Overcoming a series of crises and corruption, Spain, Greece, Portugal, Italy and other regions south of the Alps have seen their tech ecosystems come to life in recent years like never before.
Perhaps crisis is the mother of invention. Whatever the cause, “the ecosystem is growing a lot stronger in a lot of different angles – investors, public knowledge about startups, etcetera,” said Jorge Gonzalez-Iglesias, co-founder of Bluemove, a p2p car-sharing marketplace based in Madrid.
Gonzalez-Iglesias’s observation echoes that of other startup founders who have passed through the South Summit tent – the leading startup conference and competition in Southern Europe, which takes place inside of a covered bullring at Las Ventas. The South Summit started in Spain just two years ago and has quickly become the epicenter for the entire region’s hottest tech startups and for VCs from around the world.
Eiso Kant, co-founder together with Philip von Have and Jorge Schnura, of Madrid-based Tyba, an online recruitment platform with a focus on junior talent, and winner of the South Summit Early-stage Startup prize in 2013, agreed. “I must say, over the past four years this city has seen tremendous growth in terms of the startup ecosystem.” Miguel Arias, a tech startup champion and COO of Madrid-based CartoDB, a geospatial database in the cloud that facilitates local intelligence for the masses, also said of Madrid, “there have been great advancements in the city’s ecosystem over the past five years.”
The same is true for Barcelona. Christian Rodriguez, founder and CEO of ByHours, an online platform and app for booking hotels by the hour, said, “Now, I think it is a good ecosystem. It is improving everyday. With more investors, with more experience, with good companies that can help you with a lot things…Now it is a very good place, more than three years ago for sure.”
In regards to local venture capital, Antonios Fiorakis, co-founder with Georgios Gatos and Theodoros Orfanidis of Athens-based Incrediblue, an online marketplace for all-inclusive vacation boat rentals, said, “In the south, in Italy, Greece and Spain, I think there are enough early-stage investors to support your company. And I think obviously they are building a good network…with the rest of Europe, like London and Berlin. So the local VC ecosystem is lot more connected now, not that far apart.”
Oscar Macia, CEO and co-founder of Barcelona-based ForceManager, a mobile sales management tool with geolocalization, agreed there is a lot of seed money. But he warned, “It is very difficult to find money for growth. Almost all entrepreneurs still have to go outside of Spain to get money. It’s very difficult, so I think it is something we need to build here. And I think it is a great opportunity because there are a lot of startups right now that will need this money for growing.”
For example, five years ago these South Summit finalists, 24Symbols, Bluemove, ByHours, Cabify, CartoDB, ForceManager, JobandTalent, Incrediblue, Mint Labs, Momit, Traity, Trip4Real, and Tyba, barely existed, some not even in the minds of their founders. Today, they are growing fast and have the numbers to prove it.
Over the past three years, these startups have attracted investment of an estimated 75 million euros. Total investment in all 170 South Summit companies to-date is an estimated 165 million euros.
The leader of the pack is Madrid-based JobandTalent, a job matching platform co-founded by Felipe Navío and Juan Urdiales, with a unique algorithm based on linguistics. In July 2014, they closed a 10.29 million euro Series A funding led by Spain’s Qualitas Equity Partners (QEP), Kibo Ventures, Fundacíon José Manuel Entrecanales and business angels Pelayo Cortina Koplowitz and Nicolás Luca de Tena. In May, they secured a 23 million euro Series A funding round as an extension of the previous investment. A series B round is expected in the coming months.
On a smaller scale, but big in regards to the buzz it created both in and outside the ecosystem, is Barcelona-based Trip4real, an online platform that connects travelers with locals around the world.
Founded by Gloria Molins, Trip4Real made headlines in 2013 when it received 150,000 euros in funding from Ferran Adrià, the world’s most influential chef, together with Toni Segarra and Luis Cuesta, the hyper-creative founders of the prestigious ad agency, with unusual name, *S,C,P,F…. Trip4Real also has received 1 million euros in seed funding from Caixa Capital Risc, Kibo Ventures and ENISA.
The British are coming! Investors from outside Spain and Southern Europe have taken notice of this up-and-coming ecosystem. Incrediblue received 2.3 million euros in a third round of funding in May from London-based Connect Ventures, Firestartr.co, HOWZAT Media, Openfund, and Seedcamp.
Madrid-based Cabify, an online car service, has received over 9 million euros from a mix of investors, including Brendan Wallace, Black Vine and Seaya Ventures, from Silicon Valley, Europe and South America. Tyba attracted 2.5 million euros in investment last year from Sunstone Capital in Copenhagen and the Kuwait Investment Authority.
Over the past one to two years, these startups have put much of that money into growing their teams - on average, increasing the number of employees four times.
Cabify co-founder and CEO Juan de Antonio, increased his team from 30 people at the beginning of 2014 to 150 today. Barcelona-based early-stage startup Mint Labs, a company its co-founders Paulo Rodrigues and Vesna Prčkovska describe as “Google maps for the brain”, and winner of the South Summit Biotech prize in 2014 among many others prizes in the tech circuit, have more than doubled their core team in one year and plan to hire at least two more soon.
To accommodate for this growth Mint Labs recently moved from a co-working space into an office of their own (though due to the Telefóníca strike in Barcelona they were without access to Internet, something Rodrigues and Prčkovska solved in true entrepreneurial spirit by inviting the team into their home).
Madrid-based Traity, an online reputation standard founded by Juan Cartagena, also measures growth in terms office space. In three years, he has moved his company six times, from a Google Campus co-working space with three desks in 2012 to a 2,000 square foot (185 square meters) office of their own today.
Later-stage startups have added offices abroad. For example, ForceManager, which started out in a 20 square-meter incubator space, now has a 600 square meter office occupying two floors on Barcelona’s prestigious Diagonal, as well as offices in Madrid, London and Bogota. Cabify opened an office in Mexico City. And both CartoDB and Madrid-based 24Symbols, an online book subscription service co-founded by Just Hidalgo, Aitor Grandes and Ángel Luengo and David Sánchez, have opened offices in New York.
Getting down to the nitty-gritty of growth metrics, each startup has shown tangible returns on investment. Bluemove has between 15 and 20 thousand active users compared to 9 thousand about a year ago. According to González-Iglesias, “Each month we are triplicating what we did last year. We expect to close our year on a stand-alone basis between 1.5 and 2 million euros in revenues. Last year we closed a bit under 1 million in revenues.”
Rodriguez of ByHours reported 150,000 transactions, or about one transaction every five minutes in 2014, up 150% from the year before. COO Christian Picard expects the revenue “coefficient will be tripled or multiplied by four” as they expand beyond Barcelona and Madrid into bigger cities with more business travellers like London, Paris and Berlin.
CartoDB has 1,000 paying customers, over 100,000 users in 50 countries, and 70 partners including Google Maps partners Cloudsherpas, Appgeo, Onix, and Wabion. Arias said, those numbers “have way more than doubled…in just eight months. We have gone way over triple growth year over year.”
Cabify has been “multiplying revenues every year since we were created by 10 times or more,” said De Antonio. Incrediblue’s Fiorakis said, “In terms of sales, in 2014 we grew like six times, in the triple digits. In terms of fleet, the same, we went from 100 boats to 3,000.” He added, when we first started in 2012, “we couldn’t even imagine we could be in this place today.”
Since winning the South Summit B2B prize in 2014, ForceManager figures have more than doubled. For example, Macia said the company now has 190 clients compared to about 70 last year. In regards to what’s next, Macia continued, “Now we keep executing our strategy for going to international markets...We are going to have a very good position in Latin America. We are expanding into the rest of Europe as well. So it’s going to be a very intense year. And next probably we will go into the US market.”
Navío said JobandTalent has increased users from 1.7 million in June 2014 to 5.3 million today, and expanded its market from Spain and the UK, to Mexico, Chile, Colombia and Venezuela.
Mint Labs is already with various groups doing new treatments pre-clinical research. They are working now with doctors at the Hospital Cliníc in Barcelona doing an imaging study with Parkinson’s patients. Prčkovska said, ”It’s amazing because they call us. They really want to share their patients. We can just go there and collect the data and work with something very tangible, which is very important. And it is very exciting because like that we will build more cases for different neurological disorders and show how our tools help them and then we can scale.”
Madrid-based Momit, an Internet of Things company co-founded by Miguel Sánchez, Eduardo Rodríguez and Miguel Díez in 2012, is not disclosing any figures on revenues or users. But the company has Endesa as a major client is now selling its Smart Thermostat in over 10 countries, including Spain, Italy, France the UK and Germany. Sánchez, Momit CEO, said the company plans to “multiply by 10, to be a reference, not just an SME. We’re on our way to becoming one of the five most important Internet of Things companies in Europe.”
Traity had 700,000 users back when they attended the South Summit in 2013; today they have 4.5 million. Cartagena is proud of their product, which he says is scientifically more advanced than any other similar product in the market. They will be releasing patents very soon.
Trip4Real has reached 25,000 users in the year since the platform went live. They’ve opened in five other countries since presenting at South Summit last year, and are currently operating in London, Paris, Rome, Lisbon, Edinburgh, and Dublin, with an eye on Amsterdam.
If the growth at these companies and the popularity of the South Summit conference are accurate indicators, the Southern European tech industry is well on its way to reaching maturity and recognition as a world-class startup ecosystem. Each has potential to go on to become the region’s first Unicorn - a popularized term for a startup that receives a valuation of over $1 billion.
“It’s really about the big stuff,” concluded CartoDB’s Arias. "The idea of over growing from 50 to 500 and then to 5,000, and creating our first unicorns… the big funding beyond the series B. The scaling up guys. All of that. That’s what’s missing now, but I think it’s coming.”
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