By Lukas Walter and Merijn Kramer
The financial crisis of 2008 was tough for the startup community of Madrid, but the creative sector is growing again. More and more startup-entrepreneurs are standing up to build up their own businesses in the Spanish capital. More and more people from Latin-America and other countries are coming to Madrid to start up their businesses due to the better entrepreneurial climate in the city.
One of the most important factors for the success of a big city lies in its economic success. A significant indicator for this is the startup community and the creative industry. It builds up the future economy and attracts even more entrepreneurs from outside.
In terms of funding Spanish startups, 2015 was a record year. According to ASCRI (Asociación Española de Capital, Crecimiento e Inversión), Spanish startups received a total amount of €659.4 million, representing a stunning 83 percent growth in volume from 2014. Catalonia and Madrid accounted for 60% of all these transactions. According to startupxplore.com, one of the biggest startup-databases in Spain, there are around 3000 startups in Spain. Approximately 900 of them are located in Madrid.
There are many hubs in the city that try to help founders get started: not just in a financial way, but by providing a space for founders to network with other entrepreneurs. One of those hubs is Campus Madrid, a working space and startup-hub for future business-owners. It was initiated by Google to stimulate entrepreneurship and build entrepreneurial communities around the world.
‘’This is evidence that the Madrid area is a very upcoming area for entrepreneurship and creative startups.’’
The fact that Campus by Google has landed in Madrid, gives a lot of entrepreneurs at the working space confidence. When talking to several Spanish entrepreneurs at the Campus Madrid, they are very happy with Campus coming to Madrid. ‘’This is evidence that the Madrid area is a very upcoming area for entrepreneurship and creative startups. Google really has a huge impact on startups in Madrid’’, says José Villa, a 30 year old Spanish entrepreneur.
“Startups are the ones that are creating jobs. We have evidence from a recent OECD report, that startups that survive the first five years are the ones creating 21% to 55% of all new jobs, depending on the country,” Isidro Laso, the head of the Startup Europe initiative of the European Commission, told Forbes-magazine when?. This means startups play an even more important role in recovering from a financial crisis that has also caused a huge rise in
unemployment in the country. However, according to South Summit, a Spanish startup-community, only one percent of the founders were unemployed before they decided to start their own business.
The front part of the Campus Madrid. Photo by Lukas Walter.
A lot of entrepreneurs are working on a daily basis at Campus Madrid, which was founded in June 2016. The Campus Madrid is part of a larger project from Google. With the Campus project, they want to support entrepreneurs with resources, connect leading startup communities and create hubs for entrepreneurship in 125 countries.
Yet, they do not only offer a local workspace. Their idea is that everyone with an idea is welcome to one of these Campus locations. People there are basically building their own businesses in the classrooms offered by Google and the local partners such as Tetuan Valley and Techstart. The Campus is actively helping entrepreneurs building their own companies with workshops and masterclasses. Besides that, it is also a representative place for entrepreneurs to meet investors, or to have a coffee with other people. At Campus, every member is allowed to organize their own events for free, while using resources of Google. The only string attached here is that Google’s name is also attached. This means that the working space is not only a place to work, but a place to socialize and share ideas in as well. The atmosphere is very similar to a student-working space, which makes the place a nice hub for being creative and sharing ideas with others. The Campus has a café-area and several work-spots for more focused work.
The Campus from the inside, with Philipp working down right. Photo by Lukas Walter.
Philipp Férnandez, a 27 year old entrepreneur from Brazil, is also using Campus Madrid as his own working space. His idea is based on tourism and highlighting the Madrid-startup culture to other entrepreneurs from different countries. ‘’The economy in Spain is growing again and, for start-ups, the situation is growing to be more profitable. And I really do believe that Madrid is a very nice city to work from’’, Philipp says.
‘’In Brazil, investors ask up to 500% of value-increase for some startups’’
When talking about his business, Fernandez seems to have a clear idea on what he wants to do. ‘’What I want to do, is connect people from other countries to the startup ecosystem we have around here. By doing that we can all learn from each other and grow together, and we can learn a lot in terms of entrepreneurship.’’
The fact that there is a huge growth in investments in start-ups, is making it a lot easier to bring ideas to reality. Compared to hubs in Brazil, working in Madrid is way easier. In Brazil, investors ask up to 500% of value-increase for some startups, because they want a bigger value increase than the credit card taxes of 400%. Which makes it impossible for start-ups to pop up and make their idea work.
Madrid is a much easier place to work from compared to any hub in Brazil. Each year, the economy seems to be growing in Spain and the start-up community feels that its way easier to get investors. ‘’Mainly there’s much more distance between the big hubs like Rio de Janeiro and Sao Paolo. There are almost no working places there. In Madrid, you can sign up
fairly easily for different working places spaces and the people are very open here’’, Férnandez says. Also, when moving to Europe and building a start up here, the value immediately increases. ‘’The euro, of course, has much more value than Brazilian money. This makes it easier for Brazilian and other Latin-American entrepreneurs to get value out of their businesses. In fact, it is a win-win situation for us. We can make promises and maybe even get more value out of it than asked for.’’
Seeing the numbers and looking at the stories from all entrepreneurs at the Campus, there is hope flying through the city. A healthier creative community is key for economic success nowadays. Initiatives live Campus and South Summit are boosting the creative minds to get themselves to work after college and create a better economy for Spain. They provide resources and help to entrepreneurs to build up their own companies in Spain. This might be one of many solutions to a far greater problem, the huge unemployment rates in Spain, as well as a better working environment for entrepreneurs in Spain. The renewed economic growth is also attracting people like Philipp to the country, which could lead to a more international community living in Madrid. In conclusion, Progress has been made and a growing economy is being born. Yet, there is a lot to be done to preserve the progress that has been produced recently in Madrid.