[World Tour] Spain: "We have a sort of entrepreneurial bubble here, but the quality isn’t always up to scratch."

By August 04, 2014
World Tour en Espagne

In the wake of the economic crisis, a wave of entrepreneurship is now lapping over Spain. With around 500 incubators, the startup ecosystem, though still rather sketchy, indicates a promising trend.

Interview, during a broadcast by L'Atelier numérique (L’Atelier Digital) on the BFM business channel, with Pierre-Alban Waters, founder of Moving2Madrid, a company which seeks out suitable real estate for foreigners who are moving to Madrid.

L’Atelier: In addition to the real estate startup you’ve founded, you’re also looking to bring together on the Guiripreneurs website the community of international entrepreneurs living and doing business in Madrid. In other words, you’re very taken by entrepreneurship. But is this a characteristic of Spanish people in general?

Pierre-Alban Waters: No, not really. But the economic crisis has changed things somewhat and at the moment it’s quite sexy to be an entrepreneur! The crisis and unemployment have led many people to ask themselves whether they should set up their own businesses and try to make a name for themselves. Success stories such as Facebook also encourage young people to go this route.

Is this idea of setting up your own business leading to growth in innovation and tech startups? If so, in which sector in particular?

For a long time, Spain was highly dependent on construction. The crisis means that the country is having to look for new growth drivers. So it’s quite understandable that the tourism sector is now being further developed and that some startups have decided to focus on this market.

More generally, how is the Spanish startup-support ecosystem structured? Is it based on solid foundations? Is it just emerging now? Is it providing sufficient stimulus for the entire startup scene?

Well, in the 2008-2010 period there was practically nothing. Entrepreneurs had to support each other. Since then however things have changed a great deal and there are a lot of organisations encouraging startups. I would even say that there are rather too many initiatives and they don’t always manage to spot the best opportunities. But in spite of everything, things have started to move and the ecosystem looks quite promising.

Are the initiatives you mentioned all about setting up incubators, accelerators and events designed to stimulate the ecosystem?

Recently a list was drawn up covering the whole of Spain, and we saw for example that there were over 500 incubators in this country. At the moment there are perhaps too many. We have a sort of entrepreneurial bubble here, but the quality isn’t always up to scratch. And all the investors I speak to always say the same thing, namely that there’s more money available than good projects to invest in. This is also partly due to the lack of quality and immaturity of the ecosystem. But the good news is that there are many opportunities.

And is the government also getting involved in the ecosystem? Does it provide assistance? Is state funding available? Is it also encouraging the startup environment as a whole?

No, it hardly gets involved at all. For photo ops yes, but not that much when it comes to actually doing something. The government has taken some positive steps but overall it’s doing about 10-20% of what actually needs doing. For example, we now have the equivalent here of the French ‘auto-entrepreneur’ tax status. Before that you had to pay €300 a month in social security as soon as you started up a business, i.e. before you were generating any revenue. Now, with the new ‘sole trader’ status, you no longer have to pay that and it’s easier and more encouraging to set up in business. But there are still problems with social security charges when you take someone on. In fact recruiting staff in Spain requires a lot of administration and is quite expensive. On the other hand, Spanish staff are quite cheap salary-wise. Some people even say that what we ought to be doing is producing stuff here Spain and selling it abroad.

Could you give us some examples of Spanish startups that have made it big-time?

Yes I can. There’s my favourite entrepreneur, [Argentine entrepreneur] Martin Varsavsky. He’s a bit like Xavier Niel, the founder of [French telecommunications company] Free. He set up Jazztel, which competes with the major Internet service providers. Jazztel proved to be a great success and he sold the company. Then in 2005, he founded Fon, a world leader in WiFi. This guy is the perfect example of a foreigner who initially came to Madrid for the quality of life we have here, and then set up a number of large companies which have enjoyed highly successful internationally expansion.

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