2024 had to be the year of recovery of investment in startup companies, but, for now, the data in Spain reflect the opposite.
Far from rising, investment in the first quarter has plummeted to 380 million dollars, about 360 million euros, according to the Dealroom platform, which accounts for the investments of emerging companies on a global scale. This figure represents a drop of 46%, if the data is compared to the same period of the previous year, and a decrease of 22% taking the investment in the fourth quarter of 2022 as a reference.
Indeed, there have been no large rounds of capital investment in Spain from January to March. With the exception of Travelperk, which raised 95 million at the start of the year, the rest of the operations have been below 50 million, as has been the case of Heura, Multiverse or Embat.
No one would guess it judging by the atmosphere at the 4YFN entrepreneur conference, which was held in Barcelona in February coinciding with the Mobile World Congress. “In this edition, we were able to count on the presence of many international investors and their interest in local startups was significant. Let’s see if in a few months we will see the fruits of these meetings,” says Gerard Olivé, investor in the Barcelona fund Antai Ventures.
What is the reason for the drop in startup funding? Several investment sources point to the macroeconomic situation, on which the flow of venture capital depends. “Interest rates are not falling, and geopolitical instability is growing. This context scares away investment,” says Carlos Blanco, president of the Encomenda fund. Venture capital depends on the evolution of the stock markets, from where the investment flow begins and expands to large funds and then smaller ones. For this reason, explains Olivé, “Spanish funds accumulate a delay of about six months with respect to the behavior of the stock markets”, so that in the first quarter the sector was experiencing the slowdown in the stock markets in mid-2023.
For this same reason, Olivé believes there are reasons for optimism. “The Nasdaq, the largest technology index in the United States, has recovered in 2024,” specifically 6% so far this year. Also “we have begun to see IPOs of American startups, operations in which the funds take advantage to recover investment, so that the wheel is reactivated,” he maintains.
Despite this, no one ventures to make any predictions, and the funds continue to ask startups for plans to achieve profitability as soon as possible, both in the case of the companies in which they plan to invest and in those in which they plan to invest. They already participate.
“It is clear that we will not again see the euphoria of the years after the pandemic, when it barely took companies a year to raise series B or growth rounds. Now it takes almost two,” says Jordi Vidal, head of the Kibo Ventures fund in Barcelona. Along the same lines, investors note that the multiples at which startups are valued have decreased significantly. “The current system is healthier and more coherent,” they admit.
Does the brake on investment pose a risk for the Spanish startup ecosystem? Without this financing, they have no way to undertake their expansion plans. “In no case is there a risk. Good projects end up getting the resources, although perhaps less than they planned and at a lower valuation than they would like,” says Blanco. In fact, although it may seem like a paradox since the funds invest little, Vidal points out that “now is the best time to invest” because “company valuations are low and funds can acquire shares at prices lower than those of years ago.” some years”.
While waiting to see how the situation evolves, investors maintain that there are good opportunities to participate in companies that develop artificial intelligence (AI) systems and technologies linked to the environment (climate tech), two sectors that are now on everyone’s lips. .
