Madrid: A Place to Shortlist to Host Your Startup
My first visit to Spain was in 1992, the year of the Olympics in Barcelona. I was amazed by the heat in Seville but also by the friendliness of the local people in Spain and especially in Madrid, where I made my home. Coming from London, Madrid seemed like a town, not a major city, with its compact centre and streets full of cafés that become bars at night. I fell in love with Madrid and its friendly people, great food, low cost of living, wonderful weather and easy going vibe.
While I did not expect to become so involved in the Madrid startup scene, if I look back, those initial reasons to love Madrid are part of the reason that it’s becoming an attractive startup location: lifestyle, affordable living, a blend of local and international talent (with low salaries compared to the rest of Europe), good access to the rest of Europe/the world, and close links with Latin American markets.
The Evolution of Madrid’s Startup Ecosystem
Spain came out of a dictatorship in the late 1970s. Coupled with a civil war that was still fresh in Spaniards’ hearts and minds, the key goal for any new worker even through the 1990s was stability. In those days, the local business environment was very bureaucratic in Madrid, requiring a lot of paperwork and an optimistic mindset to get anything done. Most people dreamed of a long-term position in a large company or of finding work as a civil servant. This reality was shattered by the recession in the late 2000s.
At the time, the city lacked the proper funding infrastructure to support startup growth. A lack of private and public funding for startups meant that the only thing the local Madrid government could do was provide low interest loans and “soft landings” for startups by offering advice, bureaucratic support, and spaces to work in that were basically unused government buildings.
Interestingly enough, these offerings now serve as the foundation of the local startup scene: government support, soft loans, grants, friendliness, and lifestyle. The government-backed ENISA fund and CDTI Innovation grants have proven particularly useful for startup projects. Additionally, Madrid is a booming co-working city with a rapidly growing number of co-working offerings/spaces across the city.
Another element responsible for the growth of the local ecosystem: local business schools, especially IE University, where I am an Adjunct professor. It is one of the most highly ranked schools in the world, as well as having well over 100 nationalities represented on campus. Several initiatives from IE have helped to build the Madrid Startup Ecosystem considerably, including: “Venture Day,” an event showcasing student startups, “South Summit,” one of the biggest annual startup conferences in Europe, and “IE Venture Lab,” the school’s startup incubator.
Finally, there is an emerging trend to develop open innovation projects between traditional corporations and startups to find innovative solutions for legacy firms in very uncertain and unpredictable times. Two key players in this regard are the innovation consultancies Opinno and Valhalla.
As a result of these developments, Madrid has evolved into a much more business and startup friendly city. It rose dramatically to 30th place in the World Bank’s 2019 Doing Business Report, and was rated Most Improved Digital Economy in 2018 by the European Commission. Although funding is still an issue, and funding levels are not even close to the levels of funding available in the UK or USA, investors are very active with smaller amounts at the early investment stages for startups.
Some key local stakeholders to have a look at:
- Startup Hubs:
- Venture Capital Firms:
The landscape here in Madrid is fast changing, growing and becoming more international. See you soon for a “café con leche” in the sunshine!
