2024 was supposed to be the year of the recovery of investment in emerging companies, but at the moment, the data in Spain reflect the opposite.
Far from rising, the investment in the first quarter has fallen to 380 million dollars, around 360 million euros, according to the Dealroom platform, which accounts for the investments of emerging companies on a global scale. As the graph shows, this figure represents a drop of 46%, if you compare the data with respect to the same period of the previous year, and a drop of 22%, taking as a reference the investment of the fourth quarter of the financial year 2022 .
Indeed, in Spain, there have been no large rounds of capital investment between the months of January and March. With the exception of the emerging Barcelona company Travelperk, which at the beginning of the year raised 95 million, the rest of the operations have been below 50 million, as has been the case with Heura, Multiverse or onslaught
No one would say that given the atmosphere at the 4YFN entrepreneurs' congress, which was held in Barcelona in February to coincide 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", points out Gerard Olivé, investor in the Barcelona fund, Antai Ventures.
What is the reason for the drop in financing in emerging companies? Several investment sources point to the macroeconomic situation, on which the flow of risk capital depends. "Interest rates are not going down and geopolitical instability is growing. This context discourages investment", points out Carlos Blanco, president of the Encomenda fund. Venture capital depends on the evolution of the stock markets, from where the investment flow starts and expands to the large funds and then the smaller ones. For this reason, explains Olivé, "Spanish funds accumulate a delay of about six months with respect to the stock market's behavior", so that, in the first quarter, the sector was experiencing the brake of the stock markets in mid-2023.
For this very reason, Olivé believes there are reasons for optimism. "The Nasdaq, the largest technology index in the United States, has recovered in 2024", specifically by 6% this year. We have also "started to see IPOs of emerging companies in the United States, operations in which the funds take advantage to recover investment, and thus the wheel is reactivated", he says.
Despite this, no one ventures to make any predictions. Funds continue to ask start-up companies for plans that anticipate reaching profitability as soon as possible, both in the case of the companies in which they intend to invest and in the case of the companies in which they already participate.
"It's clear that we won't see the euphoria of the post-pandemic years again, when companies barely took a year to raise Series B or growth rounds. Now it takes almost two," comments Jordi Vidal, head of the Kibo Ventures fund in Barcelona. In the same vein, investors note that the multiples at which emerging companies are valued have fallen significantly. "The current system is healthier and more consistent", they admit.
Does the brake on investment represent a risk for the ecosystem of emerging Spanish companies? Without this funding, they have no way to carry out their expansion plans. "There is no risk in any case. 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 funds invest little, Vidal points out that "now is the best time to invest" because "company valuations are low and funds can get shares at lower prices than from a few years ago".
Awaiting how the situation evolves, investors say 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 in everyone's mouth
