Startup valuations have plummeted since the 2021-2022 bull market, which has hit the European startup ecosystem particularly hard, but there is one European region where the correction has worked slightly in its favor: the South.
Evidence of this was apparent at Mobile World Congress in Barcelona earlier this year, as TechCrunch reporters repeatedly encountered Nordic venture capitalists scouting startups in the Iberian Peninsula (Spain and Portugal). These startups bring a winning combination that venture capitalists love: significantly lower operating costs and much lower valuations.
Further evidence of this “southern trend” comes with the news that Enrique Linares, one of the co-founders of European unicorn Letgo, and Oriol Juncosa, a veteran of Barcelona’s VC world, are launching a new venture capital fund, Plus Partners. Plus Partners hasn’t disclosed how much they’re raising for their new fund, but the rumor I’m hearing is that it’ll be in the range of $30-50 million.
Among the fund's co-founders, Linares led second-hand marketplace Letgo, which attracted investment from Accel, Insight Partners, Prosus and others to become the first Spanish startup to reach unicorn status. Prior to Letgo, he co-founded Captaris, a fintech company with a large presence in Latin America.
Juncosa began his career in venture capital at Nauta Capital in Barcelona and later co-founded early stage venture capital firm Encomenda Smart Capital. He then became CFO of Carto, a data visualization SaaS company based in the US and Spain that has raised over $100M. As an investor/shareholder, he has invested in over 75 startups, including Carto, Cobee (sold to Pluxee), Holded, and Housfy.
So what is Plus Partners' theme? Juncosa says the themes will be focused on “health and nutrition,” “finance and real estate,” and “the future of work and productivity.” The fund will focus on pre-seed and seed-stage startups in Southern Europe, many of which are from Spain.
Juncosa said the fund is backed by founders and former C-level executives from companies including Carto, Luzia, Kantox, Red Points and Typeform.
He believes Spain and Portugal need more professionally managed venture capital funds because too many early-stage investors, especially non-professional angel investors and family offices, tend to “do more harm than good” to their emerging tech industries by overly inflating valuations or participating in investment rounds on punitive terms for founders.
“The big news for me in Spain is that there are role models, and also the tech community in Spain and Portugal is very open and everyone is happy to support someone,” he told TechCrunch over the phone.
Which countries does the new fund think are “hotter” when it comes to startups? “Overall, we would say that Barcelona, Madrid and Lisbon are three great cities for entrepreneurs. If you look back 10 years ago, Barcelona was the biggest tech city, but Lisbon and Madrid have managed to catch up. Now entrepreneurs have a choice of where to set up their companies.”
Linares reiterated that Southern Europe currently has “a lot” of entrepreneurs who can serve as role models for new startup founders, emphasizing that “we have a lot of talent and founders can internationalize very successful startups from here.”
“Barcelona and Madrid are neck and neck as ecosystems, but Valencia is growing,” he added. “They have a summit in October, the Valencia Digital Summit. We were speakers there last year and it was fantastic. I was very surprised. It was my first time there.”
The fund will also focus on Italian start-ups, completing the “Southern Europe” theme.
“The investment in Spain will be significant, [Southern Europe]”Italy is often overlooked. Rome and Milan are catching up. We are very excited,” Linares said.
Plus Partners arrives at a time when VCs are starting to turn their attention to Southern Europe.
Yellow, a new VC firm founded by Oscar Pierre, Sacha Michaud (founders of Glovo) and Adam Lasri (a former investor at VC giant Atomico), recently raised €30 million in funding in less than five months and has bet on the region.
Additionally, Spanish venture capital firm Kfund raised $75 million in funding for technology projects earlier this year.
According to a Dealroom report on the Spanish tech ecosystem, the combined enterprise value of Spanish startups will exceed €100 billion in 2023. It also found that venture investment in Spanish startups stagnated last year, with €2.2 billion raised across around 850 funding rounds.
According to the annual “State of Technology in Europe” report for 2023, the Spanish ecosystem ranked fourth overall and also had the highest number of startup funding deals last year.
Finally, the European Investment Bank's venture capital arm also backed a new Spanish fund this year that aims to invest 1 billion euros ($1.1 billion) in growth-stage technology startups.