On 11 February 2021, the Spanish President, Pedro Sánchez, presented a new strategy in Spain for entrepreneurs – called the Spain Entrepreneurial Nation Strategy. This important document aims to foster investment, competitiveness and to attract talent to Spanish technological startups. Right now the Council of Ministers are approving the draft bill on startups, which is has been in high demand and is crucial to making Spain a truly Entrepreneurial Nation.
To find out more about Spain’s renewed focus on its startups, we got in contact with Francisco Polo, the High Commissioner for Spain’s Entrepreneurial Nation Strategy. From the Startup Act, to ‘digital nomad’ visas, to facilitating administration online, we dove into what this new strategy means in practical terms for both founders based in Spain, and startups that would like to grow there.
Thank you for joining us today. What is Spain’s Entrepreneurial Nation strategy and what impact are you expecting over the next 5 years?
The Spain Entrepreneurial Nation Strategy is a long-term vision for transforming the production base of the Spanish economy. Promoted by the High Commissioner, who reports directly to the Prime Minister, it seeks to make Spain a more innovative country, one that generates more and better jobs, and leaves no one behind, making innovative entrepreneurship the icebreaker of a new economic model.
The Strategy focuses on innovative entrepreneurship because this is the sector which, according to the OECD, generates the greatest returns in terms of productivity in the short term. The 50 measures included in the Strategy pursue four goals: to accelerate the maturity of investment in Spain; to attract, retain and develop talent; to step up the scalability of Spanish companies; and to turn the public administration into an entrepreneurial public sector that generates favourable regulatory frameworks and promotes investment in innovative projects.
The Strategy sets out to make Spain an Entrepreneurial Nation by 2030, with innovative entrepreneurship spearheading its economic model. The aim is for Spain to become a nation in which innovative entrepreneurship leverages the sectors driving the economy to generate growth, thus creating virtuous circles that help increase the competitiveness of these large, established corporations and to create more high-quality jobs. And this Entrepreneurial Nation will be built on the foundations of cross-cutting policies that leave no one behind.
You’ve mentioned that there are 50 entrepreneurial measures included in the strategy. Could we dive in a bit further with some practical examples?
The Spain Entrepreneurial Nation Strategy is the document which, for the first time ever in Spain, sets forth the Government’s commitment to make innovative entrepreneurship its lever for growth. The Strategy is, therefore, the first practical step in Spain’s journey to becoming the Entrepreneurial Nation with the greatest social impact in history.
The measures comprising the Strategy include some of the longstanding demands of the sector. One of these is the Startups Act, which will enable Spain to take a qualitative leap forward as a country thanks to the improvements it proposes in terms of company incorporation, administrative simplification, tax breaks and foreign investment incentives. This will become a reality within the next few weeks, as recently announced by Spain’s PM, Pedro Sánchez.
The Strategy also includes measures to make Spain a haven for talent. The Visa Programme will improve access to work visas for entrepreneurs who wish to found a new company or move an existing company to Spain, as well as for investors, and for professionals recruited by innovative Spanish companies. We will also create ‘digital nomad’ visas. According to a study by the expat community Internations.org, two Spanish cities, Valencia and Alicante, head the ranking of the best cities in the world to live and work for expats. We want to offer all professionals the opportunity of coming to work in Spain because it is a country with excellent conditions for pursuing a life project. Another key measure is the improvement of the current stock option’s taxation, a fundamental tool for attracting talent.
Concurrently, Spain aspires to become the number one country in continental Europe for investment in innovative entrepreneurship. Despite the pandemic, our country has demonstrated that it has a robust ecosystem, exceeding 1 billion euros invested in innovative companies in 2020; but we must articulate measures to help us increase the investment in Spain. To this end, we will facilitate the fast-tracking of the procedure to obtain a foreigner ID number for foreign investors, we will step up active policies to encourage innovative companies to establish their headquarters in Spain and a programme to boost debt investment are designed to achieve this objective.
Could you explain more about which ‘administrative facilities’ will be included in the Startup Act, and will the measures of this strategy be equal across all autonomous regions?
The Startups Act will be a milestone in recognizing startups as companies with high potential for growth and job creation (more and better quality jobs), wealth and innovation. This recognition will facilitate access to financing and support for startups, helping stimulate the innovative entrepreneurship ecosystem. The law will also facilitate the attraction and retention of talent, and will include tax benefits and investment incentives.
In terms of administrative facilities, the regulation should simplify the incorporation of startups as limited companies; facilitate the completion of procedures remotely, something that has become more necessary than ever with the situation resulting from the pandemic; and adapt the tariffs and fees associated with the creation of companies.
The Spain Entrepreneurial Nation Strategy is nationwide in scope and has been conceived with the entire territory of Spain in mind.
How were those measures that are now part of Spain’s Entrepreneurial Nation strategy decided?
The Spain Entrepreneurial Nation Strategy sets forth measures that are the product of the dialogue we have had with the entire sector over the past three years. These measures represent the overwhelming consensus that exists in the innovative entrepreneurship ecosystem regarding what needs to be done. We have identified four areas for improvement:
Firstly, we are going to accelerate the maturity of investments in Spain. We must close the gap between us and other similar EU countries: investment levels in Spain are four times lower than those of France, and almost five times lower than those of Germany, according to The State of European Tech 2020.
Secondly, we want to make Spain a talent haven. We will promote measures to attract, develop and retain talent; measures that will enable us to compete on an equal footing with other European countries.
Thirdly, we will promote measures to increase the opportunities for growth available to Spanish companies. 99% of companies in Spain are small- or medium-sized enterprises. However, the data shows that larger companies are better at withstanding crises and safeguarding jobs. Therefore, although it is perfectly legitimate for a startup to think about selling out when it has become highly successful, we must generate more opportunities that enable the scalability of our companies. This is important in order to consolidate sectors and to create more and better jobs.
Lastly, we want an entrepreneurial public sector. The Strategy aspires to build a dynamic public administration that generates favourable regulatory frameworks and promotes investment that not even the boldest venture capital funds would be capable of fostering.
What is the timeline for the rolling out of the scheme – when will we see most of the actions in place?
Spain has made a decision: to become the Entrepreneurial Nation with the greatest social impact in history by 2030. The Strategy represents, therefore, a long-term vision with a ten-year timeframe.
Within this projection for the coming decade, the Strategy identifies nine priority measures that will be implemented in the short and medium term, as well as measures to be adopted over the next three years.
International startup events are an important connector between startups, international investors and innovation-focused SMEs. Since the event sector was completely crushed by the COVID-19 crisis, is the Spanish government planning to support startup events and therefore honor their big impact on startup hubs?
I do not believe that innovative entrepreneurship events have disappeared because of the pandemic. Although this sector has been hit hard, it has made a tremendous effort to keep going. An example of this in Spain is South Summit, one of the main innovative entrepreneurship events in the south of Europe. They made changes to the format and succeeded in holding a successful event. Another example is the Barcelona New Economy Week, which was born during the pandemic to reactivate the economy.
Supporting ecosystem events is one of the critical measures of the Strategy, through the Programa Bandera (Flagship Programme). What we are currently lacking is a properly coordinated and structured effort between the different administrations, bodies and ministries in our country aimed at seizing opportunities to attract investments or talent through international events. The Flagship Programme will focus precisely on institutionalizing the creation, development and attraction to Spain of international innovation and entrepreneurship events.
Does Spain’s Entrepreneurial Nation strategy include any provisions for social impact startups, such as social investment tax relief?
The Strategy includes measures to promote triple bottom line entrepreneurship, meaning companies with a three-fold social, economic and environmental impact. The main line of work is the National Plan for Social Entrepreneurship. This measure proposes policies to promote startups that have a transformative impact on society. It includes actions such as approving a favourable regulatory framework, strengthening the mechanisms of public and private investment in social entrepreneurship, and creating spaces for social innovation.
The digitalisation of companies has sped up in recent months due to COVID. Will it soon be possible for Spanish startups and SMEs to complete all their administrative tasks online as part of the new law?
Spain already has high levels of digitalization. The Digital Economy and Society Index (DESI), which annually compares the digital evolution of the EU-28, places Spain in fifth place as regards to connectivity. We are also the European country with the highest household fibre optic coverage, which represents the sum of that of France, Germany and the United Kingdom combined; but we want to keep improving.
We have the opportunity to continue advancing our ambition to make the State the “visible hand” that promotes innovation and productivity in our country, a challenge which Spain is working to meet. This is evidenced by the approval of a Royal Decree-Law, in December 2020, approving urgent measures for the modernization of the Public Administration in Spain, the Digitalisation of the Public Authorities Plan and special regulations to allow corporate board meetings to be held by videoconference during the pandemic. We have included lines of action in the measures comprising the Entrepreneurial Nation Strategy to remove barriers and to streamline administrative procedures.
