“Talent attracts money”, states this business maxim, highlighting the notion that capital gravitates towards areas with initiative and the potential to generate value. Considering the figures and the inertia of the Valencian startup ecosystem, it is evident that Valencia presents a compelling opportunity for investors and venture capital funds.
Having established itself as the third prominent entrepreneurial hub in Spain, as evidenced by the growth in investment operations throughout 2022 compared to the preceding year, the region is also making steady progress towards its goal of becoming a global benchmark for entrepreneurs and leading tech companies. This is demonstrated by the recent strategic expansions undertaken by renowned multinationals such as Siemens, HP, Toshiba and Hitachi, and numerous others, all of whom have chosen Valencia as their new base of operations.
How can the potential of the Valencian startup ecosystem be scaled?
If we consider the equation talent = money as our guiding principle, it becomes clear that the greater the volume of the talent, the greater the generation of money. Now, the question arises: how can we foster the growth of entrepreneurial talent?
To address this, we have identified the five factors that constitute thriving entrepreneurial ecosystems, and the encouraging news is that Valencia encompasses all of them.
- Manufacturing
The extensive network of universities, business schools, and research centres in Valencia serves as an abundant resource for nurturing talent. Particularly, institutions with a technical focus, such as the leading Universitat Politécnica de Valencia, play a pivotal role in meeting the high demand for profiles in this field, thus attracting the attention of foreign firms.
- Activation
To encourage a significant portion of talent to embark on the entrepreneurial path, it is crucial to facilitate their initial steps. Accelerators play a fundamental role in this process, and Valencia has a long history in this regard, housing some of the most renowned accelerators both nationally and internationally (Plug and Play, Lanzadera, KM Zero, Innsomnia, Social Nest Foundation, etc). Over time, these accelerators have evolved beyond their initial training models and have integrated venture capital into their operations, leading to a surge in the number of scale-ups and an ecosystem rich in success stories.
- Importing
Being an appealing destination for foreign talent to establish roots is a coveted aspiration for any city, and Valencia has achieved this distinction. From leading tech companies, such as those mentioned above, to foreign startups that open offices in our ecosystem, as well as thousands of digital nomads who spend a significant portion of the year here, we are importing more and more talent from abroad that not only enriches the local workforce but also contributes to the development of a more globally-oriented ecosystem. For example, the recent “Startup HeatMap Europe” study positions Valencia at an impressive #4 ranking among the most sought-after cities for entrepreneurship across the continent.
- Internationalisation
An ecosystem that imports foreign talent is one that establishes valuable connections with other entrepreneurial hubs, therefore fostering stronger ties with those that share similar mindsets and lifestyles. A prime example of this is the Valencia-Miami-Latam axis, a dynamic business bridge that connects our ecosystem with the fastest-growing one in the United States, and also serves as a gateway to Latin America.
- Inclusion
Promoting a higher representation of women-led startups is crucial for any thriving entrepreneurial ecosystem, as recent research by DealRoom suggests that companies with female founders exhibit a higher success rate when scaling from the ‘Seed’ to ‘Series A’ stage.
Spain is on the right track, emerging as a leader in attracting investment for women-led startups. In the case of Valencia specifically, an impressive 40% of tech and innovation companies in the region have at least one female co-founder in their team, surpassing the national average the ranges between 13 and 20%.
In addition to the essential ingredients that contribute to the recipe for success, there is another crucial element: the ability to establish oneself as the epicenter of the global startup community at least once a year.
This achievement is precisely what our ecosystem accomplishes through the annual celebration of VDS2023, our flagship event. The summit convenes startups, corporations, and investors from all over the world to the city, and this year it will be held on the 26th and 27th of October at the City of Arts and Sciences.
What do international VCs think of the Valencian startup ecosystem?
There’s no better way to gauge the flourishing ecosystem and its global allure than by understanding the sentiment of the leading venture capital funds operating from Valencia.
Enrique Penichet, Founding Partner of Draper B1, affirms that Valencia is on par with what is recognised as an “emerging innovation hub” – a vibrant and well-established ecosystem. This is substantiated by “the presence of numerous startups with important Series A and B funding rounds, and the emergence of a unicorn“. A recent illustration of this trend is the investment of six and a half million euros secured by Fourvenues.
The success of these companies has not gone unnoticed by international investors, as acknowledged by Penichet. “Investment funds are expanding beyond their typical circuits of ‘mega hubs’ and are actively seeking out hidden gems like Valencian startups“, a strategy for which they rely on local knowledge of funds such as Draper B1, a VC firm aware that these major players “approach us in search of the next big opportunity“.
Patricia Pastor, founder of GP Next Tier Ventures, the latest addition to the list of venture capital firms originating from Valencia, shares this sentiment. She describes our ecosystem as a “hotspot” due to the significant presence of “entrepreneurs, companies, and international investors that have chosen to settle in the city”, as well as the “remarkable speed at which young startups in Valencia are able to scale“.
“The best indicator is that the Valencian ecosystem is now self-sustaining,” Pastor emphasises, noting that in the past, it relied on “public-private collaboration” to thrive. In Pastor’s view, “the region is poised for a cycle of prosperous years due to the commendable efforts of the Valencian Association of Startups, the prominence of Valencia Digital Summit, and the unique advantage offered by the business bridge with Miami, which sets it apart from other European hubs”.
Alberto Andújar, Manager at BIGBAN Inversores Privados, further emphasises the international potential of our ecosystem. “Valencia stands out as an attractive destination for international startup investors due to its robust innovation ecosystem, pool of tech talent, R&D investments, strategic geographical location and networking opportunities, in addition to the exceptional quality of life the city offers,” he adds.
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