Spain’s tech startup scene: a new European force?

After more than a decade of stagnation, the European venture capital market has shown signs of bursting back to life in recent years. Yet while the UK, Germany, France and Sweden enjoy most of the hype, there are signs Spain may be emerging as a force to be reckoned with.

A recent report by Spanish analyst Venture Watch found deal volume within the country had enjoyed an increase of 28% in H1 2015, in comparison with the same period the previous year. More impressive still, the report finds aggregate deal value has shot up a whopping 134% from €86m to €201m.

Yet it is worth noting Venture Watch included a €36.8m round for Wallapop, an online second hand marketplace in its results. While the investment round is widely reported to have taken place, the company is notoriously secretive about its fundraising history and as such the record remains unverified.

Furthermore, the report also includes investments in two companies that, strictly speaking, are not Spanish. Namely, these include a €13.5m injection into online marketing company Olapic, which was founded by two Spaniards but is now headquartered in New York, and a €10m round for London fintech Kantox.

We took a look at the top five deals of H1 2015, according to unquote" data, to obtain a clearer picture of venture activity in the country.

JobAndTalent
The highest profile venture-capital-backed fundraising throughout H1 saw online recruitment business JobAndTalent raise $25m in June. The investment round, in which Kibo Ventures and Qualitas Equity Partners took part, brought the total amount raised by the Madrid-based business to $39m.

With unemployment still particularly high in Spain, on the surface the deal presents encouraging signs for the country's economy. However, JobAndTalent stated it will use the funding to undertake expansion across Latin America and the US – a traditional stomping ground for Spanish SMEs looking for increased resilience and reduced dependency on their local market.

Secondhanding Networks
January saw Spanish venture capital start the year with a bang, as US firm Insight Venture Capital invested €15m in Barcelona-based e-commerce business Secondhanding Networks. Only four tech deals in Spain surpassed the amount raised by Secondhanding in 2014, two of which were for electronic voting company Scytl – which most recently raised $44m as part of a $104m round.

Spanish e-commerce has seen increasing appetite from the asset class over the past two years. In H1 2015, €47m changed hands for internet companies, according to unquote" data. This is up from €19.8m over the same period the previous year and €24.6m in H2 2014.

Beabloo
In May, SoftBank Group invested €10m in Beabloo, a digital marketing and big-data company focusing on the retail sector. The company stated it was aiming to double its headcount to 70 by the end of 2015.

However, as with JobAndTalent, the injection of funds will primarily be directed towards international expansion. While Beabloo will make new appointments in its Barcelona headquarters, the business is also looking to hire new staff in its Chinese office in order to market its software to e-commerce companies across China, Japan, Indonesia and India.

Ticketbis
The fourth most lucrative deal in the country saw Active Venture Partners lead a €3m deal for portfolio company Ticketbis in April. Ticketbis is in the process of rolling out its online platform for the resale of event tickets across new territories – particularly those that have not yet been penetrated by large US competitors such as Stubhub and Viagogo.

At the time of the investment, Active partner Blair MacLaren told unquote" the amount could have been significantly higher and was structured as a convertible loan to grant the business the option of pursuing a larger funding round later in the year. Time will tell whether this will come to pass.

Nubelo
Our top five list is rounded off by another recruitment platform, Nubelo. The business, which matches freelancers with digital companies, raised a €2.5m funding round led by Caixa Capital Risc in January. As if to complete the theme, Nubelo has used the fresh capital to fund its expansion – as the pattern anticipates – in the Latin American market.

Factoring out the aforementioned deals for Wallapop, Olapic and Kantox, aggregate deal value for Spanish tech companies actually fell from €64.66m in H1 2014 to €62.3m in the first half of this year, according to unquote data".

It does have to be taken into account that Wallapop is rumoured to have recently raised another €100m in addition to the €36.8m it reportedly received in January. This would push the aggregate figure up considerably higher to around €200m, storming past even the €115.9m seen in H2 2014. If this is indeed the case, there are indications Barcelona and Madrid could be taking steps towards closing the gap to Europe's leading tech hubs.

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