The Southern Trend: Why VCs Are Flocking to Southern Europe
While the startup ecosystem is still reeling from the downturn of 2021-2022, one region has surprisingly benefited from the correction – Southern Europe. The evidence was clear at Mobile World Congress in Barcelona earlier this year, where numerous Northern European venture capitalists were scouring the Iberian peninsula for top talent. What’s driving their interest? A potent combination of lower operating costs and more reasonable valuations.
A New VC Fund to Ride the Southern Wave
The latest indication of this trend is the launch of Plus Partners, a new venture capital fund co-founded by Enrique Linares, one of the cofounders of letgo, a Spanish unicorn that attracted investment from top firms like Tencent and Kleiner Perkins. Linares will be joined by fellow entrepreneur and investor Miguel Carrillo, who has a proven track record in identifying and nurturing early-stage startups.
Why Southern Europe is Gaining Traction
So, what makes Southern Europe an attractive destination for venture capitalists? For one, the region offers a lower cost of living and doing business compared to more established startup hubs like Silicon Valley or London. This means that entrepreneurs can stretch their seed funding further, allowing them to experiment with innovative ideas without breaking the bank.
A Surprising Rise in Venture Investment
According to Dealroom’s latest report on the Spanish tech ecosystem, venture investment into Spanish startups held up last year, with €2.2 billion raised across 850 funding rounds. This represents a significant increase from previous years and solidifies Spain’s position as one of the top startup ecosystems in Europe.
The ‘State of European Tech’ Report
The annual ‘State of European Tech’ report for 2023 paints an even more encouraging picture. Not only did Spain’s ecosystem rank fourth overall, but it also recorded the highest number of startup fundings last year. This surge in activity has drawn attention from top venture capitalists, who are now taking a closer look at Southern Europe as a potential hub for their next big investment.
A New Fund Aims to Invest €1 Billion
The European Investment Bank’s venture capital arm is also backing a new fund that aims to invest €1 billion ($1.1 billion) in growth-stage tech startups in Spain. This significant injection of capital will undoubtedly further fuel the region’s startup momentum and cement its position as a major player in the European tech scene.
A Boost for the Spanish Startup Ecosystem
The combined enterprise value of Spanish startups surpassed €100 billion in 2023, according to Dealroom’s report. This remarkable achievement is a testament to the hard work and dedication of entrepreneurs, investors, and policymakers who have contributed to the region’s success.
A New Era for Southern Europe?
As the startup ecosystem continues to evolve, it’s clear that Southern Europe is emerging as a significant player in the global tech landscape. With its favorable business climate, lower costs, and growing pool of talented entrepreneurs, this region has become an attractive destination for venture capitalists seeking their next big bet.
A Bright Future Ahead?
As we look ahead to 2025 and beyond, it’s likely that Southern Europe will continue to attract more investment and attention from the tech community. The launch of Plus Partners is just one indication of the growing interest in this region, and it remains to be seen which startups will benefit from this influx of capital.
A New Era for Tech Journalism?
As an editor-at-large of TechCrunch, I’ve had the privilege of following the startup ecosystem’s evolution over the years. This trend is a welcome development, as it brings new opportunities for entrepreneurs and investors alike. I’m excited to see how this story unfolds in the coming months and years.
About the Author
Mike Butcher (M.B.E.) is Editor-at-large of TechCrunch. He has written for UK national newspapers and magazines and been named one of the most influential people in European technology by Wired UK.
