Battle of the Startup Cities: Madrid vs Barcelona #StartUps - The Entrepreneurial Way with A.I.


Tuesday, September 13, 2022

Battle of the Startup Cities: Madrid vs Barcelona #StartUps


Turning our attention to sunny Spain, we wanted to take a look at the bustling cities of Barcelona and Madrid. Two powerhouses of Spain’s positively growing startup ecosystem and two cities that are known to indulge in a bit of healthy competition every now and again. Every year, we release an overview of Europe’s top startup hubs and these two cities regularly come quite close – last time we ranked Barcelona at number 5 and Madrid at number 7.

This year, Spain was rated by the European Commission as one of the continent’s most advanced digital economies. So, now it’s time for the hotly-anticipated El Clásico, but this time we’re not talking about Pique or Carvajal, rather which city is hitting the back of the net in the startup world. 

Barcelona is producing exciting startups across a multitude of verticals, nurturing them from early-stage right up to unicorn heights. From the likes of Glovo and TravelPerk to Wallbox and Typeform, Barcelona has been rightly labelled as a “unicorn territory”. Let’s not forget those up-and-coming disruptive companies, such as Heura, who are making themselves known on a global scale. Check out 10 Barcelona-based early-stage startups we have our eyes on here.

With an increasingly metropolitan community, made up of highly skilled locals, an international community of digital nomads and young professionals, alongside an incredibly attractive lifestyle, Barcelona is somewhat of a heaven on earth for startups and naturally harvests the best of startup culture. Not only does the city play host to our annual EU-Startups Summit, but it’s also home to the Mobile World Congress and some of Europe’s most influential incubators, investors and accelerators have set up roots in Barcelona. 

Meanwhile, Madrid is known for its thriving art culture, exciting nightlife and as the beating heart of Spanish heritage. The Spanish capital is also a buzzing startup hotspot, with success stories like Cabify, Spotahome and many more. It is also home to hubs like ImpactHub, TheCube and Utopicus, and events like South Summit, one of the biggest startup conferences in Southern Europe. 

Madrid also offers an attractive offering of financing and grant options, such as Avalmadrid, and a series of friendly financial arrangements with banking institutions. Ranked in third place worldwide for its number of coworking spaces, there’s plenty of affordable office space here. In fact, Madrid not long ago began offering coworking spaces free of charge for six months. This year, Madrid bumped itself up the list of Monocle’s most liveable cities

Let’s see how the two line up

According to Dealroom, the two cities have a very comparable number of startups active at the moment and each city is the birthplace of 5 unicorns. However, when looking at funding, some differences start to emerge. 

Looking at the stats, Barcelona has received about $5.4 billion in new VC funding since 2015, while Madrid lags slightly behind at $4.4 billion. The respective values of each city’s startup ecosystem rests at $39 billion (Barcelona) and $24.3 billion (Madrid) – putting Catalonia’s capital slightly ahead. 

But, funding isn’t everything – it’s also important to consider the quality of life, availability of coworking, cost of living and the available talent pool. Thinking about this funding in the context of Madrid’s commitment to co-working spaces, and Barcelona’s slightly pricier lifestyle, the two cities are very close. 

Influential incubators and accelerators 

Madrid Barcelona
Wayra IMPACT Accelerator
Cink Emprende GameBCN
Tetuan Valley La Salle Technova
Google Campus Conector Startup Accelerator 

Popular startup co-working spaces 

Madrid Barcelona
Cloudworks OneCoWork
The Shed CoWorking Cloudworks
Coworking Espíritu23 Betahaus
Utopicus WeWork

Madrid’s top verticals at the moment are regarded as transport, jobs & recruitment and healthtech. Barcelona is also making eye-catching developments in transport, as well as big in enterprise software and foodtech. 

With insights from Andrés Dancausa from TheVentureCity’s Spain division and Miquel Martí, the CEO of Tech Barcelona, we explored some of the reasons why these cities are booming right now – and see how the two compare.

Why are both Madrid and Barcelona having a tech and innovation boom right now? 

According to Miquel Martí, “Barcelona has a solid economic background in commerce, design and industry. In addition, it has relevant universities and research centers, as well as good infrastructures. Barcelona is a great city to live in for its geography, culture and gastronomy. The digital ecosystem started here more than two decades ago and has bloomed in recent years, due to the fact that tech allows talent to work from wherever.

“Due to the effort of all the different stakeholders of the ecosystem combined with the singularity of Barcelona, therefore making it the best city to live and to work in.”

Thinking of Madrid, according to Andrés, it’s all about a blend of great talent, and a cheaper cost of living than other European capitals. He said:

“Not only talent coming from the many universities present in the Region, but also talent coming from startups and tech companies that have their headquarters in Madrid. The big density of startups makes it also easier to find all kinds of services and professionals needed to launch a startup. Finally, being the economic capital of Spain, all the important VC Funds have a presence in Madrid and all the main corporates are here too, which makes it easier for startups to seek partnerships with them as well.

“I think it certainly helped that we were one of the most open regions in Europe just a few months after the pandemic, and given that it is a very likable city, many foreigners were attracted to Madrid for a few weeks during and after 2020. Add that to the increasing presence of remote teams and you find why so many remote workers are also choosing Madrid as their place to be.”

Thinking culturally is interesting as well. According to Andrés, Madrid has long been an exciting place for people to flock to in search of new experiences and expertise.

At the core of innovation, there are people of different backgrounds keen for sharing knowledge with others. Madrid has been for many years the main pole of attraction for Spanish citizens born outside Madrid to develop their professional careers. So much in fact that there are many few “gatos” (those that have their four grandparents from Madrid). I can’t think of any more welcoming Region to host more international talent to build the next ten years of startup innovation.”

Meanwhile in Barcelona, “technology lives within the city and it’s the main driver of urban, social and economic transformation. One of the main projects of the association is the Urban Tech Campus Project: it develops a network of singular buildings in the city center where innovative companies attract the best talent.” Says Miquel. 

How do the cities keep up the momentum going forward? 

Miquel sees Barcelona on a strong growth trajectory, maintaining this relies on maintaining the foundations of education, investment and entrepreneurial spirit. 

“Keeping the good work in the combination of the different factors that helped us reach our current status: good education, investment, entrepreneurial culture, success cases, … But if I had to point out only one, I would go for Talent. We do have very qualified talent but if we want to keep growing we still need to attract and retain more in order to maintain the presence of global tech hubs from multinational corporations and a growing startup ecosystem.” 

Looking to the next 5-10 years in Barcelona, Miquel thinks that “we will see more tech-based companies (spin-offs) coming from Universities and Research Centers. More international investors, as well as innovation and digital areas of international corporations, will be active players of an ecosystem that will be one of the main motors of our economy. Barcelona will be the city of talent in Europe.”

Heading back to Madrid, Andres is also optimistic about the city’s startup future.

“I think Madrid has made a great effort in the past ten years to build the infrastructure for that growth, and that we have the physical capacity to build more growth. Maybe one thing that I miss would be more startup events. We are home to the South Summit, which is a great event, but there’s enough space in the year to hold other international events such as WebSummit, Saastr or even a SXSW Madrid edition. Those events gather thousands of people that are then attracted to those cities later on.

“I hope we can 10x in every key metric like we have 10x as a country in the amount invested in startups in the past 10 years.”

Battle of the startup cities: Is there a winner?

Both Andres and Miquel agree that the two cities are great places to live and to work, they both avail of opportunities, entrepreneurship and exciting innovation. They are two cities attracting international attention, in terms of talent as much as an investment – so it is really hard to claim an outright winner. 

As for us, looking at the cosmopolitanism that has come to define Barcelona, the growing demand here for co-working spaces and increasing digital nomad availability shows that the city’s international reputation still remains strong. As we head to an ever more internationally-connected world, this is a factor that marks a big difference. This, combined with those slightly bigger funding numbers and the growing startups that are glowing on the world stage, place the Catalan capital slightly ahead – at least for the time being. 

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September 13, 2022 at 10:35AM by (Patricia Allen), Khareem Sudlow