Aside from fast-growing e-commerce startups, what else does Spain have to offer?

From Tech.eu, by Alex Barrera:

Spain has always been good at one thing, exploiting the sun. Some years ago, we decided to “diversify” and get into real estate. We all know how that ended.

During the economic crisis, many in Spain criticized this mono-industry strategy. We needed more diversification and the government promised to power other value added industries. Nothing happened.

Meanwhile, the technology industry has been slowly but steadily growing in the country, from an early agrarian ecosystem of e-commerce businesses to a more industrial and services-based Internet economy.

Over the past few years the country’s startup and investor ecosystem has seen significant growth in multiple areas. Funding activity is just one example of this, as Spanish technology companies received more investment in the first three quarters of 2015 than in all of 2014.

However, one question still remains: are we going to make the same mistakes as in 2008?

Is the Spanish startup industry diverse enough or are we looking at a winner-takes-all scenario where e-commerce dominates all other sectors?

The chart above shows the reality of the country’s startup ecosystem, as e-commerce continues to dominate the funding landscape. It’s important to note that Spain has always been a very commercial country and that the leap into e-commerce was the obvious step for most people moving into technology in the late 90s.

E-commerce’s growth has been steady since 2000 and it’s, by far, the most mature industry in Spanish tech.  As a mature sector, startups in the space are stepping on the growth pedal and thus we’ve seen an increase in the frequency and size of the rounds for e-commerce startups (LetGo‘s €90 million, Wallapop‘s €36.8 million or Tiendanimal’s €30 million in 2014).

These massive rounds, while impressive enough, obscure the growth of several other key industries. A deeper analysis of the growth of each sector in the last twelve months reveals a different picture.

Apart from e-commerce, there are four other powerful industries making their way into the country’s technology economy.

Employment is having its moment. JobandTalent raised a €23 million Series B round last year to continue to build its blue-collar jobs marketplace. Tyba, another big player in the space also headquartered in Madrid, is currently transitioning into a developer-focused platform called Sourcezj3nl9r5, demonstrating that there are still problems to solve within the HR sector.

Fintech is another industry that’s showing big promise. The frequency of fintech deals is increasing year after year, as well as the volume of each round. Deals like Ebury’s (€77 million), PeerTransfer (€17 million) or Digital Origin (€15 million) have brought the industry into the spotlight in 2015.

It shouldn’t be surprising, though. Spain owns two of the top largest banks in the world, BBVAand Santander Group, and there is an entrenched financial culture in the country. Spain will never be The City, but banking and financial services are still a big part of Spanish culture.

Four of the top banks in Spain (Caixa Capital Risc, BBVA Ventures, Santander Innoventures and Sabadell’s BStartup) are actively investing in startups, both locally and abroad.

It’s not surprising that many newcomers to the startup scene have extensive financial backgrounds. Many of them have been sacked from their banks or left for greener pastures and have turned to technology, thus fuelling a significant increase in Spanish fintech businesses.

Will fintech displace e-commerce? It remains to be seen. What’s sure is that we’re going to hear plenty about the fintech industry in Spain in coming years.

Another interesting trend is the emergence of two industries that have never been associated with Spain.

On one side, more and more entrepreneurs are starting data companies. This is probably a reflection of the general data-obsession sweeping the tech world. Names like CartoDB (€20.5 million in 2015), FruitBull (Wayra batch), Agile Content (€5.3 million), Startupxplore (Spanish Crunchbase-meets-AngelList), Stratio (€2.3 million), Graphext (Former Tuenti mafia) or Bitext(€800,000) are good examples.

Apart from data, gaming is also becoming big in Spain. The country has had a long history in that industry (Dinamic Software, FX Interactive, Pyro Studios, etc.) but it wasn’t until recently that it exploded. With several accelerator programs specialized in gaming likeGameBCN, recent acquisitions like Akamon’s (€25 million), big rounds like SocialPoint‘s (€22 million) or Playgiga’s (€5 million) and a myriad of indy studios, Spain could be well positioned to take on other industries in Europe.

Given the aforementioned figures, it seems fair to say that there is a healthy mix of new industries in the Spanish technology ecosystem. While e-commerce is still the largest industry in the country, we expect to see industries like fintech taking over the mantle soon enough. Finally, keep a close eye on the data and gaming industries because, albeit small, I predict that they will mature very fast during the next few years.

Also read:

Investment in Spanish startups to surpass $500 million in 2015 (for the first time ever)

Tech funding in Europe in January 2016: Spain’s hangover

9 challenges you’ll face as a Spanish entrepreneur

How to successfully obtain an entrepreneur visa (in Spain)

Kibo Ventures prepares new €80 million fund to lead investments in Spanish startups

Image credits: Miguel Librero / Flickr