Three quick notes about the Spanish startup investment market in 2018: €1 billion, SaaS and Madrid & Barcelona
2018 has come to a close and I’m in the middle of putting together last year’s investment numbers to understand what happened in Spain from a different and more number-centric perspective.
I’ve been doing so for several years and you can find previous analysis in the following links:
- The evolution of the Spanish VC ecosystem from 2013 to 2018
- Spanish startup exits (2005–2017): from emptiness to a decade of relative abundance
- The startup investment landscape in Spain in 2017: €784 million across 195 rounds
- A geographical breakdown of the Spanish investment landscape in 2017: what regions attracted most VC funding?
This year I plan to publish a series of articles that look into specific aspects of the Spanish tech ecosystem. To begin with, I’d like to highlight three things that have called my attention as I’m browsing through the data.
This analysis excludes financing from public entities (ENISA, CDTI, H2020, etc) as well as the biotech and life sciences sector. This analysis only includes publicly announced investments.
€1 billion
You’ve probably seen this number highlighted in other articles and analysis, and rightfully so. For the first time ever, Spanish technology companies raised more than €1 billion in one year.
The local tech ecosystem has come a long way from the €300 million that was raised in 2014, just four years ago.
There’s more money than ever in the market and we’re also seeing an increasing number of international funds looking at local companies, which is good for all parties involved. Founders have more funding alternatives, local investors need to improve their game (especially as some of those foreign VCs invest earlier than before) and the whole ecosystem gets to pitch to deep-pocketed investors that are capable of leading big Series A/B/C rounds.
SaaS everywhere
I was recently talking to a fellow VC in Spain and he said something along the lines of: “Man, this is crazy. A few years ago you’d see ton of ecommerce, marketplaces and B2C companies looking for funding in Spain, but in recent times the number of B2B SaaS startups in the market has just exploded”.
This is something that we’ve also observed at K Fund and, in fact, out of the 22 companies in our portfolio, more than 50% are SaaS companies (and we also have startups that have a very strong SaaS component within their product offering, even if they are mostly B2C).
As visible on the graph above, in 2013 and 2014 there were about 20 investments per year in SaaS companies. In 2018 there were 53 and 2017 was an even bigger year for SaaS, with more than 70 deals.
When looking at the same trend from a total investment volume perspective, the outcome is quite similar. SaaS companies raised a combined €223 million in 2018, mostly thanks to big rounds from Travelperk, Logtrust/Devo, Red Points, Stratio and others.
Madrid and Barcelona
As you might have noticed in the first graph of this post, and always according to our data, the number of investments slightly decreased in 2018 compared to the previous year. Which means that the deals that were closed in 2018 were, on average, bigger.
What’s also interesting -and I need to look deeper at our numbers- is that the decrease in investment deals mostly comes from lower activity in Barcelona (and in Cataluña in general). 66 deals in 2018 versus 98 in 2017.
During the same period, Madrid-based tech companies closed 61 investments (vs. 51 in 2017).
I find this interesting, beucase since I’ve been tracking this data in 2013, Barcelona has always seen 2X or 3X the number of deals than Madrid. Having said that, and as you can see in the investment volume graph above, there’s still a big difference between both cities; in this case mostly as a consequence of Letgo’s big round.
I’ll continue to dig deeper into this, but I wanted to highlight it anyway.
Stay tuned for more articles and analysis in the next few weeks!
