2. IMPROVING THE ECOSYSTEM TO CREATE
GREATER OPPORTUNITIES FOR SUCCESS
We have some of the brightest people living in Spain. However, a great
portion of this talent is lost as individuals go abroad to search for better
professional career opportunities. The amount of professionals that go
abroad is especially high for industrial, mechanic, electronic, computer
engineers and specialists in new technologies1.
If we want Spain to regain its productive capacity, we need to facilitate the creation and
consolidations of innovative companies that can offer new jobs. We have the
motivation and necessary tools to do it, but we need to remove the existing barriers and
unite our efforts to improve the possibilities for success from within the ecosystem. The
solution doesn't come from one individual or group, all stakeholders in the ecosystem
need to work together.
TALENT: We need to stop the brain drain
because it has a very negative impact on
the economy.
CAPITAL: We need more access to capital
to drive up the reinvestment of profits
and to attract foreign investments and
increase access to crowdfunding.
REGULATORY ENVIRONMENT: We need a
stable and effective legal framework to
facilitate the creation, management and
closing of companies.
ECOSYSTEM: We need to overcome the
difficulties that prevent us from
materializing the startup potential that
exists in Spain. This potential has grown
significantly in the last couple of years.
EDUCATION: It is fundamental to drive
the entrepreneurial spirit in all stages of
education.
CULTURE: We need to overcome the
cultural barriers that damage
entrepreneurial activity.
OURPRINCIPLES
1 http://www.eldiario.es/economia/Sanitarios-ingenieros-arquitectos-demandados-extranjero_0_74192893.htm
3. 89% of employment in Spain is
generated by companies of 20
or less employees2.
SMEs represent more than
65% of Spanish GDP3.
By 2018, startups in Europe will
employ almost 5 million
people and will generate 63
million ? in profits4.
2 https://emprendedores.fundacionbankinter.org/Conocimiento
3 http://www.espanaconecta.es/pdf/BCG_espanaconecta.pdf
4 http://www.dw.de/digital-start-ups-key-to-eu-future/a-17498256
4. IMPROVING THE ECOSYSTEM TO CREATE
GREATER OPPORTUNITIES FOR SUCCESS
Everyone must cooperate to drive growth and innovation. We have
identified 5 key stakeholders that can contribute to improving the
Spanish ecosystem:
Investment
Legislative Pow er
Universities
Entrepreneurial
Community
M ass media
Big
Companies
Spanish
Startup
Ecosystem
5. Talent
- Increasing startups' competitive
power in the labour market in order
to hire the best professionals:
- Ease the social charges
- Facilitate stock options for
employees
- Simplify the recruitment of foreign
talent
- Promote startups as a possible
professional career
Capital
- Improve fiscal policy and promote
reinvestment
- Attract international investment
- Improve the efficiency of public
investment
- Boost investment in Spain
Regulatory Environment
- Upgrade and homogenize the
regulatory environment
- Simplify procedures for creation and
management of companies
- Improve options after failure
- Buy more from SMEs
Ecosystem
- Improve available information on
initiatives for entrepreneurship
- Interconnect Europe
- Share resources and good practices
- Bridge the gap between expert and
unskilled entrepreneurs
- Create physical hubs
- Interconnect the most important hubs
with peripheral areas
Education
- Use methodologies to foster creativity
and active learning
- Promote qualifications of educators
- Get educational institutions in touch
with market reality
- Promote technological transfer
- Promote business creation programmes
in universities
- Improve language proficiency
Culture
- Help society better understand
startups
- Unveil the true potential
- Remove the stigma associated with
"ambition"
- Nourish change and innovation, and
stop punishing failure
6. Talent
In Spain, we are suffering from a severe brain drain which has
a negative impact in all aspectsof our economy.
There is a strong desire for talent in the startup industry. For Spanish startups to
be able to compete on equal terms with other companies they need to be able
to pay better wages. To achieve this goal we suggest that we:
Ease social
charges
The social chargesthat companies have to bear
are really high. It will be very helpful to create a
new system to calculate social security
contribution rateslinked to the turnover,
especially during the first years of a startup5.
Often times, startups need to hire professionals
that are outside of their budget. Hence, many
startup offer stock options ?suplementary to
salary earned. However, in Spain stock option
taxes are so high that rather than it being a
motivation for them, it cost them money.
Therefore, we recommend revising legislation in
regards to this issue.
Facilitate stock options
for employees
5 http://chamberivalley.com/2011/12/06/manifiesto-espana-emprende-promovido-por-chamberi-valley/
7. Simplify the
recruitment of
foreign talent
Spanish startup ecosystem is really young and
experienced entrepreneurs are scarce. Attracting
foreign talent to work in our startups would give
startups the necessary experience to increase
their possibility of success. We suggest
simplifying legal procedures for startups and
employees, so that it is easier to hire people with
the necessary technical skills and to work from
outside the European Union.
Despite some initiative's efforts, few students
see startupsasan option for their professional
career. Thus, we need to increase our efforts to
advertise the possibility of creating new
companies and that working in startups is a
viable career option.
Promote startupsasa
possible professional
career
8. Capital
We need to increase accessto capital in Spain. In order to succeed, we
need to promote reinvestment of profitsby entrepreneursand
experienced investors, attract foreign investment and improve
accessibility aswell asconditionsof crowdfunding.
Capital gainsbear such high taxesthey discourage
investment in startups and successful entrepreneurs
from pursuing new ideas. Investors prefer traditional
forms of investment because they are less risky and
they pay less taxes, while successful entrepreneurs do
not like to see their earnings go to taxes.
Improve fiscal policy
and promoting
reinvestment
Most of the available information about startups in
Spain is in Spanish. This language barrier makes it
difficult to attract foreign investment. It is necessary
for startups to translate their work to English, in order
to communicate outside of Spain.
- We need to give more visibility and support to our
successful investors, as they demonstrate how
money can be made by investing in Spanish
startups.
- New publicco-investment initiativesshould
foster the presence of international funds with
proven experience in startups.
Attract international
investment
9. Improve the
efficiency of
publicinvestment
To ensure equal opportunity, we think it is important for
small public aid to exist for the early stages of a startup.6
However, at the same time, we think it is essential that
this aid is screened and supervised by evaluators with
proven experience in startups.
Public financial structures have to be flexible and capable
of adjusting to the local ecosystem because more money
doesn't always mean greater success.
The percentage of failed companies is really high and very
often investors don't know the valuation mechanismsand
criteria of startups as well as how to investment in them.
It is advisable that both public organisations as well as
investors and business angel associations:
- drive up reinvestment of profits from entrepreneurs and
experienced investors;
- open small investments through positive regulations and
tax policies towards equity and crowdfunding platforms;
- promote access to publiccapital marketsand make them
more attractive to high-growth companies;
- provide training about the peculiarities related to
investing in startups, especially around the valuation
process;
- boost co-investment with experienced investors;
- advertise the advantage of investing in startupsto big
companies because large firms are one of the key drivers
of investment, collaboration and acquisition of startups
in more developed ecosystems.
6 ?Las pequeñas empresas están [...] mucho más necesitadas de financiación que las grandes corporaciones?
http://chamberivalley.com/2011/12/06/manifiesto-espana-emprende-promovido-por-chamberi-valley/
Boost investment
in Spain
10. Regulatory Environment
We think that government shouldn't be the primary driver of a
country's entrepreneurial ecosystem, but it does play an
important role in its success. The legal framework has to be
stable and favourable so that it promotes the creation,
management and closing of companies.
Startups are creating business models that are ahead
of obsolete regulations, which were created without
taking into account on-line marketing and
distribution.
The situation will improve greatly if governments in
the EU jointly created a minimum legal framework
that would act as a guide for innovative technological
startups until specific regulations are developed for
their activity.
In Spain, the process of creating and managing
companies is still very long and expensive. This is
one of the reasons why many Spanish founders
choose to build their startupsin other countries, like
the UK or the USA. We need to continue to support,
improve and simplify those procedures in order to
promote growth and the creation of new jobs7.
Upgrade and
homogenize the
regulatory
environment
Simplify proceduresfor
creation and
management of
companies
7 In the World Bank's report "Doing Business" Spain's ranking climbed from 115th to 74th place. However w,e are still very far
from the average of our neighbouring countries (54) (http://espanol.doingbusiness.org/data/exploreeconomies/spain/)
11. Improve the options
after failure
Society penalizes failure enormously. Besides the
social consequences, entrepreneurs who fail have to
face legal and financial consequences. Legislation
should reduce financial consequences of failed
businesses, so that entrepreneurs can learn from their
mistakes.
?Research shows that businesses created by
re-starters grow faster than businesses set up by first
timers in terms of turnover and jobs created?8.
Buy more from SMEs
In general, government agencies and corporations
minimize their risk by hiring larger firms. ?For many
entrepreneurs, selling to the government is all but
impossible [...]. If EU governments want to kick start
the engines of growth in their countries, they must
commit to shifting a certain percentage of their
procurement contracts to smaller firms?9. We suggest
policies that encourage government agencies and
corporations to work more with SMEs.
8 A second chance for entrepreneurs: prevention of bankruptcy, simpli?cation of bankruptcy procedures, and support for a fresh
start?, European Commission, January 2011;
http://ec.europa.eu/enterprise/policies/sme/business-environment/?les/second_chance_?nal_report_en.pdf
9 http://startupmanifesto.eu/files/manifesto-es.pdf
12. Ecosystem
The Spanish startup ecosystem lacksconnection between different
initiativesaswell asuseful and objective information about available
resources. Furthermore, since the ecosystem isso young, there existsa large
disproportion of experienced and unskilled entrepreneurs.
Hence, it isnecessary to:
Improve available
information on initiatives
for entrepreneurship
There are many public and private initiatives
(incubators, contests, grants, workshops? ), but:
- some of them, such as public grants, go unnoticed
due to an excess amount of initiatives;
- on the other hand, some of these initiatives don't
have a clear value proposition and there is no
objective way to measure their contributions. Thus,
entrepreneurs don't know where to look for the help
that they need.
Interconnect
Europe
Besides improving the Regulatory Enviromentment,
there are several things that can be done within the
ecosystem to make startups feel "European":
- facilitate access to accelerators in the rest of Europe
and exchanges between programs;
- promote the exchange of ideasand develop links
between initiatives to help startups in other
countries, similarly to programs promoted by the
European Commission.
13. Share resourcesand
good practices
Our ecosystem is young and, thus, inexperienced. Lack of
resources such as quality mentors and capital is common.
The situation would improve considerably if initiatives
collaborated by sharing knowledge and mentors such that
startups can be supported by various initiatives.
Bridge the gap
between expert and
unskilled
entrepreneurs
There is an overflow of new entrepreneurs in the
ecosystem, along with a growing number of initiatives that
are dedicated to helping them. Only a few are aimed at
experienced entrepreneurs and fewer are able to assist
both. Hence, there are little to no opportunities for
experienced and unskilled entrepreneurs to meet and
collaborate.
This lack of interaction causes new entrepreneurs to
commit rookie mistakesthat would have been quickly
detected and avoided in more matured ecosystems
Create physical
hubs
In places with large concentration of startups, the transfer
of knowledge and collaboration between different
stakeholders come naturally.
Therefore, it would be beneficial to promote the creation
of an epicenter in geographical areaswith enough
potential, in order to centralize the headquartersof
startupsand initiativesfor entrepreneurship.
Interconnect the most
important hubswith
peripheral areas
The most important hubs in Spain attract a large portion of
entrepreneurial activies. It is typical for bright and talented
individuals to move to these hubs or outside of Spain. To
avoid this we could:
- facilitate accessto resourceswithout having to re-locate
physically;
- promote local initiativesthat addressesthe needs of each
area.
14. Education
It isessential to stimulate the entrepreneurial spirit at all stages
of education10. We need to teach young people not only how to
start a new businessbut also help them discover their passion
for thisline of work. Hence, we suggest to:
Use methodologiesto
foster creativity and
active learning
Our education system fails to explore individual talent
and teach transferable skills11. Classes are not
proactive. An engaged classroom helps students to
face and solve new situations, to venture, to make
mistakes, to learn from those mistakes, to take risks
and to enjoy this process. It is important to understand
that failure isa precursor to success.12
"The European Commission has said more needs to be
done to give all children access to proper ICT
training"13. We need to teach children not to be mere
consumers of technology but to to see it as a tool to
change the world.
Promote qualificationsof
educators
Educators can't effectively teach new methodologies
or tools without prior training and experience. Many
have only taken an accelerated course on the subject
and that is not enough.
10 http://chamberivalley.com/2011/12/06/manifiesto-espana-emprende-promovido-por-chamberi-valley/
11 Eduardo Serra, president of Fundación Transforma
12 http://chamberivalley.com/2011/12/06/manifiesto-espana-emprende-promovido-por-chamberi-valley
13 http://startupmanifesto.eu/files/manifesto-es.pdf
15. Get educational
institutionsin touch with
market reality
Curricula should include present market application
in addition to theoretical thoughts and teachings. It is
concerning that 79% of company executives think
that educational institutions aren't producing the
right talents needed by these companies.
Promote technological
transfer
We think it is essential to improve and strengthen
mechanisms to better facilitate the transfer of
research results from universities to companies or to
create new companies from them.
Promote business
creation programmesin
universities
"University ventures are 100x more likely to turn into a
publicly traded company"15. Universities should
encourage the development of networkswith
entrepreneurs, investors and mentors. Its an ideal
environment where students can have their first
entrepreneurial experience without having to worry
about their family or current financial situation.
Improvement of
language
proficiency
We acknowledge efforts to introduce bilingual
learning in every stage of education, but the expected
results are not being achived. It is necessary for all
professionals to improve their language proficiency,
especially English.
14 Survey by APD and People Excellence, http://www.apd.es/Inicio/Noticia.aspx?i=b0433fa2-d3b7-40d2-b280-b38aa19a24f9
15 http://blog.up.co/2014/09/08/white-paper-announcing-5-ingredients-fostering-thriving-startup-ecosystem/
16. Culture
The Spanish entrepreneurial ecosystem hasmade a lot of progressin
the last couple of years. However, there are still some individual and
cultural elementsthat damage entrepreneurial activity and affect
personal and corporate decision making processes. Hence, we suggest
to:
Help society better
understand startups
Not everyone understand what a startup really is,
how it works, why they are important and the world
that they live in. We need to make an effort to inform
and change the public perception of what it means to
be a technological entrepreneur.
Unveil the true
potential
In Spain, there is strong individual and national
self-criticism.
Personal self-criticism causes many new entrepreneurs
to "sell" themselves short because they feel
unprepared. As a result, many opportunities slip
through their fingers. Furthermore, they don't think
they can be better than their foreign competitors. They
are reluctant to explore possibilitiesoutside of their
comfort zones, but when they take the risk they find
their fears to be senseless.
Programmes that allow new entrepreneurs and
students to travel and live temporarily in other
entrepreneurial ecosystems help them to discover their
true potential and gain self-confidence.
Additionally, creating an international environment
where different cultures can mix can have a similar
result.
17. Remove the stigma
associated with
"ambition"
The concept of ambition in the Anglo-Saxon culture is
slightly different. It's based on personal achievements
and is considered to be positive. However, in Spain
individual success and ambition is seen with mistrust
and suspicion.
70% of university students believe they have no
control over their professional career16. Hence, there is
a strong tendency to conform and to stick to the status
quo.
We need to encourage personal and professional
success as well as support entrepreneurs with
ambitious goals.
Nourish change and
innovation and stop
punishing failure
A large portion of society sees change with distrust.
They prefer to minimize risk at the dispense of success.
People fear being criticised for being different and
there is a lot of pressure to follow the path that
everyone else is taking.
As we've seen in Regulatory Environment, failure is
punished. Since mistakes are frowned upon, it is very
difficult to take the necessary risks for innovation. In
many cases, the decision making process is influenced
by this fear: from the creation of new companies to
hiring SMEs (no one has been fired for hiring IBM17).
Besides changing some aspectsof legislation, we
believe it is necessary to change the perception of
failure. We have to ensure that failure is seen as
positive; a chance to learn from prior mistakesand a
step towards success.
16 http://novobrief.com/spanish-startup-ecosystem-american-pov/
17 http://loscuenca.com/2010/04/nunca-han-despedido-a-nadie-por-contratar-a-______/
18. Writers of this document:
Carmen Bermejo Hernández
Tetuan Valley
María del Mar Mitjavila
Tetuan Valley
Javier Megias
Startupxplore
This document captures the contributions of many entrepreneurs and acknowledged figures of
the entrepreneurial ecosystem. We want to highlight (in alphabetical order) the contribution of:
Justo Hidalgo
24symbols
Mario López de Ávila
Agile Entrepreneurship
Spain, Nodos en Red, UEIA
Juan Cartagena
Traity
Iñaki Arrola
Coches.com, Vitamina K,
Chamberí Valley
Alejandro Barrera
Press 42, Tech.eu
MarcosEguillor
IdeaFoster
Miguel Arias
Carto DB, Chamberí Valley
David Bonilla
Otogami, Runnics
LuisMartín Cabiedes
Cabiedes & Partners
Jorge Schnura
Tyba
Israel Gutierrez
H4ckademy
