Spain, renowned for its vibrant culture and rich history, is also emerging as a prominent contender in the global Software as a Service (SaaS) market. With its flourishing tech hubs and a surge in technological advancements, Spain stands out as a promising field for investors and digital innovators.
Much of the insights and data come from Endeavors 2022 report on Mapping Spain's Tech Sector.
Post-2008, Spain experienced a remarkable entrepreneurial boom. Over 200 tech companies emerged, creating over 13,000 jobs. This surge, particularly in healthtech, fintech, and e-commerce, represented a paradigm shift in Spain's approach to business.
Nearly 75% of the tech companies that are still in operation today in Spain have been founded since 2009.
“In the years following the financial crisis, there was a complete transformation of people’s mentality to know that Spain can be entrepreneurial. We can all play a part because a startup project is not just one person with one concept. It’s about collaboration and cooperation. The entrepreneur, as a global risk innovator, is decisive and the new player for innovation. It is key that entrepreneurs are playing hand-in-hand for the benefit of all.” - María Benjumea
While most people in the international tech scene will likely have heard of Typeform, Glovo, Wallapop, and others…there are plenty of lesser-known examples of successful, scaling Spanish SaaS companies that have been successful in serving SMBs:
These companies represent the growing trend of SaaS solutions in Spain that cater specifically to the needs of SMBs, combining innovation with practicality to help smaller businesses thrive.
The Spanish tech community's collaborative spirit has been a cornerstone of its success. According to Endeavor Insight, this collaboration fosters a supportive environment crucial for growth and innovation.
Most tech founders hold a positive outlook toward the entrepreneurial community, often willingly connecting and aiding their fellow entrepreneurs. This synergy among founders, especially in major tech hubs like Madrid and Catalonia, propels the ecosystem toward prosperity.
A survey conducted among founders in Spain revealed the following percentage of people agreed with the following statement…
Spain's tech sector boasts a rich talent pool, nurtured by top-tier universities.
“A founder told Endeavor Insight: ‘The quality of the workforce is high. I worked for a Silicon Valley startup, and I’d say that our quality here is higher on average than in Silicon Valley.’ Universities such as Universitat Politècnica de Catalunya, ESADE, and Universidad Politécnica de Madrid are commonly found when looking at founders' previous education.” — K Fund
Despite the availability of skilled professionals, Spain faces a glaring challenge in talent acquisition and retention, notably in the technical realm. Often new recent graduates and young professionals have the opportunity to join international tech companies because of how prepared they are coming out of school, and choose this option due to notoriously low starting salaries in Spain.
With many professionals seeking opportunities abroad, Spain is attempting to enhance global competitiveness by adopting strategies like promoting inclusive work cultures and emphasizing professional development.
As Endeavor states in their report:
“If you can’t compete on money, then sell the project and the culture...Strategies like leveraging remote talent, hiring from abroad, and focusing on internships and in-house training are being adopted to navigate through these challenges...The most common strategy that founders utilized to overcome this challenge is attracting remote talent or hiring directly from abroad. Spain’s good quality of life and status as an EU country mean that the country can attract workers from Eastern Europe, and from other economies”
The B2B SaaS market in Spain is ripe with opportunity. As industries increasingly digitize, the demand for customized SaaS solutions grows. Sectors like Banking, Energy, Logistics, Manufacturing, and Hospitality are showcasing increased demand for SaaS usage.
Spain, alongside Ireland, is witnessing a large surge in companies adopting multi-cloud strategies and a general inclination towards using cloud services for varied reasons like flexibility and organizational change. 60% of companies want to use cloud services (400% growth) and the country as a whole is expected to invest $1.6 billion per year (600% growth).
Spanish startups, known for their agility and local market understanding, are well-positioned to capitalize on this. Yet, this sector remains underserved, offering a lucrative avenue for investors and entrepreneurs alike.
Spain's SaaS sector offers a promising ROI potential, thanks to its diverse range of industries and the early-stage nature of many software companies. Endeavor Insight's report also highlights the importance of female founders and international collaborations, which are reshaping Spain's investment landscape.
Smaller lower-middle-market B2B SaaS companies (with revenues between $1-5 million) are especially attractive targets for international investment for several reasons:
As investors we know there is no opportunity without associated risks or challenges.
Because capital in the country can be limited, scaling companies often turn to foreign investors to fund growth. International partnerships are crucial for Spain's SaaS sector, facilitating market expansion and technology exchange.
But investors must also be aware of potential market resistance and bureaucratic hurdles, requiring a strategic approach for successful outcomes. A thorough understanding of Spain’s distinct business culture and navigating through its bureaucratic hurdles are imperative for fruitful collaborations and investments.
We foreigners who live in Spain know the bureaucratic challenges firsthand…we call life with this red tape “Spainful”. Even the locals poke fun at their own country’s bureaucratic challenges by ironically saying with shrugged shoulders and through thick accents: “Spain is different.”
At Fundamenta, we firmly believe our understanding of local cultural nuances and experience collaborating in this environment gives us a clear edge for managing foreign capital. It is extremely valuable to have trusted local partners who can act as a cultural bridge and provide insight into intangible elements of business relationships.
Spain's tech ecosystem, with its elite talent pool and collaborative spirit, presents a compelling case for SaaS investment. The B2B SaaS segment, in particular, holds abundant opportunities. For investors equipped with insight and perseverance, Spain's SaaS landscape offers fertile ground for growth.
As Spain continues to carve its niche in the global SaaS domain, it beckons investors and innovators to be part of this exciting journey. Strategic planning and nuanced understanding are key to navigating its challenges and reaping the rewards of this evolving market.
The landscape of Spain's SaaS sector is not just a testament to the country's technological progress but also a beacon of opportunity for those looking to invest in a dynamic and promising market.
