While startup valuations have plummeted since the 2021-2022 boom, hitting the European startup ecosystem particularly hard, there is one region of Europe where this correction has worked barely in its favor: the South.
Evidence of this was evident at the World Mobility Congress in Barcelona earlier this 12 months, when a TechCrunch reporter time and again encountered Northern European VCs looking for startups on the “Iberian Peninsula” (Spain and Portugal). These young firms offer the killer combination that VCs love: much lower operating costs and much less flashy valuations.
Further evidence of this “southern trend” is the news that a recent enterprise capital fund, Plus Partnersis being launched by Enrique Linares, one of the co-founders of groundbreaking European unicorn letgo, and Oriol Juncosa, a veteran of the Barcelona VC scene. While Plus Partners has not released figures for the recent fund, it is rumored to be in the $30 million to $50 million range.
Looking at the fund’s co-founders, Linares led letgo, a second-hand goods marketplace, to turn into the first Spanish startup to achieve unicorn status, attracting investments from Accel, Insight Partners and Prosus, among others. Before letgo, he co-founded Captalis, a fintech company with a significant presence in Latin America.
Juncosa began his VC profession at Nauta Capital in Barcelona and later co-founded the early VC firm Encomenda Smart Capital. He then became CFO of Carto, a data visualization SaaS company based in the US and Spain that raised over $100 million. As an investor/shareholder, he has invested in over 75 startups – including Carto, Cobee (which sold to Pluxee), Holded and Homeamong others.
So what is the thesis of Plus Partners? It focuses on “health and nutrition,” “finance and real estate,” and “the future of work and productivity,” Juncosa says. The fund will focus on pre-seed and seed stage startups in Southern Europe, with a significant percentage of them coming from Spain.
Juncosa told me the fund is backed by founders and former senior executives from firms including Carto, Luzia, Kantox, Red Points and Typeform.
He said he believes Spain and Portugal are in dire need of more professionally managed VC funds because too many early-stage investors, especially non-professional angel investors and family offices, tend to “do more harm than good” in their nascent tech scene. because they either over-inflate valuations or start the round with punitive terms for founders.
“For me, the most important news in Spain is that we have role models. Also, the tech community in Spain and Portugal is extremely open, everyone is willing to support everyone else,” he told TechCrunch over the phone.
Which country, according to the recent fund, is “hotter” in terms of startups? “I would say that overall we have three great entrepreneurial cities: Barcelona, Madrid and Lisbon. If you go back 10 years, Barcelona was the biggest tech city. But Lisbon and Madrid were catching up very well. Now entrepreneurs have a choice where they want to set up their company.”
Linares reiterated that Southern Europe is currently “filled” with entrepreneurs who are role models for recent startup founders, emphasizing: “We have a lot of talent and founders can internationalize very successful startups from here.”
“Barcelona and Madrid are on par as ecosystems, but Valencia is developing,” he added. “There is a summit in October called Valencia Digital Summit. We have been speakers for the last year and it has been fantastic. I was very surprised. It was my first time there.”
The fund can even look at start-ups originating from Italy, implementing their master’s thesis “Southern Europe”.
“We will have a significant a part of our investments in Spain, but inside [Southern Europe], Italy is very neglected. Rome and Milan are catching up. We are very excited about it,” Linares said.
Plus Partners comes at a time when enterprise capitalists are increasingly interested in Southern Europe.
Yellow, a recent VC firm formed by Oscar Pierre, Sacha Michaud (founders of Glovo) and Adam Lasri (former investor in VC giant Atomico), recently bet on the region, raising a €30 million fund in lower than five months.
In addition, the Spanish VC fund Kfund lifted up $75 million in funding for technology projects earlier this 12 months.
According to Dealroom’s report on the Spanish tech ecosystem, the total enterprise value of Spanish startups exceeded €100 billion in 2023. It also found that enterprise investment in Spanish startups paused last 12 months, with €2.2 billion raised in roughly 850 rounds of financing.
Year “The State of European Technology” Report. for 2023 stated that Spain’s ecosystem was ranked fourth overall and had highest variety of startup financings last 12 months.
Finally, this 12 months the enterprise capital division of the European Investment Bank also supported a recent fund in Spain, which goals to invest €1 billion ($1.1 billion) in growth-stage tech startups.