The culture of Barcelona draws people from around the world. With incredible buildings, great food and amazing night life, Barcelona attracts 32 million tourists per year. With a population of approximately 1.6 million people, the streets are an endless stream of foreign selfie takers and food connoisseurs. 

Barcelona is also home to La Sagrada Familia which is an unfinished Cathedral in the middle of Barcelona. It is a completely breathtaking structure and when finished (estimated for 2026) the central tower in the middle will reach 170 metres tall. The architect behind the building, Antoni Gaudí, believed that nothing man-made should ever be higher than God’s work. Barcelona’s highest point, a mountain called Montjuïc stands at 169 metres, so he has stuck true to his word! 

Another big part of Barcelona that isn’t as easy to see is their startup ecosystem. It seems that Barcelona consistently ranks as one of the top 5 European startup hub cities. The number of startups, investment flow and events has put Barcelona on the global map. 
However, unlike Portugal, The Spanish Government does not have a defined startup strategy. So what is it that makes Barcelona a leading place for startups? 

I was fortunate enough to sit down with Clemens Rychlik who is the Director of Operations at Barcinno. Barcinno is a local community-driven platform sharing the stories, knowledge & events of Barcelona’s startup and tech communities. We discussed the key ingredients that have contributed to Barcelona’s success. 

1. Lifestyle

When I asked Clemens, who is Austrian and has lived across Europe why Barcelona has such a strong startup community he looked around at our rooftop position in the co-working space, laughed and said ‘It’s simple. Barcelona has a great lifestyle with beautiful beaches & mountains, delicious food, great weather and a relaxed feel. Why wouldn’t you want to move here?’ I mean, you cannot argue with that logic! In fact, Barcelona has 26% of employees are from abroad, and 15% of all startup founders are international.

This has attracted a consistent stream of digital nomads (people who can work remotely and travel around the world whilst working) and startup founders populating over 50 coworking spaces in the Barcelona region. Clemens said coworking spaces are incredibly important for those groups as it creates ‘spaces to meet new people in a natural environment which can lead to collaborate and new opportunities’. 

Clemens is not the only one who speaks highly of Barcelona. According to Laura Urquizu, the CEO at Red Points (a tech company protecting IP), Barcelona’s strength comes from talent retention.

‘The combination of highly qualified talent from all around the world and an environment that encourages innovation has led to success stories such as Travelperk, Glovo, and Typeform. For us at Red Points, this has meant that we’ve been able to tap into a great pool of international talent – to date we have people from over 32 nationalities – which I strongly believe has played a key role in Red Points’ success story. In the future, I hope to see this trend continue, with even more innovation and investment coming to companies based in Barcelona, competing with our counterparts in European technology Hubs and of course Silicon Valley in the US.’

Laura Urquizu, CEO, Red Points

2. Events 

There seems to be an endless stream of events throughout the year for startups and investors. One of the major events is MWC Barcelona (formerly Mobile World Congress) which happens in February every year. In 2019, they had almost 110,000 visitors from over 198 countries and territories. Over 55 percent of this year’s MWC attendees held senior-level positions, including more than 7,900 CEOs. They showcase the latest innovation from around the globe and is a great chance to also show the amazing lifestyle offered in Barcelona. 
While most buzz happens around MWC, most of the invaluable networking is happening at one of the countless official and unofficial side events around the conference. 

Another popular event is 4YFN, also in February that attracts the top startups from around the world. 

For Barcinno, they are the number 1 English-language resource for the Barcelona entrepreneurial community. ‘Our founder, an American guy, Scott came to Barcelona and saw all the great things happening at a local level for startups. However, it was all in Spanish which limited international attraction. So he started Barcinno to highlight the startup ecosystem overseas to attract talent and investors.’ They are now an integral part of the startup ecosystem with events, content and a startup map to keep track of the growth as well as provide helpful connections for new startups in the region.

3. Investment

In 2018, Barcelona ranked fifth in Europe’s Capital Investment behind London, Paris, Berlin and Stockholm raising €872 million. This is more than 65% of Spain’s total start-up investment.

Of the 29 Spanish startups that managed to raise rounds of over €10 million in 2018, 12 are in Barcelona. The most impressive deals were Letgo’s €431 million, Glovo’s €115 million and TravelPerk’s €38 million.

This shows the maturity of the ecosystem which is important for not just attracting startups, but retaining them in the long term.
‘We really need to be mindful of keeping startups to the point of exit so that then they can reinvest in the next wave of startups.’ Clemens said.
It is quite common for many startups to be attracted to a place in the early stage of their business but when they get ready to scale their business, investors are often concentrated in the US, UK or Germany. Having angel investors from startup founders will help to further mature the market in Barcelona. 

Total investment dollars and seed rounds over a 5 year period in Spain

4. Education

Lastly, as the lifestyle attracts talent to settle in Barcelona, it is also home to world class education with top ranked business schools (IESE, ESADE, EADA) providing a large pool of talent. Catalunya’s University System is recognised as 3rd best in the world. Having world leading research into technology and top talent graduating regularly, it is no wonder startups are attracted to Barcelona.
In fact, according to Mobile World Capital’s findings, Barcelona has the second highest number of professional developers among all European cities, with 72,500 in total. A mix of local and global talent means that high demand workers are drawing in startups who need these skills. 

The importance of education in the startup market cannot be underestimated as the world continues to experience talent shortages in emerging technology. However, the role of education extends beyond talent, the Catalan University region is leading the way in many research areas including sustainability, AI and deep tech. Education plays a critical role in the startup ecosystem and ensuring the Universities are coordinated with local accelerators and events creates a dynamic environment for students and researchers to be actively engaged.

Challenges ahead

However it is not all unicorns and rainbows in Barcelona. There are a range of challenges including political instability and inefficient tax regulations that often deter startups. ‘It is known that it can often take 2 weeks to get a business up and running in Spain because of the government red tape. For example, they often don’t tell you about the documentation required so you set up a meeting and go there only to find out you don’t have the correct documents. Then you have to do it all over again.’ Compared to Estonia’s eResidency 10 minute set up, this is an incredibly frustrating option for startups. 

Further, as stated above, retaining talent (especially developers) and investors to continue to build the ecosystem has its challenges.
‘There is strong global competition from other cities that are attracting the same pool of talent from both investors, startups and employees. We cannot rest on our lifestyle to attract the next wave of the startup market.’ Clemens discussed the need for government to create the best conditions from policy, tax and legal requirements so it is easy to enter and stay in Barcelona. 

Overall

Barcelona’s dynamic startup ecosystem was built without heavy government intervention. This shows that a strong culture, coordinated efforts by co-working spaces, businesses and organisations like Barcinno can create a dynamic market for startups. Diversifying their economy beyond tourism is critical for Spain and the startup market is creating high potential growth industries that will help to stabilise their economy now and into the future.

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