We may be a bit biased — after all, both about 25 years ago, our CEO Rick Pizzoli moved from San Francisco to Madrid and our Spanish country manager Uri Kesselman moved from Tel Aviv moved to Madrid — but beautiful Spain is often overlooked when companies are kicking off their European expansion. They’re missing out. You shouldn’t.
Spain is the fifth largest economy in Europe, leading the pack for tourism and hospitality. It also is among the leaders in telecommunications, automotive, retail, manufacturing and agriculture. It has a stable economy with reliably strong consumer buying.
Spain has a culture of early tech adoption that makes it stand out from its more cautious European neighbors. That can make it easier than the other big European countries — and a good way to get case studies and success stories before heading to other European markets.
But Spain is not only an excellent European launchpad for many industries, but it is a simple way to go from Europe to Latin America — a gateway to 300 million more Spanish-speaking prospects. Add to that the 500 million people in the European Union, and you’d be silly to not put Spain on your European shortlist.
Madrid and Barcelona are Spain’s major economic hubs, but Valencia, Sevilla, Malaga, Zaragoza, Valladolid and Bilbao shouldn’t be ignored either. Barajas Airport in Madrid is also a popular connector between Africa and the Americas. Besides the big names you know, like Inditex, Telefónica, and Santander, Spain is made up of many many small and medium-sized businesses, making it very ripe for mid-market SaaS and infrastructure.
OK, that’s enough of the basics. Let’s talk about specific industries that are evergreen in Spain, how to approach them there, and where you may hit bumps along the way.
Spain is a country known for reliable connectivity. It’s a world leader in home and office-based fiber, investing early in 2012, boasting very high-speed internet and early deployment of 4G and 5G.
Part of this success is due to a highly competitive telecom marketplace. Spain is home to four Tier 1 and many regional carriers, including Telefónica, Orange Spain, Vodafone Spain, Movistar, Másmóvil, Euskaltel, Jazztel, Ono, and Yoigo. Each of these are eager innovators that partner with innovative, third-party software and hardware providers.
You of course can’t mention Spanish technology without thinking of Telefónica, one of the largest operators and mobile network providers in the world. What was for years a public entity, in the 30 years since it’s gone private, Telefónica remains by far the largest telecom provider — and top ten business — in the country. But, instead of just monopolizing the market, it’s worked to drive competition and innovation. Since 2011, Telefónica’s Wayra has been providing seed funding and mentorship for hundreds of startups in Spain and Latin America.
To reach these telco giants, as well as subsidiaries and telco startups, you must have tech-savvy sales folks on the ground, immersed in the Spanish language and culture.
Barcelona is host to important industry events including MWC (formerly Mobile World Congress), Smart City Expo World Congress, and the IoT Solutions World Congress. If your work suits any of these events, you need representatives on the ground and meeting highly qualified prospects.
Spain is a big adopter of and contributor to open source software especially in the telco space, as well as a market open to voice over IP (VoIP), mobile auxiliary services, digital terrestrial TV devices, and anything that enables mobile payments. If you integrate or work tangentially with the telco space — including security, cybersecurity and CCTV — Spain should be a top European target.
Add to all this knowledge Europe’s newly announced requirements around the circular economy, and specifically the “right to repair” phones and tablets, Spain’s telco space remains ripe for more disruption.
Spain is already a world leader in renewable energy. Half the grid is renewable already — up from 42% just six months ago. In fact, last month it hit the aspiring goal of nine straight hours of successfully powering the entire national grid on only renewable wind, solar, and hydroelectric power. It’s well on its way to hitting 74% renewables by 2030, and is well ahead of its neighbors toward its goals of meticulously phasing out coal power generation by 2025 and decommissioning oil power plants by 2030.
Besides ways to help on this journey, cutting edge waste and water treatment technologies will find eager adopters. If you can help make or measure a greener Spain, you are set up for success here. Like all countries in the EU, there are strong requirements coming down the pipeline, but it’s still not easy to measure carbon footprint — Spanish companies are clamoring for ways.
And don’t forget that AgTech has a welcome Spanish audience, especially as it faces another drought-filled summer. We saw that first hand when Yara International leveraged our lead and sales services to help bring green fertilizers to Spanish farming. Again here, Spain is home to creative problem solving.
Tourism is unsurprisingly Spain’s most important industry. But you have to approach the verticals that tourists interact with differently. Spanish hospitality is known for its higher quality at affordable rates, where its home to some larger chains like AC, NH, Barceló and Meliá. While these are internationally recognized brands, you still need relationships within Spain to reach them with hotel tech.
On other hand, Spain has far fewer chains than its European neighbors. That means any technology targeting restaurants — and there is an appetite for it — needs to go through third-party channel resellers both online and, for physical products, with big local names like El Corte Inglés, Carrefour and FNAC.
As Spain is an early tech adopter, it’s no surprise that it is all about innovation in the automotive tech space. This includes, unsurprisingly, in the electric vehicle space. Madrid was a really early adopter of EV chargers, replacing many of the public phone booths with charging spots. Those are now in need of upgrading.
In general, Spain has one of the most ambitious EV incentive schemes in Europe, including subsidizing up to 7,000€ for regular vehicles and 9,000€ for vans purchased by the end of the year.
Spain’s largest automotive brand is SEAT, and it also has Derbi motorcycles. Beyond those brands, it is a major manufacturer of European car parts, making it a great target market for automotive tech including hybrid motors, non-polluting technology and fingerprint analysis. Of course, autonomous driving and cybersecurity are essential high-tech solutions still widely in demand.
And Spain’s cities have a big appetite for other greener mobility like electric bikes and scooters.
It’s not all café and vino over delicious menús del día (but there is that too.) There are definitely some challenges when approaching a Spanish expansion.
Spanish salaries are smaller than the other larger European markets, which is part of what has inspired the competitive spirit, but be aware that spirit extends to marketing too.
Spain can be a difficult market to hire in, especially as a startup, as locals are looking for more stable jobs, which would give you a higher churn rate. On the other hand, when you’re ready to establish a business entity and HQ there, it has a highly educated workforce from which to hire. Plus, people want to live in Spain which helps attract and retain talent.
Just be aware that Spain has strict labor laws and companies have to pay higher taxes and severance packages, which can limit your flexibility while testing out a market. Similarly, the time, money and bureaucracy to set up a business entity in Spain can run a higher cost than most — so make sure you are going to stick around before setting it up.
Spain can be a tougher market to crack because the Spanish really value personal relationships. It’s a country that wants to close deals in mostly in-person meetings. Channel sales venders and the telecom industry also expect to have long-term relationships in place, doing business built not rust.
Oh, and absolutely, these customer relationships have to be in Spanish and embracing of the warm and welcoming Spanish culture — you say “Hola” and “hasta luego” (see ya later) to everyone in the elevator.
Of course, all of these risks can be diminished by using an independent trained salesforce that knows how to work in the local markets. Especially during your first year in a new country market, relying on a third-party outsourcing partner, you can then gain the network and flexibility you need to test out this market.
Did I mention the quality of life? I don’t just think of Spain as a place to expand your sales to. With the right partners early on, you can set yourself up for success and then really build a business and a life there.
Are you considering how and where to launch your tech scale-up to Europe? Just click Contact Us above so we can set up a time to talk. Gracias!