Just a few days before the South Summit, a new era seems to have arrived in Spain. Has Spain become the new Eldorado for French and European investors? One thing is certain: VCs and, more broadly, private equity funds are no longer satisfied with making one-off investments, and are going so far as to open offices in Madrid and Barcelona in order to establish their presence on a long-term basis. On paper, the Spanish market is full of advantages: an attractive tax system, a large number of SMEs, high-potential start-ups... not to mention the sunshine and friendly atmosphere that are the envy of northern Europeans. But can we really expect to expand into this flourishing market as a matter of course?
Madrid and Barcelona: the next places to be in Europe?
The facts speak for themselves: the Spanish start-up ecosystem is experiencing remarkable growth. Between 2019 and 2024, it jumped 2.7 times, making Spain the second fastest growing startup market in Europe, just behind Norway (BBVA Spark/ Dealroom). The country now has more than 8,500 startups funded and has seen the birth of more than 15 unicorns, including the famous Glovo, Cabify and Wallapop. This ecosystem has also proved its resilience in a complex economic context marked by inflation and rising interest rates coupled with macro-economic uncertainties: in 2023, Spanish early-stage startups reached a historic milestone, with a record 86 Series A fundraisings totalling €644 million - a significant increase on the €477 million recorded in 2022. After Elaia, Breega and Eurazeo Growth, several French funds and startup studios are planning to open permanent offices in Spain in 2025.
Why is Spain so appealing? First and foremost, Spain offers a regulatory and fiscal framework that is favourable to investors. The Start-up Law (Ley 28/2022) has introduced incentives such as a reduction in corporation tax to 15% for the first four years, tax exemption on stock options up to €50,000 a year, and a 50% tax deduction for investors, with the ceiling raised to €100,000. So it's hardly surprising that the potential is there for funds. Especially as this market remains undercapitalised compared with other European hubs: less saturated by local funds, Spain is a favourable playground for foreign funds, which can more easily snap up quality deals. In addition, France and Spain are close culturally and geographically, which facilitates cross-border cooperation and investment. The cost of living and of operating is generally lower than in other European technology hubs, enabling start-ups to develop more efficiently.
A combination of factors that is making Spain particularly attractive to European funds looking for new investment opportunities... at a time when their domestic markets are suffering from real economic and political uncertainty, with a tax system that is shifting and even unpredictable (!) in some respects.
Cultural challenges not to be overlooked
The question is no longer whether to go there, but how to proceed wisely. Behind the enthusiasm generated by the Spanish market lies a more nuanced reality: you cannot just replicate an investment model without a price to pay. While Spain and France share certain affinities, their entrepreneurial ecosystems operate according to significantly different dynamics.
The first observation is that the Spanish ecosystem is still highly fragmented and loosely structured in certain verticals and sectors. Whereas France has succeeded in federating powerful hubs around deeptech, climate tech and medtech, Spain is still behind in terms of specialisation and visibility. As of now, the kind of inspirational figures and narrative poles capable of pulling an entire sector upwards do exist but are quite rare.
Language also remains a concrete barrier. While English has become the tech standard in France, its use remains limited in part of the Iberian ecosystem, particularly outside the capitals. For foreign funds, this implies recruiting locally, building cultural bridges and, above all, demonstrating humility in their approach.
Communication practices need to be revisited... including for the funds themselves
Another pitfall that is frequently underestimated is communication. Whereas French founders have adopted the pitch culture, media coverage and personal branding, Spanish entrepreneurs tend to adopt a more sober posture, sometimes perceived as self-effacing. The consequence: lots of Spanish startups are promising, but some of them are not particularly visible on the European scene. The local media, reluctant to oversell, focus on major corporate announcements and give little space to stories of growth or innovation in the emerging stage. French-style storytelling therefore needs to be adapted to put the emphasis on education and proximity while co-constructing narratives with Spanish entrepreneurs so that it reflects their ethos.
However, it's not just the founders who need to adapt: the funds themselves need to review their codes. To attract a quality dealflow, they need to be perceived as credible, readable and committed local players. This requires funds to rethink their communications strategy, their tone of voice, their channels - and sometimes even their outspokenness. The challenge is to find the subtle balance between a differentiating local approach and consistency with the global brand platform. It's not a question of reinventing oneself, but rather of broadening one's register, with intelligence and astuteness.
This adaptation may even become a strategic lever: by experimenting with more flexible formats that are closer to the field, funds can boost their attractiveness while nourishing their perspectives on their overall positioning - e.g. a concrete illustration of the importance of ‘think global, act local’.
A promising market for those who choose to immerse themselves with grace
Spain is a market with a bright future. But this future can't be taken for granted, it has to be earned. More than just a geographical move, investing in the Iberian Peninsula requires real immersion, in terms of culture, strategy and people.
Funds capable of combining high standards, local agility and global coherence are the ones that will succeed in transforming this Iberian dynamic into lasting success - by capitalising not only on the economic opportunities, but also on an ability to dialogue with an ecosystem in search of recognition, structuring and new alliances.
