The Span­ish cap­i­tal is mak­ing gains thanks to a boom­ing tech sec­tor and new in­fra­struc­ture

Af­ter al­most a decade of re­ces­sion, the Span­ish cap­i­tal is back on its feet thanks to for­eign in­vest­ment and a flour­ish­ing tech scene, says Marisa Can­non

Business Traveller - - NEWS -

It’s late af­ter­noon when I ar­rive in Madrid and, heav­ing my case up the Metro steps, I’m wel­comed by a blast of hot, musty air and the toot of a trum­pet some­where not too far away. A group of burly men in flu­o­res­cent mesh string vests stroll past, and, hop­ing to get my bear­ings, I fol­low them to­wards the sound of swelling chat­ter.

As we ap­proach the square of Puerta del Sol, with its sur­round­ing build­ings draped in rain­bow flags, it dawns on me that I’ve ar­rived for the fi­nal hours of World Pride – a week of open-air con­certs, flotilla pa­rades and street par­ties in the name of LGBT rights.

Back in 2008, th­ese cel­e­bra­tions might have been tainted by the grim re­al­ity of the global fi­nan­cial cri­sis. Spain was hit par­tic­u­larly hard, prompted by the col­lapse of its prop­erty mar­ket, which had boomed ever since the launch of the euro in 1999. Aus­ter­ity fol­lowed, along with a se­ries of bank fail­ures and a spike in un­em­ploy­ment, at its height in 2013 reach­ing 26 per cent.

To­day, the dark­est days of re­ces­sion are over thanks to a com­bi­na­tion of quan­ti­ta­tive eas­ing, fall­ing oil prices and grow­ing ex­ports from large Span­ish com­pa­nies such as In­di­tex, owner of Zara and Mas­simo Dutti, and in­fra­struc­ture firm Fer­rovial, which de­vel­oped Heathrow’s T5 and new T2 and is now work­ing on a joint ven­ture with Lon­don’s Cross­rail.

Smart gov­ern­ment poli­cies have also helped to at­tract for­eign in­vest­ment – from e-com­merce giants Alibaba and Ama­zon, along­side dig­i­tal and fin­tech providers such as UST Global, Ebury and Ria, among oth­ers.

The cap­i­tal has done par­tic­u­larly well in ap­peal­ing to over­seas in­vestors, draw­ing as much as € 51 bil­lion in for­eign di­rect

in­vest­ment be­tween 2012 and 2016.“Ever since Spain and Madrid left the eco­nomic cri­sis be­hind, in­vest­ment has grown rapidly,” says Ro­cio Guemes, di­rec­tor of gov­ern­ment agency In­vest in Madrid. “In 2016, Madrid re­ceived in­vest­ment worth € 11.5 bil­lion, up 11.5 per cent on the pre­vi­ous year. This was 47.5 per cent of the to­tal in­vest­ment re­ceived in Spain.”

Much of this fund­ing has been ploughed back into real es­tate, fi­nan­cial ser­vices and con­struc­tion, as in­vestor con­fi­dence grows in the prop­erty sec­tor. The coun­try’s GDP is now ris­ing steadily, up 0.7 per cent at the end of last year com­pared with the first quar­ter of 2017, while un­em­ploy­ment has fallen to a post-cri­sis low of 18 per cent.


Sup­port for start-ups be­gan to ap­pear in the cap­i­tal, with Span­ish tele­coms group Tele­fon­ica open­ing its global small busi­ness ac­cel­er­a­tor Wayra in 2012, fol­lowed by the 2015 launch of Google’s third Euro­pean out­post for en­trepreneurs (af­ter Lon­don), of­fer­ing a space for peo­ple to work and col­lab­o­rate.

“Spain has al­ways been a coun­try of en­trepreneurs, but the cri­sis was a wake-up call,” says Sofia Ben­jumea, head of Google’s Cam­pus Madrid and co-founder of the South Sum­mit start-up con­fer­ence. “Since 2012, the start-up ecosys­tem has de­vel­oped tremen­dously, both in Madrid and Barcelona, along with new hubs like Va­len­cia and Malaga.”

At that time, Google Cam­pus was present only in Lon­don and Tel Aviv (it now has hubs in War­saw, Seoul and Sao Paulo), so why did it choose Madrid next? “The an­swer is, why not?” Ben­jumea says. “Spa­niards are not the best at sell­ing them­selves, but we have a high level of en­gi­neers, a great qual­ity of life, ac­cess to tal­ent, and our start-ups have re­ceived in­ter­est from a lot of ma­jor ven­ture cap­i­tal funds.”

Now in its third year, Cam­pus Madrid has amassed 32,000 mem­bers from across Spain, Europe, the US and Latin Amer­ica, all of whom can use it to work, meet, and host demo days and work­shops, for free. Housed in a 19th-cen­tury bat­tery fac­tory, the space is bright and airy with colour­ful mu­rals, a café and clus­ters of Scandi fur­ni­ture where pairs of 20- and 30-some­things hud­dle over their lap­tops.

The top floor is re­served for late-stage start-ups that have gained res­i­dency – there are cur­rently seven of th­ese, from a gro­cery shop­ping and de­liv­ery app to one that mon­i­tors your fer­til­ity if you are try­ing to con­ceive. Since open­ing, Cam­pus start-ups have cre­ated 2,500 jobs and raised more than Ð37 mil­lion in fund­ing.


Last year, the Euro­pean Com­mis­sion over­saw the launch of a pi­lot ini­tia­tive called Madrid Startup House, which is work­ing to es­tab­lish a one-stop-shop to pro­vide sup­port and guid­ance for fledg­ling en­ter­prises. It has been mo­bilised by com­mu­ni­ca­tions agency Hu­gin and Munin and in­vest­ment fa­cil­i­ta­tor So­cios In­ver­sores, whose di­rec­tors es­tab­lished the project.

Asier Baster­retxea-Gomez and Vic­tor Teo­dosio co-founded Madrid Startup House in 2016. “While we know there is a lot of growth and in­vest­ment, Madrid’s start-up scene is dis­persed – you have some­thing here and there, in­stead of a nice, thick gravy where you can see who is part of the ecosys­tem and com­mu­nity,” Baster­retxea-Gomez says.

The foun­da­tion is work­ing to in­te­grate th­ese parts, as well as to cre­ate use­ful tools such as a startup com­mu­nity map, an events plat­form and ad­vice on fund­ing. It has also re­cently joined Startup

City Al­liance Europe (SCALE) – an al­liance of 19 start-up or­gan­i­sa­tions in 11 cities aimed at cre­at­ing a broad ecosys­tem while of­fer­ing sup­port to firms that are ready to scale up and lever­age their Euro­pean neigh­bours. Mem­bers in­clude Am­s­ter­dam, Helsinki, Paris, Rome and Lon­don.

Young start-ups with a great idea but no cash are in luck. One of the foun­da­tion’s key pro­grammes aims to im­prove the of­ten de­mor­al­is­ing and re­stric­tive process of find­ing in­vestors. Baster­retxea-Gomez says that they are cre­at­ing an on­line stage where the coun­try’s most pop­u­lar crowd­fund­ing plat­forms can fa­cil­i­tate their projects, tap into cap­i­tal and get in touch with pri­vate in­vestors.

“This has un­cov­ered a huge amount of tal­ent,” he adds.“We pre­sumed this ex­isted in Spain and Madrid, but it was hid­den be­cause [new start-ups] couldn’t find ways to fund them­selves.”

But it isn’t only start-ups that have found fer­tile ground in Madrid’s tech sec­tor. Since launch­ing in Spain in 2011, Ama­zon has opened new lo­ca­tions across the coun­try each year, and, in 2016, un­veiled a tech­nol­ogy cen­tre in the cap­i­tal. At the launch, Terry Hanold, vice-pres­i­dent of tech­nol­ogy for Ama­zon EU, said: “Over the past five years we have proven that Spain is an ideal place to in­no­vate. We have found pro­fes­sion­als with in­cred­i­ble tal­ent.”

An­dreu Castel­lano, cor­po­rate com­mu­ni­ca­tions man­ager at Ama­zon Spain, says:“This year, Ama­zon will cre­ate more than 600 new fixed jobs in Spain, which means that in just one year, its work­force will in­crease by more than 50 per cent.”

This au­tumn, the group’s Span­ish head­quar­ters plans to re­lo­cate to a larger 12,000 sqm space in down­town Madrid with ca­pac­ity for more than 1,000 staff. The new tech hub will also move here, along with the first team out­side of the US that de­vel­ops soft­ware for Ama­zon Busi­ness, the group’s B2B mar­ket­place.

A new Ama­zon lo­gis­tics cen­tre is also due to open next year in Illescas, Toledo, 40km south of the cap­i­tal, and is ex­pected to cre­ate more than 900 jobs in its first three years.


De­spite grow­ing se­cu­rity con­cerns across the con­ti­nent, tourism here re­mains strong, with just over nine mil­lion vis­i­tors in 2016, up al­most 2 per cent on the year be­fore. Brands such as Hyatt, W and Four Sea­sons are set to open ho­tels in the next two years, while re­cent city-cen­tre launches in­clude prop­er­ties from Only You, Melia and NH Ho­tels.

Monica Tor­res is gen­eral man­ager of the 83-room NH Col­lec­tion Pala­cio de Tepa, which is housed in an 19th-cen­tury palace that was once home to the last viceroy of Spain in Mexico. “The next few years are go­ing to be quite chal­leng­ing, with the

open­ing of Four Sea­sons and W nearby, so this area is go­ing to be a hot spot,” she says.

Mean­while, an am­bi­tious re­gen­er­a­tion project in north­ern Madrid is likely to up the ante for many busi­nesses when it even­tu­ally sees the light of day. De­signed to ri­val in­ter­na­tional fi­nan­cial hubs such as Ca­nary Wharf and La Défense in Paris, the Madrid Nuevo Norte project plans to trans­form 268 hectares of in­dus­trial waste­land into a busi­ness zone also en­com­pass­ing homes, park­land and a metro ex­ten­sion.

While this should be cause for ex­cite­ment, no one is hold­ing their breath for a timely de­liv­ery – the project was first an­nounced in 1994 and has been held up by years of bu­reau­cratic and po­lit­i­cal wran­gling. This sum­mer, a revised ver­sion of the project was fi­nally ap­proved and, when work be­gins late next year, it will be one of the largest ur­ban re­gen­er­a­tion projects in Europe, with pro­posed fund­ing in the re­gion of Ð6 bil­lion.

“We have stud­ied other projects in Europe to de­cide which fea­tures to repli­cate and er­rors to avoid,” says a project spokesper­son. “Sev­eral stud­ies in­di­cate that there is a lack of high-qual­ity of­fices here. We want big com­pa­nies to choose Madrid as their head­quar­ters. All com­pa­nies will be wel­come.” Al­though in its early stages, the project has al­lo­cated 149 of the 268 hectares to com­mer­cial use, and ex­pects to build close to 11,000 new homes.

All of this will aid Madrid in its at­tempts to at­tract UK busi­ness as Brexit draws near

All of this will aid Madrid in its at­tempts to at­tract UK busi­ness as Brexit draws near. In­vest in Madrid’s Ro­cio Guemes says that the Madrid Nuevo Norte de­vel­op­ment will be one of the most ad­vanced busi­ness zones in Europe.

“We are per­ceiv­ing in­ter­est in the project from for­eign com­pa­nies and, once it is launched, there will be ex­cel­lent op­por­tu­ni­ties for in­vest­ment,” she says. Hav­ing weath­ered the storm, it’s clear that, to­day, Madrid is open for busi­ness.

From top: Calle de Al­cala; the new Ama­zon HQ

Be­fore the ef­fects of the ex­tra cash could be felt, glim­mers of hope be­gan to emerge from the city’s tech scene. While the down­turn rav­aged Madrid’s hous­ing and con­struc­tion sec­tors, young en­trepreneurs cap­i­talised on the low rents and liv­ing costs....

Left: World Pride cel­e­bra­tions Above: Puerta del Sol

From top: Nuevo Norte de­vel­op­ment; NH Col­lec­tion Pala­cio de Tepa; Only You Atocha

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