The situation of startups in Spain: great growth in recent years, but weighed down by bureaucracy

• GUILLERMO DEL PALACIO

Updated on Saturday, December 11, 2021-01: 55

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The new law on the ecosystem of emerging companies, popularly known as the startup law, was approved last Friday in the Council of the Minister. As stated in the subsequent press conference by the First Vice President and Minister of Economic Affairs and Digital Transformation,

, establishes a "very favorable" fiscal framework for the sector. If so, it could help Spain reach its potential in a market in which, despite having grown in recent years, it is far behind countries such as France or Germany.

The law, therefore, will seek to create an "attractive" regulatory environment that is capable of both promoting and attracting investment: there will be a special regime for digital nomads with which it is sought to get as many Spanish investors who have been in for five or more years living abroad as foreign professionals.

To achieve this, the law defines what a startup is - innovative technology-based companies - and places this accreditation in the hands of Enisa.

Achieving it will allow, for example, to increase tax-free investment to 100,000 euros in newly created companies (that is, up to five years, except in the case of those dedicated to biotechnology, industry or energy, which reaches up to seven).

Serial entrepreneurship is also contemplated, so it will be possible to benefit from this measure up to three times.

Another of these tax advantages will be a

, instead of 25%, for these companies, which may also defer the tax burden for two years without interest. Likewise, the limit of tax-free stock purchase options for employees goes up to 50,000 euros and they will only be taxed when they are settled or when they have been held for ten years.

Studies and experts agree that, if this were a sports competition, Spain would be

, but with the potential to achieve much more. Countries like France managed to improve their position precisely with a similar law. Of course, according to

, director of Situation and International Economy at Funcas, his great contribution was not necessarily financial: "The streamlining of procedures served to boost startups even more than the fiscal part."

In his opinion, one of the current problems in Spain is that many companies are created, but a large number of them also die in a short time. "This is something that, in turn, reflects a problem we have of business growth: companies either cease to exist or remain in SMEs," he says. This is also a consequence of the temporary nature of the labor market and even of the gaps in training.

In any case, he believes that the main stumbling blocks "have to do with

", something that can be seen perfectly in local incubators, which have been very successful in many territories, but whose startups encounter problems when leaving the zone. "There are a series of administrative procedures and also differences in regulations between autonomous communities, which perhaps make it difficult for when the baby is born and begins to walk, it becomes a young person or an adult who even travels around the world," he exemplifies . "We have a series of regulatory elements that can be a brake on business growth", laments the expert.

Despite this, Torres considers that Spain has many assets, such as the quality of the infrastructures, lower taxes than in several neighboring countries - he points out to France, Italy or Portugal - and labor costs that are not very high.

This is reflected in foreign direct investment - "it continues to come in a lot" - and exports.

Startups in Spain

According to the annual report by the consulting firm Dealroom, the ecosystem of emerging companies in Spain has exploded in recent years and has multiplied its value by five since 2015. Thus, it has currently reached

globally, when by the middle of the decade it barely reached 10 billion. The growth comes from the hand of its first unicorns - companies with a valuation of an Anglo-Saxon trillion, equivalent to our 1,000 million - such as Glovo, Wallbox or Flywire.

This has also made investment in the country grow, which is precisely what the startup law wants to cement and promote, especially in Madrid and Barcelona.

Of course, the year of the pandemic was very hard and investment plummeted: in the first half of 2021, more money had already been made than in all of 2020.

Despite this, Dealroom believes that there is still room for growth, especially internationally.

Investment in startups in Spain, explains the consultancy, is dominated by sources of Spanish or, at most, European origin and only 15% of the capital came from outside Spain in 2020.

On the other hand, the latest report on SMEs and entrepreneurship published by the Organization for Economic Cooperation and Development (OECD) highlights that small companies in Spain are joining the digital transition and the organization positively values ​​access to high-speed networks (the country is above the average), but considers that there is still a delay in the adoption of electronic commerce or cloud computing, where the percentage of penetration is around 25%.

Regarding the ease of creating businesses, the OECD places Spain among the best countries from the point of view of simplicity and evaluation of regulations and the few administrative burdens that companies encounter.

However, he believes that the cost is considerably high and that there is a lack of technical knowledge and innovation.

Few unicorns

In the list of 'unicorns' prepared by CB Insights, led by the Chinese company Bytedance (owner of TikTok) with a valuation of 140,000 million dollars,

appear

: Jobandtalent (2,350 million), Cabify (1,400 million), Copado (1,200 million) million) and Glovo.

Jobandtalent and Copado entered the last four months.

The number of mythological animals for 2021 puts Spain at the level of countries such as Belgium (two), Ireland (three), the Netherlands (five), Sweden (four) or Switzerland (also four) and well above others of our environment such as Portugal or Italy, which do not have companies of this type.

However, if the number is compared with Germany (23), France (19), Israel (22) or the United Kingdom (37) it is clear that there is a lot of work ahead.

According to the criteria of The Trust Project

Know more

• Spain

• France

• Glovo

• Germany

• Portugal

• Italy

• United Kingdom

• Tik Tok

• Cabify

• Belgium

• Ireland

• Sweden

• Swiss

• Israel

• Catalonia

• Madrid

• economy

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