When you think of European startup hubs, blustery places like London, Berlin and Stockholm jump to mind. The southern half of the continent is better known for warm but economically dysfunctional cities that are perfect for beach vacations but not for founding businesses.
But it turns out not every ambitious European founder has to choose between nice weather and a vibrant startup ecosystem. According to a new report by Startup Genome, a U.S.- based organization that consults with global hubs to help them nurture their nascent startup scenes, beautiful Barcelona is home to the best little European startup scene you've probably never heard of.
The biggest little startup hub around
While the Catalan capital's young startup scene certainly doesn't have the scale of more famous tech hotbeds like Silicon Valley or Tel Aviv, Startup Genome's numbers reveal that the city is home to far more startups than most would guess from its relatively low profile.
More than 1,000 tech startups call the city home, and they're attracting plenty of attention from investors and larger businesses looking to acquire promising technology and the talent that built it. "The city has an Ecosystem Value of $6.4 billion dollars--a measure of startup valuations and exits," according to the report, and exits (including both IPOs and acquisitions) have quadrupled in the past four years.
These aren't tiny deals. "Since 2013, Barcelona has produced an average of one $100+ million dollars exit per year. The two most recent ones being Social Point, a gaming company (acquired for $270 million dollars) and Privalia, an online-fashion outlet (acquired for $560 million dollars)," the report adds.
The city is particularly rich in startups in the white hot smart cities sector, as well gaming, biotech, and pharma. The presence of so many startups in these last sectors is largely thanks to the the many large life sciences companies that already call Barcelona home. "Catalonia is home to the five biggest Spanish pharmaceutical companies, including Grífols, a Fortune 2000 company. The region includes 870 companies in the broader life sciences sector," notes Startup Genome.
The looming shadow of political uncertainty
Thanks to Barcelona's many attractions as a place to live, including its healthy economy, cosmopolitan vibe, and rich cultural life, the city's startup scene has been impressively successful at attracting and retaining talent. "Only 3 percent of startups in our data report having left Barcelona for other ecosystems. This low rate of Startup Leakage reflects the attractiveness of living in Barcelona," reports Startup Genome.
But given the looming political uncertainty of Catalonia's push for independence, will this last? I reached out to Dane Stangler, Startup Genome's Head of Policy, to see if he thought the turmoil would be a significant drag on Barcelona's startup ecosystem in the future.
In an email Stangler stressed that his organization's data collection preceded the referendum on Catalan independence that kicked off the crisis, but he claimed no one they interviewed mentioned the upcoming vote as a factor in their decision making. This and the underlying data have made him optimistic about the future of the city's startup scene.
"Obviously, political uncertainty can eventually affect economic activity, so there is certainly concern there. If Barcelona or Catalonia lost the presence of large anchor companies, that would have an impact on the startup ecosystem, since large companies are customers and sources of talent and future founders," he wrote, but the strong pace of acquisitions seems to point in the opposite direction. If big Barcelona-based businesses were contemplating fleeing, you'd think they probably wouldn't be gobbling up local talent.
Stangler's final verdict: "The deep-seated strengths of Barcelona lead me to believe the ecosystem will be resilient in the face of political uncertainty for some time."