Barcelona triples its bet on venture capital with 30 million

The Barcelona City Council is redoubling its commitment to the city's entrepreneurial ecosystem through venture capital. The council is finalizing the launch of its third investment fund, which this time will be endowed with 30 million euros, triple the amount of the two funds launched since 2020.

Again, the City Council has opted for a fund of funds: the 30 million will be invested in private venture capital funds, which will be responsible for selecting and investing in emerging companies. Although the selection of startups depends on private entities, the City Council sets the conditions and criteria they must follow, including the requirement that companies be based in Barcelona and its metropolitan area, as explained by the Deputy Mayor for Economy, Jordi Valls. According to him, with this fund the city takes "a leap in scale."

In addition, the council prioritizes companies led by women, as well as strategic sectors for the city, such as deep tech, the blue economy, sustainability, health, biotechnology, and creative industries, areas already covered by its first two funds. In this third fund, it also emphasizes new areas: the impact economy and the care economy. With the latter, the City Council wants to anticipate a project being studied with companies and other institutions: to locate a care hub in Barcelona, with innovative projects that respond to needs linked to issues such as dependency and old age.

Named Barcelona Invest Fund, the new fund aims to boost the city's entrepreneurial ecosystem while diversifying its economy and the municipal investment portfolio. To do this, this fund focuses on companies seeking to enter a growth phase, with the aim of retaining companies that have emerged in the city and aspire to develop within its ecosystem.

For this reason, the Barcelona Invest Fund increases the maximum investment tickets compared to previous municipal funds. While the first and second had a cap of three million and 1.5 million euros, respectively, the third amounts to five million euros. This third fund, as the second one did, admits the participation of funds that go beyond Barcelona, including national and international scope, which allows attracting international capital to the Barcelona ecosystem, as Valls highlighted: "It generates a pulling effect for other private investors to bet on the ecosystem."

The fund, which will go through the municipal plenary session in March, is part of a City Council strategy to boost its ecosystem through investment funds that is unique at the local level, according to Valls: "We are not aware of any other municipality that is carrying out this type of activity. It is very innovative for a City Council". Thus, the council wants to establish itself as an "entrepreneurial City Council" that not only advises, but also "shares the risk" with the entrepreneur, as highlighted by the general director of Barcelona Activa, Lorenzo di Pietro, along with the managers of Economic Promotion Antoni Fernández and Miquel Rodríguez.

The two already active City Council funds add up to a portfolio of 107 invested startups

So far, the City Council has invested close to nine million of the 20 it has allocated to the two funds, which will be deployed as investments require. Specifically, it has invested eight million of the ten available from Barcelona Accelera, which have reached 65 companies, and another 1.3 million from the Deep Tech Fund, with 42 startups so far. Both funds, which will last at least ten years, are expected to continue growing and investing.

This fund-of-funds formula generates a multiplier effect on public investment, as the City Council invests an amount on the condition that the private fund contributes the same amount with a determined multiplier, which in the case of the two already operational funds has ended up multiplying by 14, in the first, and by 10, in the second.

And this formula "is beginning to be part of the city's economic promotion", according to Valls. In fact, these funds are self-sustaining, as they build an investment mechanism that allows new investments to be made from the return of previous ones, as Di Pietro highlighted: "If all goes well, we will have a permanent tool for boosting venture capital in the city."