mwc spanish startup_ecosystem
TRANSCRIPT
THE SPANISH STARTUP
ECOSYSTEM
STARTUPS IN SPAIN More than 20 years creating tech companies
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% YoY)
• 3 main hubs:
• Barcelona: 26% of all startups, +16% YoY
• Madrid: 27%, +25%
• Valencia: 14%, +32%
Source: Boston Consulting Group, McKinsey, Startupxplore
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)
STARTUPS IN SPAIN Spain: competitive workforce, hard to find
Average tech salary
San Francisco
New York
UK
Europe
Ireland
Sweden
Germany
France
Italy
US$0 US$60000 US$120000
Source: AngelList
SPAIN
Number of developers
San Francisco
London
Paris
Moscow
Istanbul
Berlin
Stockholm
Lisbon
Oslo
0 45,000 90,000
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
Amazon (Adam Sedó, PR Manager ): “Tech
talent in Spain is abundant, but most
importantly available”Source: Atomico, Stackoverflow
Source: Novobrief
2015, RECORD YEAR €500m+ raised by Spanish startups for the 1st time ever
Investment received by Spanish startups
0
150
300
450
600
2013 2014 2015
DealsInvestment (m€) 535
286
222
MEGA ROUNDS 13 rounds bigger than €10m
2013
2014
2015
2X €10m+ rounds in 2015 vs. 2013 and 2014 combined
HEALTHY MIX OF INVESTOR TYPES VCs and business angels as key ecosystem drivers
Source: Venture Watch
Distribution of deals by investor type (Q1-3 2015 vs. 2014)
0 %
25 %
50 %
75 %
100 %
2014 2015
27 %
15 %
43 %
59 %
Venture Capital Business Angel BA Network Public fundingCorporation Corporate VC Crowdfunding Accelerator
(69)
(17)
(37)
(59)
WHERE DOES THE MONEY GO? An ecommerce (or mobile classifieds) country
Source: Venture Watch
Top investment sectors 2013-15 (number of deals)
Ecommerce
Marketing
Lifestyle
Fintech
Travel
Communications
Education
Gaming
Data
Food
0 17.5 35 52.5 70
Sectors that have received most investment volume 2013-15 (M€)
Ecommerce
Fintech
eGovernance
Security
Marketing
Communications
Employment
Gaming
Data
Lifestyle
€0 €100 €200 €300 €400
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
In what type of rounds did foreign VCs participate in in 2015?
17 %
13 %
19 % 15 %
35 % €1 to €5m€6 to €10m€11 to €15m€16 to €20m€20+m
Source: Novobrief
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’
BARCELONA TECH HUB
A DIGITAL COUNTRY Barcelona drives Catalonia’s 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
A DIGITAL COUNTRY Barcelona’s 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
A DIGITAL COUNTRY Education + entrepreneurs + funding + public institutions/coworkings = success
Education
Funding
A DIGITAL COUNTRY Barcelona’s ecommerce & mobile economy
Source: Startupxplore
Most common type of startup in Barcelona (as % of total market)
Ecommerce
Mobile
Enterprise
Marketing
Other
Travel
Communications
Health
Consumer web
Media
Education
Sports
Gaming
Software
0.0 % 3.5 % 7.0 % 10.5 % 14.0 %
Ecommerce
13.4%
Mobile
12.8%
Enterprise
10.8%
Marketing
6.2%
Travel
5.9%
Comms
5.7%
Health
5.2%
BARCELONA DOMINATES STARTUP INVESTMENTS 60% of all euros invested in 2015 went to Barcelona-based startups*
€0
€175
€350
€525
€700
Barcelona* Madrid Valencia
19.7
165
324
2011201320142015
Source: Webcapitalriesgo, Novobrief* Barcelona and rest of Catalonia
BIGGEST ROUNDS IN BARCELONA Explosive growth
Source: Webcapitalriesgo, Novobrief
Largest investment rounds in 2015 (€m)*
Letgo
Wallapop
UserZoom
Digital Origin
Typeform
Kantox
Softonic
Deporvillage
Loanbook
Marfeel
0 25 50 75 100
€3
€3
€4
€6
€10
€13
€15
€30
€40
€92
• €264m invested in Barcelona startups
• Hypergrowth: +96% YoY
• 92% of all capital invested inall of Spain in 2014 (€285m)
*This analysis includes Wallapop’s widely reported, but not officially confirmed, $100 million round
CATALONIA’S TOP SECTORS Mobile classifieds, ecommerce & fintech
Source: Webcapitalriesgo, Novobrief
Startup sectors that attracted more investment in 2015
13 %
3 %
10 %
13 %61 %
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
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 funding1
(€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
EUROPEAN CONTEXT Very small VC per capita
VC investments per capita 2014 (€)
€0
€100
€200
€300
€400
Israel USA UK Spain625
141
371 • Spain: more investments and money than ever
• In other main tech hubs in 2015…
• US: €50b+ • UK: €4.5b • Germany: €2.4b • Israel: €1.6b • France: €1.5b • Spain: €0.5b
Source: Pablo Ventura, Dealroom, NVCA
EUROPEAN CONTEXT Low density of business angels
Source: Atomico / AngelList
Density of business angels in Europe
LondonParis
BerlinHelsinki
MoscowIstanbul
Amsterdam
StockholmMunich
ZurichDublin
CopenhagenVienna
HamburgBrussels
Oslo0 625 1,250 1,875 2,500
BARCELONAMADRID
Business angels per ,000 people
HelsinkiZurich
BrusselsLondon
AmsterdamDublin
ParisStockholm
CopenhagenBerlin
Munich
Oslo
ViennaHamburgMoscowIstanbul
0 0.15 0.3 0.45 0.6
BARCELONA
MADRID
161
0.1
0.05
168
EUROPEAN CONTEXT Spain accounts for small fraction of EU exits & M&A value
M&A deals in Europe (Q1-3 2015)
7 %
93 %
Rest of EuropeSpain
• 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
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
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.
THANK YOU
All of the charts, tables and figures that are included in this report come from publicly available sources.
Special thanks to:
METHODOLOGY