However, Spain’s capital city is actually the hottest spot for startups, especially when you take a look at the statistics. Mobile World Capital Barcelona reported that 30% of Spain’s startups reside in Madrid, and 29% in Barcelona. So, whilst one is seen as the more obvious startup hotspot, in fact, the numbers sway slightly more in Madrid’s favour.

According to the Socio-Economic impact of South Summit in Madrid, conducted by South Summit and PwC, Madrid is one of the best capital cities for entrepreneurship.

Maria Benjumea, Founder and President of South Summit, comments: “Madrid is one of the great capitals for entrepreneurship thanks to its ability to attract and retain talent. It hosts 41% of investors, 33% of the total investment of the national ecosystem, and 31% of startups.”

Supportive ecosystem

On 1st January 2023, Spain passed the ‘Spain Startup Law’, which marked a significant milestone in Spain’s legislative landscape. The passing of this law set a new standard for the nation’s approach to nurturing a business ecosystem that encourages innovation and technologically driven businesses. It introduced a specialised regulatory framework designed specifically to address the unique requirements of startups.

The law introduced measures that were aimed at nurturing startups throughout their lifecycles. This includes:

• Encouraging startups to set up or relocate to Spain
• Simplifying the process of starting and operating a startup through streamlined administrative procedures
• Attracting and retaining specialised talent by offering improved tax incentives for stock options
• Enhancing links between trade schools, universities, and emerging companies
• Developing hubs in smaller cities and rural areas to attract businesses and investors
• Fostering collaborations with startups for innovative public projects
• Tackling the gender gap in the startup scene

The ecosystem in Madrid

A factor that makes Madrid stand out is how supportive its ecosystem is for entrepreneurs. Not only are the measures in place to support entrepreneurs, but entrepreneurship is highly encouraged.

Benjumea comments: “According to the South Summit Socioeconomic Impact Report that we have been preparing for several years, Madrid is one of the main innovation hubs in Europe. It ranks third in Europe in the number of startup accelerators over the last year, fourth in Europe in the number of pre-seed opportunities, and fifth in the total number of tech companies founded in the last 10 years. The capital has a strong entrepreneurial ecosystem made up of 2,645 startups that created 48,000 jobs in 2023, 30% more than the previous year, and raised €775 million in 128 operations.”

South Summit

Madrid has a supportive startup ecosystem, and within this is South Summit. South Summit was founded back in 2012, when the economic crisis had darkened the business outlook in Spain. The organisation grew with the belief that innovation and the entrepreneurial spirit would be the driving force in healing the economy.

The event, co-organised with IE University, allows startups to pitch their projects to international investors, connect with potential clients, and learn from unicorn founders sharing their expertise at the event.

South Summit has even expanded outside of Madrid. It organises South Summit events in other countries, like Brazil, but has also created a scaleup focus series of events known as its ‘Scaleup Series.’ This takes place in Munich, London, Paris, Milan, and Lisbon, and brings the flair of its usual events around Europe to support the startup ecosystem, as well as spreading more awareness of the Spanish ecosystem.

Education for entrepreneurship

Within IE University sits IE Business School, which puts a strong emphasis on entrepreneurship. The business school’s mission is to give students the mentality, the toolbox, the opportunities, and the community to become a lifelong entrepreneur. It wants to empower entrepreneurial professionals to build sustainable value propositions that make a positive impact in the world.

According to its statistics, 25% of IE University alumni start their own businesses, and over 1,500 students per year being trained in entrepreneurial management.

Lee Newman, Dean of IE Business School, comments: “Being one of Europe’s largest, most vibrant, and manageable cities, Madrid has become a magnet for global entrepreneurial talent. This talent, along with Madrid's startup-friendly policy, its ecosystem of incubators like IE Business School’s Venture Lab, and the South Summit mega-event, is catalysing a next wave of high-potential startups. As Dean of IE Business School, an institution founded by and for entrepreneurs, and a former DotCom entrepreneur myself, I am very excited to be a part of this.”

It’s not just IE University that aid the education of entrepreneurs to be. Educational pillars like the Universidad Politécnica de Madrid (UPM) and Universidad Complutense de Madrid (UCM) underscore the city's commitment to tech excellence. Not only is the area a startup hotspot, but it is also a tech hotspot.

The historical capital marries tradition with a thriving tech landscape. Multinational tech corporations and vibrant startups coexisting in the city makes for a dynamic environment for tech professionals. Google, Microsoft, Accenture, and IBM, are just a few of the tech giants that have found a home in Madrid, which has contributed to its status as the tech hub it is today.

But don’t just take our word for it. If you’ve been considering a change of scenery, maybe Spain’s capital is the new environment you need to work on your startup.

This article originally appeared in the May/June issue of Startups Magazine. Click here to subscribe