Venture capital launches for entrepreneurs

This 2021 is being a key year for the Spanish entrepreneurial ecosystem. Not only because of the approval, just over two weeks ago, of the so-called “Start-up Law” project, but also because of the amount of money and trust that investors are placing in the innovative projects of Spanish entrepreneurs. “The third quarter of 2021 confirms the change in trend in Spain, becoming a record year for investment in history,” underline from the Observatory of Start-ups of the Fundación Innovación Bankinter. Between January and September, a total of 3,082 million euros were injected into Spanish startups and emerging companies, 283% more than in the same period in 2020.

In addition to the volume of financing raised, there is another relevant factor that makes 2021 the year in which investment in start-ups “has changed level”, according to this entity, and it is that its structure and composition have also changed. Thus, venture capital or venture capital has been the protagonist of the year, registering one of its best results in the third quarter with an investment volume of 446 million euros, 41% more than in the same months of 2020.

“There is increasing diversity, from small private investors to large international funds leading rounds of several hundred million in Spanish start-ups”, explains Fernando Dal Re Olleros, partner of The Venture City and head of its investment fund First Ticket del EMEA area.

In his opinion, the most important thing is that in recent years there have been “many good successes” that have encouraged the sector, effectively calling on new investors.

A good example is Glovo, which this year has raised about 450 million euros. Idealista and Capchase also stand out, with 250 and 237.89 million euros respectively; or Devo, the last Spanish unicorn, which at the end of October announced that it had raised 215 million in its last investment round.

Sectors of interest in the ‘business angels’

According to the latest report from the Start-ups Observatory, some of the sectors that are causing the most interest in recent months among the ‘business angels’ are ‘Business and Productivity’, where the round raised by the human resources start-up stands out Factorial, or Health and Wellbeing. The latter industry with notable growth as a result of the pandemic. Both sectors were the most active in the third quarter, with a total of 11 operations in each of them.

On the other hand, the ‘fintech’ snatched the first place in mobility and logistics in these months, becoming the industry that achieved the highest volume of investment, as well as the largest number of operations thanks to large rounds in start-ups such as Capchase or Ritmo.

Likewise, there is a gradual increase in investment in software, especially due to the round closed by Madrid’s Copado, which amounted to 118 million.

The sectors have a lot to do with the decision of the experts when it comes to investing or not in a star-tup. From Angels Capital they assure that For investment in venture capital, both the size of the market at the time of investment and the long-term trend are looked at. “It is possible to invest in small markets that show clear signs of current or future growth,” they add.

Although this is not the only factor in deciding where to put the money. The team, the scalability of the project and its degree of innovation are other key points that investors analyze.

Looking ahead to 2022, the sector expects to maintain this growth line in terms of investment in emerging companies. Thus, The Venture City partner is betting that companies linked to innovation and technology in finance will continue to be the focus of investors in the coming months, as well as that of “cybersecurity, ‘healthtech’ and ‘gaming'” .

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These will be joined by another that until then has not appeared in the ‘top ten’ of industries in which the ‘business angels’ are interested: the category of ‘future of work’. Or what is the same, projects focused on improving work environments.

After seeing how «the volume of investment has tripled from one year to the next, the ecosystem has very good prospects for next year. Dal Re Olleros expects that by 2022 “Spanish start-ups will continue to multiply their valuation and gain even greater weight in the European sector” and foresees a flow of large funds that will enter financing rounds earlier and earlier.. This trend in turn will push “business angels to enter even earlier phases and higher valuations,” the expert specifies.