The make-up of the next government of Spain is unclear after yesterday's inconclusive election — but local startups hope that their leaders, whoever they are, will keep tech close to the top of their agenda.
The centre-right Partido Popular (PP) got the most votes and seats but didn’t win an outright majority in parliament, even with the support of its main ideological ally Vox, so coalition negotiations with smaller parties will determine whether or not they can replace the socialist Partido Socialista Obrero Español (PSOE) in government.
There's also a chance that prime minister Pedro Sánchez will be able to secure a majority in parliament with the help of regional parties — or, if neither party can find enough votes, a fresh set of elections later this year.
In recent years, the PSOE has championed Spain’s startups, introducing a wide-ranging startup law that created a better tax regime for stock options, set up a new visa for digital nomads and reduced red tape for foreign investors.
Spanish startups are hoping the new government — however it looks — keeps up the momentum and introduces more incentives to help startups scale.
“The future government must see innovation and entrepreneurship as central elements of its economic action. This will help transform the economy and achieve a more prosperous society,” says a letter issued by Adigital, a Spanish lobby group for startups, published during the campaign.
“The most important thing is to maintain this as a priority, as a key economic policy and that is our concern,” said Miguel Ferrer, Adigital’s vice-president of strategy and public agenda.
Building momentum
The Spanish startup ecosystem is in a golden era: there are five times more startups than there were in 2015, including 450 scaleups and 14 unicorns, including Cabify, Glovo and Wallbox. In 2022, €4bn was invested in the ecosystem, according to Dealroom, the second-best result ever. In 2020, the country’s scaleups alone created 324k new jobs.
This growth has been at least partially fuelled by government support.
“The good thing about the last four or five years is that technology, entrepreneurship and scalability became a priority in the economic policies of the government. For us, that has been a complete change in thinking,” says Ferrer. “The government understood that this is not a fancy secondary thing but it's a priority for the geopolitics and the economic model of the country.”
From a founder's perspective, one of the biggest successes of the PSOE government was its so-called startup law — a framework of rules designed to boost early-stage entrepreneurship in the country, which included a variety of tax breaks for startups, new rules on stock options and a new visa for digital nomads.
At a European level, Spain also chipped in to a €3.75bn fund-of-funds, created by the European Investment Fund, which backs late-stage VC funds.
Way forward
If the PP does end up in power, Spain’s startups shouldn’t have to worry about any backsliding on recent successes — the party has traditionally been more pro-business than its socialist predecessors, and voted in favour of the startup law. It's also made encouraging statements about developing the ecosystem during the electoral campaign.
If the PSOE can hold on, startups ought to be able to rely on a continuation of the policy advances that tech has made under Sánchez's rule.
To take Spain’s startup ecosystem up a level, Ferrer says “the next priority is to start talking about scalability” — the benefits of the current startup law only apply to companies that are five years old or less.
Antonio Iglesias, managing director at Endeavor Spain, an international organisation building founder communities, agrees. “We need to evolve the startup law, just like the ecosystem is growing,” he says. “We need to shift the focus from creating companies to growing and scaling them.”
Iglesisas thinks there’s a need for a new framework, either a “scaleup law” or an evolved startup law. “It needs to actually be able to provide incentives for all the players in that scale up phase.”
But he also doesn't see the change of government as a threat to the ecosystem. “I don't see anyone that will break the trend that has already started,” he says. “We have a subsector of our economy which is technological companies, startups. I don't see any single reason why anybody would be against that. No matter what colour you are, why would you be against this when there's already a momentum? Why don’t you just keep pushing it?”
