Startup Genome is a leading American consulting firm in the area of the analysis of entrepreneurship ecosystems. Every year it publishes its Global Startup Ecosystem Report which ranks the top 20 different worldwide ecosystems. Recently, it has launched a study on Catalonia - the Barcelona Startup Ecosystem Report-. The aim of this study was to obtain a greater understanding regarding the strong and weak points of our Catalan ecosystem as well as establishing a series of recommendations on public policy to be carried out in order to improve Catalonia’s positioning in the international rankings in this area.
Catalonia’s startup ecosystem
Catalonia’s startup ecosystem is undergoing explosive growth. Catalonia has quality research institutions, a growing number of entrepreneurs, an enviable quality of life and a government that aims to promote this ecosystem.
The growth experienced by Catalonia’s startup ecosystem in recent years is thanks to the fact that, for decades, the region has benefited from a strong industry-based economy; Initially as a textile manufacturing center and later by becoming a hub for automobile engineering. Since the 90s, Barcelona has been identified globally as a leading international city in urban design and planning and in 2014 it was named European Innovation Capital by the European Commission.
Catalonia is in a great position to move from the activation phase to the globalization phase of its ecosystem. Startup Genome classifies global ecosystems for startups in 4 possible stages of development: activation, globalization, expansion and integration, with the phase of expansion being the initial phase and the phase of integration the phase of higher level of development. These phases are calculated based on the following values: experience in startups, size and resources, rates of exits and unicorns in the ecosystem analyzed. Catalonia can move to the globalization phase if it increases the entrance of financing and startups from abroad. In addition, it is also advisable that it increases the global connections of the founders of Catalan startups.
The exits are increasing in both name and size, the founders of Catalan startups are acquiring experience and the Startup Output (number of startups in the region) is high. Founders of Catalan startups are not leaving the region: The Catalan startup ecosystem has a very low rate of flight of companies compared to other startup ecosystems worldwide.
The Catalan startup ecosystem is well connected globally, it is in a healthy moment with high level exits and enjoys emerging advantages in relevant technology subsectors. Capitalizing these assets and opportunities and focusing efforts on overcoming the gaps detected in this study is what must be done to push Catalonia into an even higher path of growth and innovation.
Key Catalan subsectors
The study provides us with an analysis of the 3 selected sub-sectors: smart cities, life sciences and videogames.
- Smart Cities:
According to Juniper Research, Barcelona has been positioned as the 2nd city worldwide after Singapore. This sector accounts for 3% of Catalan GDP. Examples of startups that have raised capital in this sector are Worldsensing, Bismart, Datumize, Immfly, Nektria, MOCA platform and WeSmartPark.
- Life Sciences:
Catalonia concentrates the five largest Spanish pharmaceutical companies, including Grífols, a company that is part of the Fortune 2000 company list. In this area, Catalonia has enjoyed several recent operations in terms of financing rounds and exits in this subsector: AELIX Therapeutics, which has developed a vaccine against AIDS and has raised $13.8M; STAT-Diagnostica, the medtech startup that develops patient testing solutions and has raised $30M in a recent round; Anaconda Biomed, which develops medical devices for stroke treatment and which has raised $18M. Other companies which have recently attracted investment are: Mint Labs, Som Biotech, Transplant Biomedicals, Devicare, Cebiotex, and Minoryx Therapeutics
Catalonia has 120 video game companies (25% of the Spanish total), with a turnover of 217 M. euros (42.5% of the Spanish total). Furthermore, Barcelona has recently been home to an outstanding exit in this subsector. This being the sale of Social Point to the American Take-Two for a value of more than $270M. Also worthy of note is the exit of Akamon (now Tangelo Games) acquired by the American company American Technologies Corporation for more than $25M. If we talk about other success stories in this sector in Barcelona we must also include Digital Legends Entertainment, one of the world’s leading companies in video game development.
Gaps in the Catalan ecosystem
The Catalan startup ecosystem faces a series of challenges that must be overcome in order to continue evolving and growing:
- Increase the number of startups: Although Catalonia has a number of start-ups similar to that of other ecosystems of its size, it would need to double the number of startups in order to continue growing (Startup Output).
- More financing in the seed and early seed stage (early stage): Few startups in the ecosystem receive adequate levels of financing and Catalonia has financing gaps as regards volume, size of rounds and implication of foreign investors.
- Better access to the global market: The Catalan ecosystem has a high degree of global connection. However, Catalan startups could sell to the global markets at a higher ratio. This limits their growth because startups that sell globally grow twice as fast as those that only sell internally.
- Strengthen the key subsectors: With vibrant growth in the subsector of video games, smart cities and life sciences, Catalonia should continue to invest, both publically and privately, in these key local sectors in order to establish decisive advantages in the region.