and it is the region with the highest proportion of people with higher education, as well as having the best availability of scientists and engineers.

From sustainable impact investment to innovation incubators

In addition to being the home of large venture capital funds, it’s also possible in Madrid to back startups that seek to improve the planet. An example of this is La Bolsa Social, a participative financing platform that “promotes projects that are looking to generate a positive impact on society and the environment, which is essential if we want to create a better future for generations to come”, explains its marketing and communications manager, Antón Jáuregui. Of the 25 startups supported by the platform, 14 are from Madrid. “Being in the heart of Madrid has helped us gain visibility and generate community,” the expert acknowledges.

Being in the heart of Madrid has helped us gain visibility and generate community

La Bolsa Social’s headquarters are in one of the six Impact Hub Madrid locations that offer entrepreneurs spaces to work and hold meetings, network and undertake training. The Spanish capital has many other coworking spaces and support infrastructure to offer startups, such as the Google for Startup Campus Madrid, as well as established accelerators like Tetuan Valley, which was created in 2009.

De Madrid al cielo de las 'startups': radiografía de la capital del emprendimiento

The presence of private players is complemented by the support of the public administrations. At the regional level, the Fundación Madri+d stands out. It is currently strengthening “its network of mentors and ‘business angels’”, according to the Community of Madrid’s Deputy Minister for Universities, Science and Innovation, Fidel Rodríguez-Batalla. He also indicated that the local Government is driving entrepreneurship in sectors such as video games, artificial intelligence, aerospace and medicine: “We are working with the Ministry of Health to promote the creation of biomedical companies based on patents from universities and research centres”.

Madrid has a solid support network, forms a bridge with Latin America and has a mature ecosystem

For its part, Madrid City Council has other established initiatives – the Madrid Emprende network of business incubators, where there are offices, advice and other support services for companies to cover their early needs, and the creation of a municipal artificial intelligence centre and an incubator to promote the foodtech sector.

Trucksters, eCustoms and Lucas – three Madrid success stories 

Fintech companies (160 in total, according to El Referente) and those dedicated to business software, e-health, cybersecurity and logistics are among the most important in terms of investment volume in the Community of Madrid.

One of the startups that is aiming to solve the challenges of traditional logistics, such as the disconnect between actors and the lack of digitisation, is eCustoms. “The platform synchronises those involved in shipping goods to save time and make the process efficient,” explains CEO Cristina Martín. Their use of blockchain brings “transparency and traceability” to dispatches and artificial intelligence optimises the platform.

Although it has received support from international initiatives, the first impetus for eCustoms came from La Nave. “Having an office in their facilities has made our work easier and we’ve taken part in two of their programmes, one on mentoring and another to do with scaling”, explains Martín. This year, the startup has carried out a Fast Track with BBVA too. The result is a pilot in which eCustoms offers BBVA financial solutions to their clients and, at the same time, the bank provides its customers with some of the startup’s services.

Madrid is a good place to live and there’s a lot of talent to tap into

Another of the projects in the region that has also gone through Fast Track is dedicated to improving logistics processes – Trucksters has created a system of relays between truck drivers, who are assigned a specific leg of a route. “We provide non stop transport to our customers and we stop drivers having to spend weeks away”, says the co-founder of Trucksters, Gabor Balogh.

Trucksters already connects Spain with Belgium, the Netherlands, Germany and Poland for over 400 customers and has just sealed a €6.3 million round of financing with the aim of continuing to expand. Balogh argues that having their headquarters in Madrid has helped their startup take off, not only because of the presence of investors and commercial contacts, but also for its “strategic” location on trade routes.

De Madrid al cielo de las 'startups': radiografía de la capital del emprendimiento

The CEO of proptech Lucas, a platform to make it easier for millennials to rent with an option to buy, also found the resources he needed in Madrid, specifically at BBVA’s Open Space. “All the pieces were there – access to industry professionals who could validate certain processes, to financial information and to tech developers”, recalls Steven Aitkenhead. Two years after it was established, Finnish company Kodit.io has just acquired the company in an operation with which they hope to create “the pan-European company in the sector”, in the words of Aitkenhead, who is now also Country Manager for Kodit.io.

“Madrid is a good place to live, there’s a lot of talent to tap into and entrepreneurs can find many opportunities”, concludes the businessman. It is likely that the snapshots and results of the upcoming South Summit, which will be held between 5 and 7 October in both physical and virtual formats, will once again confirm the attractiveness of the Madrid entrepreneurship ecosystem from its cathedral of innovation.

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