Barcelona is an innovative city thanks to its business ecosystem, especially those emerging companies that with little raise a fresh and new project that aims to change something in everyday life. It is clear, however, that they cannot do it alone. This is where funding, both public and private, plays the most important part. Capital is what makes a good idea become the new product on supermarket shelves, the new smart software, or the new way of working. For years, Catalonia and the Spanish state have been trying to keep pace with investments in emerging companies or scaleups —a startup that has already passed the initial testing phase and achieves rapid, constant, and sustained growth over time—, but they cannot always compete with foreign markets. In European terms, both public and private investment are slower, without as much capacity to take risks and very short-term, which stagnates the growth of companies that have to choose between sovereignty or the acceptance of foreign investors. It is these that look to the investor and ask for a change; three keys to compete without leaving: single market, patience, and talent retention.
The Cercle d'Economia convened last Thursday a reflection day on one question: Who finances innovation? In the first sessions, representatives of public and private funding came out separately to acknowledge that they intervened as much as they could, but much remained to be done. Two hours later, the witnesses took the stage: Factorial, Qilimanjaro, and Lumiris Spectral Solutions. Three companies with an ambitious, scaled or scalable project, which demand an improvement in the funding ecosystem to make their lives easier. The first issue is the fragmentation of the European market. Playing on the European investment board is a challenge. It is clear that scalable and international companies seek funding beyond the country that saw them born. Therefore, it is not strange for Catalan startups to go to Europe to test the market. However, unlike the United States, each country in the European Union has different regulations, norms, and evaluations, which makes it very difficult to obtain funding in a divided market.
"This fragmentation does not favor companies in the early years," says Marcel Queralt, Chief Partnerships Officer at Factorial, the Catalan scaleup that develops human resources software. In this way, the businessman recalls that larger and common projects can scale the company in a "faster and more solid" way. Queralt assures that these investments are the most interesting and that without them, "many companies resort to foreign capital," he argues and acknowledges that in their funding rounds, the United States and the United Kingdom are the main representatives.
The United States is Europe's big competitor
The United States is Europe's big competitor. Americans not only finance projects within their territory, but they also cross borders and participate in companies here. Furthermore, when a startup has to seek funding, it is easier for it to enter a single market. "In Europe we have different regulations, various evaluations and norms that change depending on the country," says Queralt, who confirms that "we compete with single markets." The reality is that regulations and norms are always put on the table as problems for emerging companies, especially when seeking growth in a European context without a unified market. It is for this reason that, many times, companies seek capital outside their home country or even outside Europe: "We want to grow the company sovereignly, but in the end what we want is to make it grow," explains Marta P. Estarellas, CEO of Qilimanjaro Quantum Tech, the Catalan quantum computer company, winner of the Best Startup of the World 2024 award at the Mobile World Congress (MWC).
Another of the keys to maintaining competitiveness is long-term financing; patient capital. "Our times are much longer, therefore, we need financing that can wait for us. That does not go by deadlines, that goes by objectives," clarifies Anna Seriola, co-founder and CEO of Lumiris Spectral Solutions. Hers is the smallest of the three companies and the one in the earliest stages. They have developed a medical device that helps fertility and assisted reproduction (IVF) specialists select the best embryo to implant, with the aim of achieving a faster pregnancy and reducing the number of failed treatments. A complex technology, but with great growth possibilities that needs investors who can overlook immediate results and that "more capital is needed before the product," Seriola concludes.
Talent drain
Undoubtedly, the point where the three companies coincide is in the ability to retain talent. You can have good financing, but if there are no workers, experts and professionals to make a project advance, it dies. Estarellas assures that the talent drain is a real problem for the Catalan and Spanish business ecosystem. She herself confesses that she went abroad and recognizes that she has seen many executives of foreign companies who are from Barcelona. "Capital must also serve to retain our talent," she emphasizes. Seriola has a similar opinion, who recognizes that in her company they need very specific profiles and, therefore, have to compete in a fierce market to get them: "Talent stays because we have good projects," remarks the CEO of Lumiris Spectral Solutions, referring to the fact that salaries are not always competitive. Queralt, for his part, recalls that talent "is essential" to make a company work, but also recognizes that without a single market and facilities in regulation "it is difficult not to leave."