valencia regularly at the top of the ranking of the best cities in the world, for its great combination of more than 300 days of sunshine a year, the Mediterranean Sea at your doorstep and a lifestyle that values leisure, exercise and good food. But it’s not all paella and chill.
The start-up scene of the Valencia region — based mainly in the capital plus the smaller cities of Alicante and Castellon – has gained momentum in recent years and is now making its mark on everything from AI, fintech and cybersecurity to cleantech, healthtech and industrial IoT.
Of TNW’s first conference in Valencia just now around the corner, we’ve rounded up a number of local tech scene leaders who have contributed to the growth of the ecosystem over the past decade. Our goal was to get their views on where the Valencia tech scene is today, what’s going on and the challenges ahead.
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“I always say we are in puberty”, Javier Megaasmanaging partner of the EMEA VC fund of Plug and Play Tech Center in Valencia, TNW said. “This is a very important moment when you create your beliefs and the foundations of your life.
“In the coming years everything will accelerate. We are at the tipping point of the ecosystem change, from a regional, rather local ecosystem to something much more ambitious – and much faster.”
Valencia by the numbers
Data shows a tech hub on the rise. According to the Bankinter Foundation’s Startups Observatory, investments in startups in Valencia increased from €58.5 million in 2021 to €73 million in 2022. The ecosystem tracking platform Dealroom reports that the Valencia region has the highest number of startups per capita in Spain .
Investigate through Start Valencia found that the number of registered startups in the region increased from 1,012 in 2021 to 1,212 in 2022; Dealroom, meanwhile, has an even higher estimate of over 1,500 startups.
València is still light on unicorns but can point fly wirethe global payments activator (now headquartered in Boston), the first Spanish startup to list on the Nasdaq in 2021, and live entertainment platform Fever, who became a unicorn last year. Other notable success stories include Jeff, Climate Trade, Voicemod, Sesame HR, and Sales Layer.
The investor scene tends toward local offices, with notable names including Draper B1, Angels Capital, the private angel investor network BiGBAN, Demium, and GoHub Ventures, as well as Global Omnium, the world’s fourth-largest water company. US-based Plug and Play also invests in startups in Valencia, including Climate Trade and Zeleros.
For Plug and Play’s Megias, the biggest difference between Valencia and other startup scenes is the former’s bottom-up ecosystem.
“It’s really built and connected by the founders,” he said. “We’re very good at creating efficient businesses from the ground up and scaling to, say, Series A – but we have a challenge to really scale that to the next level and build really big companies, like Flywire for example .”
More than 30% of all startups in Valencia are two years old or younger. Nearly 30% of all startups are pre-seed, and another 30% are in the seed stage. Just under 10% of them have received Series A funding. Less than 1% has secured Series B funding, and the same goes for Series C.
“The international community of Valencia is growing.
Megias says Valencia is becoming a magnet for expats. The reasonable cost of living and the pleasant, uncluttered city are major attractions, but more international jobs are also emerging. The Megias team, which covers the EMEA region from central València, consists of 30 different nationalities, all of whom speak English at work.
“There is an international community that is growing because big companies, like Plug and Play, are coming here and attracting them,” said Megias, co-founder of Start Valenciaa non-profit organization that promotes local startups.
One of the main areas for startups in the region is La Marina, which also happens to be the location for it Applied Sciences Valencia. The accelerator Lanzaderathe strategic partner of Applied Sciences, pioneered the development of a tech strip on the coast.
Founded in 2013 by Joan Roig, the billionaire owner of the Mercadona supermarket chain, the complex is now home to the EMEA business school, Lanzadera itself and its scale-up space Angels, the Insomnia accelerator, Biohub and Sesame. Operating under the umbrella of the Marina de Empresas entrepreneurial center, Lanzadera has accelerated more than 1,000 startups to date and recently acquired the first batch of more than 100 from Portugal.
This year, another building on the tech strip will open its doors: La Terminal startup hub. The site offers startups and scale-ups a physical space to communicate with each other, companies and investors.
The speed of change in Valencia is something that Bianca DragomirTNW Valencia advisor and CEO of Avaesen, witnessed firsthand. Its pioneering cleantech cluster in the region consists of 300 public and private stakeholders, including 160 companies in renewable energy, water cycle and waste management, and smart cities. Since Dragomir took over the first cleantech cluster in Spain in 2013, the organization has accelerated more than 400 startups.
“When you come here, you immediately get connected.
“València is a very dynamic ecosystem, very diverse, and there are many different industrial sectors that are emerging, and traditional sectors that are shifting to a new paradigm of sustainability,” Dragomir, a native of Romania, told TNW. “And the great thing about it – every stakeholder coming from outside Valencia says this – is that when you come here you get connected right away.”
According to Dragomir, the interconnected nature of the city has really boosted the cleantech sector as startups, corporates, the local government and eight universities have brought intense collaboration and innovation.
“‘Tech for good’ is a great way to describe what’s happening, and what’s been happening here for years… it’s a really good point of differentiation,” she added.
Attracting the big money
Vicén notes that while the Valèncian ecosystem is young compared to, say, Paris and Berlin, it has a “freshness” that encourages an open exchange of knowledge and experience between startups.
“Something that I think the entrepreneurial ecosystem in Valencia has done well is essentially taking advantage of the space [in the whole tech marina area],” he said. When investors come, they often get a tour of all accelerators and incubators along the Marina.
However, attracting large-scale investment remains a challenge. “From today, when you think about Valencia, you don’t come here to get investment, you come here because you think it’s a good place to start with low rates [for renting office space]Vicen said.
“We are very good at entrepreneurs bringing new ideas to life, but when it comes to investments, there is a gap. It’s different in big financial hubs, like London or Paris, where you’re in the capital of the country, and that makes it much easier to do business.”
Of course, investments are also essential to attract the best talent – and Spain is not known for high salaries. According to Statista’s data for 2021 on average full-time salaries in Europe, Spain ranks 18th in the continent. The founders of Zeleros, says Vicén, have been “very transparent” with investors about the need to offer salaries that are competitive with those in Northern European countries.
“Once we have those second founders, everything goes much faster.
Plug and Play’s Megias agrees, noting that companies in Valencia need to “step up their game” on salary, but to do so they need to engage with top investors in Europe. As is the case in many European ecosystems, the second generation of founders and employees, who stay and invest or create new startups, will be essential for the maturation of the technology sector in Valencia.
“Once we have those second founders who already have the connections, everything moves much, much faster,” said Megias.
From an outside observer’s point of view, one thing that needs to change is the adoption of English as a business language in scale-ups, which would open up opportunities for international talent and investors. Zeleros, the Plug and Play Tech Center and some other organizations already do this. But in general, English is not widely spoken here, and not all startups have an English version of their websites.
Nevertheless, the ecosystem has a bright future ahead.
Nacho Mas, the CEO of Startup València, predicts that the Valencian community will be one of the top 10 tech hubs worldwide.
“Despite being smaller than Madrid, we are experiencing faster growth… and we still have room for more,” Mas told TNW.
“All members of our community are working towards a common goal, which gives us a significant advantage,” he added.
Mas noted that the La Terminal project in the marina, where TNW València will take place, is expected to help attract further investment, talent and projects into the ecosystem.
“We are ambitious because we have the potential and resources to achieve success,” he said.
Whether or not it makes it into the top 10 global tech hub remains to be seen, but Valencia is definitely past its adolescence. If it can attract large investments in the future, the startup sector in the region looks set to explode.