Startup Hubs Around the World: Barcelona
The variables that go into selecting a location for a start-up are different for every company. The type of product, the manner of customer engagement, the needed resources are unique to each start-up. Some locations, however, simply charm everyone and seem to be destined for great things. The city of Barcelona is a city with rich heritage and vibrant present – giving visitors and residents a glimpse of both their past, and their future. Despite the old world charm of the architecture and buildings, however, Barcelona has firmly embraced the modern lifestyle and has begun to make a name for itself in the world of entrepreneurs.
This is not a new idea for Barcelona. They seem to have a knack for keeping an eye on the trends of the world and always manage to stay current. City leaders have great ideas for what should be done with the city, there just needs to be a bit of fine tuning to make sure that it is done in order. For the start-up looking for a location, Barcelona offers potential that simply can’t be found anywhere else. This is not the market for every start-up, but there is plenty of opportunities that should not be left off any serious list of possibilities.
In this article, we look at six essential elements of any potential start-up location that must be considered: 1) location, 2) tax incentives, 3) legal incentives, 4) availability of investors, 5) local resources and workforce, and 6) specialization.
Barcelona is a beautiful city, with beaches and old world architecture that delights visitors. The climate is ideal for outdoor living and activities, as for example enjoying boasts of 7 beaches within Barcelona’s city limits. Spain offers a laidback atmosphere, but Barcelona virtually hums with the anticipation of what a vibrant and entrepreneurial city it can become.
Recent redesigns of the city have generated a creative, vibrant location where residential areas are seamlessly mixed with commercial enterprises, and contemporary architecture sits next to industrial designs. The result of urban planning and an unique approach to zoning, the city feels as though it has always been a traditional, well-planned-yet-casual place. A well-designed metro system connects the city and has stops conveniently located near the beach and benches.
The city of Barcelona is dotted with start-ups. Compared to Silicon Valley, where a majority of the tech firms are centrally located, Barcelona’s are spread throughout the city. Unlike other tech start-up hubs, the city has a more unified entrepreneurial spirit, most likely due to the widespread acceptance of the city’s tech firms. While it will most likely never rise to the level of some of the larger cities that boast tech start-up, it can certainly be a contender in the tech field.
Easily accessed through a variety of methods, Barcelona can be reached fairly quickly as needed. As a port city, transporting goods both in and out can be easily managed and can make the manufacturing process easier. As a part of their reinvention process, Barcelona is transitioning away from a manufacturing economy and is moving towards an economy based on knowledge.
A former industrial area in the city has been revitalized into an innovation district that is the forefront of the resurgence Barcelona is having as it re-invents itself. Over 110 city blocks wide, this creative city within a city has helped to create the atmosphere in Barcelona that has helped to redefine it as a city that is moving forward.
2. TAX INCENTIVES
Barcelona’s government is working hard to establish the city as a premier entrepreneurial hub. Through their Barcelona Activa initiative, the government is implementing programs that will eliminate some of the red tape typically associated with beginning a start-up in Barcelona. Innovative systems put into place by the government provide start-up companies with tax benefits for beginning and maintain a presence within the city, daily events for entrepreneurs and networking opportunities that will allow key leaders to collaborate easily.
To identify the available tax incentives that Barcelona offers, you will need to use a certified public accountant that is familiar with international banking laws. There are various regulations that apply, depending on the citizenship of the owner. Barcelona does offer tax incentives to natives who begin companies, but a CPA would be better equipped to give specific details about those credits.
3. LEGAL INCENTIVES
The Barcelona Activa program is helping to speed up the process of starting a company. Through this program, they are helping to reduce the painstaking process of the paperwork and legal aspects of a start-up and are reducing both costs and aggravation. The city is offering a continually growing list of incentives to induce companies to start and expand within the city of Barcelona.
Establish a relationship with a lawyer who is well versed in the laws of Barcelona. There are specific things that must be taken care of – especially as a foreigner starting a business. Don’t assume that it can be done at any time – get the paperwork filled out immediately to avoid any potential problems down the road.
4. AVAILABILITY OF INVESTORS
Initial investors in the tech start-ups are plentiful. Problems arise when trying to secure a second round of additional funding – there doesn’t seem to be a well-established group of investors who desire to invest in existing companies. With the addition of new sources of funding, and an increase in competition for the funding, tech companies will be able to not only hone their company offerings; they will be able to secure funding easier.
One of the cautions for Barcelona’s growing tech community is the tendency to overlook traditional, big business industries in favor of start-ups that flare and then fizzle out. The long term business angel who is willing to put small to medium amounts of money into growing a business will do well in Barcelona. Equally as important are the venture capitalists who simply want to jump into a starting business with a sizable investment and then recoup their investment. Although in the last couple of years the number of funds and investors has increased in Spain, both types of investors would have huge investment opportunities in Barcelona. The challenge will be to secure the funding that will draw more investors, which will then bring more start-ups.
5. AVAILABILITY OF LOCAL RESOURCES AND WORKFORCE
The city of Barcelona is attractive as a start-up hub primarily because it is working so diligently to be start-up friendly. It is making great strides to attract a quality workforce as well as high tech start-ups. The city of Barcelona and Spain in general offer low cost base for every start-up, which local and international start-ups can enjoy as competitive advantage.
Barcelona is home to two engineering schools, giving the area a number of highly skilled workers. A comprehensive guide to Barcelona’s entrepreneurial spirit, the Barracino is an online feature guide to everything for the entrepreneur and offers various product developments and the latest events all in one convenient location.
However, Barcelona is struggling to hold on to talented workers to fill the start-ups that it is hoping to draw. The engineering schools certainly bring the right type of people to the city, but keeping them in the area, while encouraging them to consider becoming entrepreneurs is proving difficult. They need to establish a mentoring system to allow younger entrepreneur support. To accomplish this, they will need to find a way to encourage older and more experienced business owners to return to Barcelona. There is a sense that if they can convince one start-up to stay and become successful, the rest of the world will notice and the start-ups will follow.
In order to be successful, Barcelona will need to start thinking long term. There are individual pockets of progress being made, but they don’t seem to connect to each other. There does not seem to be an overall master plan or vision for what the ultimate goal is – it was just an idea to revitalize the city. The leadership of the city needs to establish some long term goals, and then develop the steps to be taken to accomplish those goals. Promoting entrepreneurship within the school system, encouraging young people to consider working in highly technical fields and staying in Barcelona will help to solidify the tech market of the city.
Barcelona Startup Eco-Systems: Ympact
Innovative start-ups, incubators and active networks all find their home in Barcelona. In the last few years, Barcelona has set out to establish itself as a tech start-up hub and is beginning to show signs of success. Listed in the top 30 cities for tech start-up, it is on track to impact the European market with their start-up offerings. It is struggling with some of the key elements that they will need to sustain their spot on the tech start-up list, and will have to work quickly to correct those types of mistakes that will cause greater problems down the road.
There does not seem to be one particular area that Barcelona has focused on, but there seems to be growing interest in the bio-engineering and bio-medical fields. Barcelona has a fairly diversified economy, and has all the elements needed to be a successful start-up hub. The elements which can be improved are talent and connection. Trying to bridge the gap between the already established pieces and then fill the gaps will be the challenge that Barcelona faces in the coming years. The growing bio-medical and engineering fields have long term potential, but to assert themselves as a leader on the world stage, Barcelona needs to move quickly. Attracting high tech start-ups in these fields can be accomplished with the right incentives.
Barcelona has reinvented itself several times through its history. As the former Olympic host city, Barcelona underwent a transformation that dazzled the world as they tuned in to watch the games. Now that they have turned their attention towards the tech market, there should be very little doubts in any one’s minds that they will manage to once again reinvent their image. Barcelona has always adapted well, and is constantly changing to stay current and relevant. The challenge for the city will be if they can manage to turn the tide of tech fields fast enough to attract both entrepreneurs and investors.
Notable start-ups that have come out of Barcelona:
Kigo: A Barcelona start-up, this vacation rental management system was purchased by a US software company for over $30 million. A scheduling program that was used by both owner and renter, the program will become part of a larger vacation rental program. Time will tell if the software was purchased for use or simply to eliminate other players in the vacation rental realm.
HotelNinja: This start-up was snatched up by Priceline for an undisclosed amount. A cloud based system to manage hotels; it will most likely be integrated into their current system. Similar to what Priceline already has in place, it seems as though the HotelNinja was purchased to prevent competition. Whatever the reason for the sale, Barcelona can claim the company as one of its own.
Interestingly, these two deals were both done on the same day. They generated a fair amount of interest in the Barcelona market, and seemed to draw attention to the fact that there is a growing start-up hub in Spain that is sneaking up on the competition.
Rock Your Meal: A start-up aimed at eliminating cries of “There’s nothing to eat!” this program is designed to give meal options based on what is currently in your pantry. Simply type in what you have to cook with and the Rock Your Meal plan will provide you with recipes. It also adds a shopping feature that details where to find the best deals on grocery shopping and a diet minder that keeps track of what you’ve eaten.
Barcelona has the potential to be a heavy hitter in the start-up hub arena. All of the pieces are in place; it is just a matter of getting them all in the right place, at the right time. With a system of funding already established, a robust collaboration community that supports and encourages organic growth across the city and a creative environment that is rich with ideas and knowledge, Barcelona is poised to spring into action. With the government initiatives that support the start-up market, there are multiple reasons to find Barcelona attractive to an entrepreneur looking to establish a location. The question that remains is simply what company will be the ‘one big deal’ that puts Barcelona on the map. The field is wide open, and it is anyone’s guess what company will claim the spot. Time will tell.
In San Jose we talked with entrepreneur Mark Lee about the business model of Splashtop. …