The new needs that have emerged in recent times require innovative solutions that emerging companies can quickly create and launch on the market thanks to a powerful combination of technology and talent. They also tend to have a great capacity to adapt to the growing demand for digital services that have become essential and to reorient themselves to what gives the most benefits.
For all this, investors are once again showing strong interest in startups and, especially, in those in the financial sector called fintech. “Technology and digitalization have massively changed our lives in general. Customers' experiences in the digitalized world also influence their behavior towards banks. With the health crisis we have seen the development of new needs and greater interest in fintech companies specialized in cryptocurrencies and blockchain,” explains Nic Dreckmann, Chief Operating Officer of Julius Baer.
According to the study Startup companies in Spain recently presented by INFORMA D
Obtaining the necessary capital for a startup to launch on the market is the main challenge for most of its promoters. In the initial stages, many turn to FFF (Family, Fools and Friends), that is, family and friends, and increasingly to crowdfunding, while, when it comes to professionalizing, there are networks of accelerators and incubators that constitute a important support.
Business angels and the aid granted by both institutional and private investors, based on a multitude of calls, can also contribute to giving a decisive boost. However, to grow it is practically essential to attract the interest of a venture capital firm – be it Spanish, foreign or mixed – that invests through Venture Capital funds.
In this sense, the business angel Uri Adoni recommends in Harvard Business Review that the most appropriate thing in these times marked by uncertainty is not to present itself to investors as a dazzling unicorn (focusing on rapid growth through large financing and a reserve of accessible talent), but to adopt the behavior of a resilient camel, capable of acclimatizing to the harshest environments with little food or drink for long periods, and running at full speed when necessary.
That is: be sensitive to cash flow, have a lean organization and do not deviate from a realistic and conservative operating budget. “Potential investors will want to see that you manage your cash carefully and prudently, that you do not make long-term financial commitments and that you know how to cut expenses when necessary,” Adoni emphasizes.
On the other hand, banking entities have been incorporating instruments specifically designed for entrepreneurs into their product portfolios. For the most part, these are 'soft' loans (with reduced interest rates and grace periods) and they also manage and grant financing promoted by the Official Credit Institute (ICO).
For Julius Baer, founding a company is one of the most exciting stages in life, a path in which he will have to resolve all kinds of situations. Therefore, his role focuses on helping entrepreneurs find the best solutions, analyzing which financing lines are the most appropriate in each case and helping them execute their transactions.
One of the key ways to achieve this is through estate planning. “An estate planning expert analyzes the personal situation, needs, expectations and aspirations of a person, in this case the entrepreneur, from a global perspective and with a long-term vision. This makes it easier for us to offer him adequate solutions that allow him to optimally manage his assets and allow the entrepreneur to focus on his business,” the Swiss private bank points out.
The volume of investment in startups in Spain grew by 4.3% in 2020, in which these companies raised 2,087.5 million euros in financing rounds, according to the Scanner Startups Ecosystem report from the Barcelona Tech City association, which places the Catalan capital as the main hub for the creation and concentration of startups, closely followed by Madrid, although it also points to a growing territorial diversification of investment in other parts of the country. More than 60% of the operations were covered by national investors, although foreign investors are gaining weight.
Without a doubt, in 2021 startups are being key to boosting the Spanish economy – the sector reached 750 million euros in investment during the first half, according to data from Barcelona Tech City – although it is true that, at the same time, Once again, since last year there has been a slowdown in entrepreneurial activity due to the Covid19 crisis: according to the Global Entrepreneurship Monitor (GEM) Spain 2020–2021 report, the Total Entrepreneurial Activity Rate (TEA) is at 5 .2% –with a drop of one percentage point motivated by a reduction in new initiatives–, still far from the EU average, of 8.1%.
And, although in times of uncertainty there is usually a delay in the decision to undertake - and even more so in Spain, where the fear of failure is endemic -, those who dare to take it now can take advantage of a series of advantages: they find fewer competitors; new funds have appeared willing to invest; There are multiple opportunities for businesses based on digitalization and sustainability; And in addition, in general, startups can save the initial investment in offices or premises to operate, since they have been working remotely since their inception.
