Is Spain a good place for foreign entrepreneurs to launch startups?

It’s often a dream for people from cooler, northern countries, to move to Spain and work and live under the sun, and enjoy a different lifestyle. After doing your day’s work you can relax on the beach, visit the Prado museum, stroll down the Ramblas, before ordering some tasty tapas and cool drinks in a local bar. That’s the dream!

The growing influence of the internet now makes it so much easier to start afresh in another country, especially if your intended business is web-based and with a world client base. So, the question is – is Spain a good place for foreigners to launch an internet startup?

Been there, done that

Firstly, the good news. Other entrepreneurs have moved to Spain and set up businesses, so you won’t be the first. Martin Varsavsky is perhaps the best example. As an Argentinean he perhaps had a head start with the language, but even so he’s done very well in starting up large successful companies like Jazztel and Fon, among others. He writes a very interesting blog on martinvarsavsky.net that can often give insights into the benefits and drawbacks of running a business in Spain, among other issues. Another great example is busuu’s founder Bernhard Niesner, who we interviewed recently in case you’d like some insights. His company busuu.com is now one of the best language learning sites on the world stage.

Another plus is that there are growing numbers of people based in Spain who work for tech or startup companies, so it shouldn’t be too difficult to recruit technical staff when you need them. A good site for tech recruitment in Spain is infojobs.net, but of course there is nothing stopping you from using Twitter or other social sites like LinkedIn to bring on board talent. Of course, if you find it hard to source the relevant skilled personnel locally, then Spain may well appeal to other foreigners as a place to work.

Local lingo

Lisa Sadleir, an entrepreneur based on the Costa del Sol, gives her opinion on starting a business in Spain: “I am biased as I love Malaga, Spain, and have always been very successful with my business ventures in Spain. However, I am aware that there is not as much support for business startups as there maybe are in other countries. Provided you seek the right advice and have support (specifically from a Spanish speaker) then there is no reason why any well researched idea should not succeed here as anywhere else.” This brings up an important point – even if your target market is English speaking and you are not buying Spanish merchandise, you should take steps to learn the local language. After all, you will be living there, and will have dealings with Spanish-speaking employees or service providers e.g. banks at some point. Remember that if you base yourself in Barcelona you will also need to learn Catalan, for example.

Where should you live?

The answer to this partly depends on the nature of your startup. Pierre-Alban Waters set up his new company FlatawayMadrid to help newcomers to Madrid find good accommodation (Update – January 2023: The startup seems to be no longer in business under this name and we therefore deactivated the link). Given that aim, it would have been foolhardy to base the business anywhere else. Generally speaking there are 3 main clusters of startup activity in Spain – Madrid, Barcelona and the Basque Country – and it is there that you will find more tech workers, sector get togethers etc. Indeed, a recent article on Wired magazine named Barcelona as one of the major startup capitals of Europe. Another benefit of being in Madrid or Barcelona is that you could find more resources and fellow expats who can help you with day-to-day things, as well as someone to watch the latest Premiership game or NFL match with, for instance. Having said that, if your business will be targeting fellow expats, you may wish to live closer to expat and tourist hubs, so Malaga or Valencia could be your preferred seat of work. On the other hand if you want to live far from large numbers of other expats, you could try the northern coast, perhaps in Asturias, Cantabria or the Basque Country, and you can enjoy great scenery on a daily basis, albeit with less of a sunny climate.

When it comes to essential elements like internet and housing, most towns and cities in Spain boast good infrastructure, so you will be able to access high-speed internet most places, except potentially out in the campo (countryside). Finding accommodation for you and your staff should also be relatively cheap, compared say with London or Munich. Remember you should also take into account the physical features of the flat; if you will be doing some work at home you don’t want to be struggling in 35 degrees of heat in summer with no air-conditioning.

Another thing you should take note of, is that contrary to the myth, the sun doesn’t always shine in Spain, and in fact it can be cold in winter, especially inland and at altitude. Having said that, even during a rainy year you should see enough sunny days across most of Spain to keep you happy. Just don’t forget a pullover or two for cold snaps in winter, and don’t think you won’t need an umbrella or raincoat.

Noise can also be an issue in cities, so choose your location carefully. Pierre at FlatawayMadrid makes an additional point about the noise issue: “However, the key thing here about finding a quiet place is not the neighbourhood, but the very street you live on. You can live in the very centre of Malasaña with 20 bars 100 yards away and never hear a thing, if you live around the corner in a little street. On the contrary, you can live in the poshest part of Madrid, in Calle Goya for instance, in front of the Corte Inglés mall, and may encounter some noise issues.”

Red tape battles?

You might also have to navigate some red tape, from hiring staff to presenting your tax returns. Hiring a good gestor or business advisor is one tool that most startups will need in Spain.

Lisa Sadleir set up a company on Spain’s Costa del Sol that can help new businesses cope with this red-tape. She told us: “If I were to disagree with this statement [that red-tape is an obstacle] then I would be losing half of my business! However, I believe that people think that Spanish red tape is more of a problem than it really is. Like in any country there are regulations and procedures. In Spain, this is translated into the need for a copious amount of paperwork and all in the right place at the right time. If not, you are simply sent to the back of the queue.” Put it that way and it does sound tiresome. Luckily Lisa’s company costaconsultingbureau.com is one of several who can resolve this issue for you (Update – January 2023: The company seems to be no longer in business under this name and we therefore deactivated the link). However the common advice (and particularly with a lean startup) is that it makes financial and time sense to outsource difficult tasks to the professionals. If you really insist on doing it all then perhaps the bootstrapping book WorkinSpain or visiting relevant websites like expatica or BritishExpats should be your first port of call.

Potential catches

Is there a downside to starting up your business in Spain? If your client base is local to Spain, you might find it very difficult to attract new customers; Spain has suffered badly from the recession, and many people don’t have a lot of money to spend. Remember also to look into health insurance, pension provision, etc., and keep an eye out for bank charges, another topic that people often complain about. Additionally, if you have a weakness for socialising and alcohol, you may find the temptations of partying detract from the serious issue of building up your business.

Lastly, remember that if your business fails, you won’t have a safety net to bail you out. Founders coming from somewhere like the UK, where there is a welfare state with more comprehensive coverage, should consider what the risk of failure would be. This last factor can work both ways, as you may find yourself working more diligently and carefully if you know that your lifestyle is totally dependent on the success of your enterprise.

Final words

Assuming your market is international, and your business idea is viable, Spain is surely a great place to be located, bringing you an overall sunny climate, lively night-life, great public transport and a good place to bring up a family too. We’ll let Lisa from costaconsultingbureau.com have the last word on this: “As in any country, the first step is to conduct research before launching a new business. I think too many people move to Spain with a new business idea thinking that it will be easier as they have seen the country when on holiday, in busy periods. They are not always aware of the legalities and their responsibilities. People often use their lack of language knowledge as an excuse to ignore/overlook things that they would never consider overlooking in their own country. I would not live anywhere else other than Southern Spain. It is a fantastic place to live and to bring up children. As to whether it is the right place for your business remains to be see. However, I would be more than happy to give you my opinion before you take your first step.”

Find this interesting? Be sure to sign up for our free weekly EU-Startups Newsletter so that you can stay up-to-date! 

- Advertisement -