Could Barcelona become Europe’s Silicon Valley?
Known for its stunning architecture, vibrant culture, and pristine beaches, Barcelona is quickly cementing itself as a booming gravity center for tech and innovation.
The emergence of unicorns such as Glovo (acquired by Delivery Hero), TravelPerk, Belvo and eDreams has spurred the development of the city’s startup ecosystem. This, together with a favorable business climate has bolstered the accessibility of venture capital. According to a new report by Dealroom, Spanish startups now exceed €100 billion in total valuation.
Several experts agree. The Boston Consulting Group has ranked Barcelona as the fifth most attractive city in the world for digital professionals. It also ranks sixth on EU-Startups’ list of the largest European startup hubs. The excitement around the city’s potential is such that Jordi Ribas, corporate VP of Search & AI at Microsoft, said it “has all the necessary elements to become the ‘Silicon Valley of Europe’ in the next 10 years.
In this article, I will assess Barcelona’s potential to live up to this promise, by examining its achievements and prospects in the technology industry.
Key factors behind Barcelona’s tech sector growth
Infrastructure and location
First of all, Barcelona is strategically positioned as a gateway between Europe and other countries. Thanks to its international airport, as well as the seaport, there is no problem to go to any part of the world and back.
Also, the city’s development strategy has created spaces that facilitate collaboration and creativity. For example, the area of Poblenou was transformed into an urban innovation and technology center — 22@ Barcelona Innovation District. Spaces like these tend to be a magnet for founders, and add a layer of appeal to an already enticing place.
Priscilla Lavoie, a marketing expert based in Barcelona, expands on this. “I think the general attractiveness of Barcelona — the culture, great weather, and central location within Europe — makes it easier for companies in the city to attract tech talent from across the globe. People are willing to move here, which makes the talent pool much larger,” she states.
Growing investment landscape
No innovation ecosystem can flourish without access to capital. Hence, part of Barcelona’s recent prowess is linked to the growth of available funding. According to the Barcelona and Catalonia Startup Ecosystem Report, Catalan startups raised over €5 billion between 2019–2023, 231% more capital than in the previous five-year period. Another report, Mobile World Capital’s Startup Ecosystem Overview, states that Barcelona startups have secured 66.4% of all investments in Spain. It is also worth remarking that according to Dealroom, sectors like climate tech and biotechnology, which hold some of the most promising ventures right now, are snatching most of the capital available for Spanish startups.
This has resulted in a thriving ecosystem. For example, the same Catalonia Startup Ecosystem Report mentions that Barcelona ranks fifth in terms of tech scaleups, with 283. This means companies that have survived the startup stage and have demonstrated their viability. At the same time, projects like the Barcelona Supercomputing Center, which now boasts over 150 research projects, create a cluster effect and foster collaboration between academia, Big Tech — Intel, Cisco and IBM, to name a few, are partners of the center — and innovators.
As sizable amounts of funding now gravitate towards deep tech, Barcelona could even have more to win. “Key developments like the recent addition of international submarine cables and the expansion of the Barcelona Supercomputing Center are making the city a prime location for startups in the quantum, AI, and health sectors,” said Nicolás Ventura, Head of Operations at Club GLOBALS, a growth network for tech leaders.
Government support
No ecosystem is complete without government support, as founders tend to relocate to entrepreneur-friendly hubs where they can focus on growing their businesses. To increase the region’s allure and attract talented innovators, the Government of Catalonia established ACCIÓ, the agency of business competitiveness. Through its Startup Capital program, ACCIÓ is granting €45,000 to promising tech-based startups. At the same time, the organization is lobbying for policies that make it easier to set up a company in the region.
In 2023, the federal government introduced a nationwide initiative dubbed the Spain Startup Law, which encompassed reducing the corporate tax rate from 25% to 15% for a maximum of 4 years — as long as the company was still considered a startup — and implementing a digital nomad visa to make it easier for international founders to settle. Other measures, such as a 10-year tax exemption on up to €50,000 on stock-based compensation per year, are intended to make it easier to secure talent.
However, there are caveats. To qualify for some of these exemptions, companies needed to be certified by Enisa, a new government agency. Sifted reported that by the end of 2023, only 600 startups were certified out of an expected total of 10,000. Despite these challenges, though, the move seems to have worked with investors. Even if overall VC funding was meager in the last couple of years, Spain seems to have developed more resilience to the global slump.
Talent and education
In Europe, cities like Berlin, London, and Madrid are vying with Barcelona to attract and retain top talent. Compared to some of these European hubs, Barcelona has several competitive advantages. The cost of living is lower than in London or other places like Stockholm, and the lenient weather and more social lifestyle could also have a say.
This, by itself, is not enough though. For companies to have access to a stable stream of talent, a city needs to have thriving universities and research institutions. This is definitely the case for barcelona. Institutions such as GBSB Global and business schools like ESADE, EADA, and IESE, which are listed in the top ranks in Europe, can provide plenty of talent, mentorship, entrepreneurs, and even interns to Barcelona’s start-up scene.
Access to accelerators and communities
Incubators and accelerators play a key role in boosting a city’s tech scene. Barcelona abounds with them. One of them is Startup Grind, a global community that, through its chapter in the city, has helped connect innovators through gatherings, keynote speeches, and fireside chats. Norrsken, a Swedish impact tech powerhouse, has also set up shop in the city and opened a startup house, as well as Tech Barcelona, a private non-profit that has played a pivotal role in integrating technology into the city.
There are also many top-notch events, something that Nicolás Ventura alludes to. “The city is home to some of the biggest tech conferences in the world, like MWC/4YFN, which gathers over 100,000 tech leaders annually, and the Smart City Expo, which draws global attention and fosters international collaboration on critical issues,” he says. If some factors are paramount to attracting talented individuals, this might be one of the keys to getting them to stay.
Potential barriers and challenges
Economic and political uncertainties
Spain’s economic fluctuations can affect investment in innovation. If the overall country’s economy experiences a downturn, funding for startups and research projects might be reduced, causing the founders of these ventures to flock elsewhere.
Bureaucracy can be another problem. As I mentioned, there have been hiccups in the full implementation of Spain’s Startup Law. Canada had a similar problem and presents a cautionary tale. Even though the Startup Visa program looked good on paper, its long wait times diminished its appeal, until many companies chose to establish elsewhere.
Also, there needs to be a careful balance. While growth is good, something that happened in Silicon Valley, for example, is that the excess of capital benefited people who worked for a few companies, but resulted in a prohibitive cost of living for the rest. This led fledgling entrepreneurs to look for other places to start their businesses.
Intense competition
If Barcelona falls behind in some of the aspects presented above, other cities might capitalize on that. There is an intensified competition not only across Europe, but around the world. And despite Spain’s attractiveness, it is still, according to Dealroom, a mid-tier player.
To make a point of comparison, French startups reached a total valuation of €100 billion six years ago, and German startups nine years ago. Does this mean that Spain is lagging that much? Not necessarily, since growth can be exponential. However, it signals something more important. Ambitious startup founders do not hesitate to leave a place where they don’t feel supported.
Cultural factors
Compared to professionally-oriented cultures like the United States, Spain is much more relaxed and focused on work-life balance. Also, business tends to center more around relationships.
This is evident in the Hofstede dimension scores. Spain scores low on motivation compared to the US, and high on indulgence. While overall this is not necessarily bad, it is important to strike a balance. Too much pleasure and too little work could cause Barcelona’s startup dreams to flounder.
Does this mean that talented individuals with a big vision will leave? Lena Shagieva, founder of PreggApp, an AI-powered pregnancy tracker, has an interesting perspective. “There is a reason why there is only one Silicon Valley. After experiencing living there and living here (Barcelona) now, I can tell, these places are built for different lives. Silicon Valley is a place with a laser focus on success, on money. It’s a high-octane rat race,” she remarks.
Lack of funding
Finally, it could also boil down to money. While capital available is increasing, deal flow is still slow compared to other hubs. “Barcelona has great potential, however, I believe there is a need for a more virtuous circle of money flowing into the ecosystem for it to become the EU Valley,” said Priscilla Lavoie.
She also commented that, “while we have seen interesting exits in the last 5–10 years, the majority of large investors in these companies were from the US, UK, and France, so most of the money leaves Spain and doesn’t really support our ecosystem at home.”
Lena Shagieva also touches on this. “It can be an optic problem, or because money is expensive here, but at the end of the day, businesses need money and startups need to see actual deals happening — know people who have had big money exits,” she says.
Final thoughts: Is Barcelona the next Silicon Valley?
The point of comparing many cities to Silicon Valley has been made countless times. Many places have been there — Tel Aviv, the Kitchener-Waterloo corridor, Austin and Seattle, to name a few. However, it is always a misleading comparison, because every city has unique aspects that contribute to its development or lack thereof.
Hence, the idea of Barcelona becoming the “Silicon Valley of Europe” is not accurate. Silicon Valley has singular conditions that result in a high concentration of unicorns, and setting such standards can create unrealistic expectations for Barcelona.
I rather endorse the vision of Luis Cabiedes, one of Spain’s most well-known VCs and angel investors, who states that Spain needs to develop its own model rather than trying to imitate Silicon Valley. In this regard, it is unlikely that Barcelona can rival Silicon Valley in scale. Yet, it still has the potential to become a significant player in the European tech landscape, and to do it in its own way — leveraging its strengths and distinctive advantages.
