Financing and support: BBVA Spark’s formula to boost entrepreneurs at South Summit

Once again, South Summit gathered entrepreneurs, investors, and other key players in the entrepreneurial ecosystem last week in Madrid. This year’s edition, themed ‘Human by Design,’ emphasized the importance of placing people at the center of innovation. The event saw the participation of over 2,000 national and international investors, 21 unicorns, and 650 high-profile speakers. BBVA Spark had a significant presence with a stand, an exclusive brunch for investors, and panels moderated by some of its top executives.

“South Summit is already a benchmark event in Europe, and we couldn’t miss it. Many clients and funds come, not just from Spain but from all over Europe and the world. We have to play a leading role,” said Roberto Albaladejo, head of BBVA Spark, during the event. He stressed the importance of “continuing to drive the growth of Spanish startups” so they can compete globally.

Challenging times for venture capital

A significant portion of the discussions at this 13th edition of South Summit focused on how startups can secure the necessary funding to fully realize their potential in an increasingly restrictive venture capital (VC) environment. Specifically, VC investment in Spain dropped from €4.4 billion in 2021 to €2.2 billion in 2023, according to data from the recent “The Spanish Tech Ecosystem” report by Dealroom, in collaboration with BBVA Spark.

Roberto Albaladejo moderated a panel titled “Unlocking European Growth for Fast Growing Companies,” highlighting the new opportunities for both investors and Spanish entrepreneurs across the Atlantic. “Latin America has significant digital investment needs, presenting a huge opportunity. Spain, due to language, proximity, and history, can channel that investment,” Albaladejo noted.

Lucrezia Lucotti, a partner at 360° Capital, who participated in the panel, mentioned that the market recession “is here to stay for a couple of years,” which has reinforced those talents with greater “adaptability.”

On a more optimistic note, Alexander Joel-Carbonell, a partner at HV Capital, expressed positive sentiments: “Markets are reopening, and the ecosystem is becoming more active.” Despite the drop in investment and the complex macroeconomic context, the Spanish entrepreneurial ecosystem grew in value by nearly 5% in 2023, according to South Summit data.

“We have all learned more in the past three years than in the last 20, which somehow puts company founders and fund founders on the same level,” summarized Laura González-Estéfani, founder and CEO of The Venture City fund.

Reflecting on the differences between the Spanish and European ecosystems compared to more mature ones like the U.S. and the U.K., González-Estéfani, who leads a Miami-based fund, noted, “We are much more alike than we often imagine.” She pointed out that U.S. investors often include pension and university funds, which is not the case in Europe, though Europe has the European Investment Bank (EIB). “Another difference is that Europeans are more conservative than Americans, who take much more risk from the start,” she reflected. However, González-Estéfani considered European talent to be “unbeatable.”

In a similar vein, Itxaso del Palacio, general partner at Notion, who spoke on the panel “Resilient Growth: Strategies for Scaling Success,” noted that London benefits from inherent factors like political and financial power and the English language, which gives it an advantage in accessing the U.S. market. “In the U.K., anyone can create a company in less than 24 hours online. We have to admit that other European countries, including Spain, could simplify these processes for entrepreneurs,” she added.

Alexander Joel-Carbonell commented, “As Europeans, we can be very hard on ourselves. Our ecosystem is very young, but we have already had a considerable number of significant exits, which are now having a multiplier effect.”

Debt as an alternative to VC investment

Verónica Ruiz, head of BBVA Spark in Spain, explained that the sharp correction in VC investment since 2021 “has allowed other players to enter with much more rational valuations and offer other things to the ecosystem, which I believe is a sign of maturity.” “We play an important role because we are providing debt, and debt is an additional complement that can help these types of companies at critical moments, especially when there is a scarcity of capital,” detailed Verónica Ruiz.

Debt solutions were also prominently featured at the event. Christhi Theiss from BBVA Spark, speaking on the panel “Risk to Reward: Mastering Venture Debt for Growth,” discussed the rise of this type of loan aimed at high-growth companies. “Venture debt has grown a lot in recent years. We have seen a huge learning curve among financiers. Investors see it as a sign of excellence and maturity that companies have venture debt because it means they know how to plan,” Theiss explained.

During the “Resilient Growth: Strategies for Scaling Success” panel, Jan de Dreu from BBVA Spark agreed that venture debt can be an excellent product for financing growth companies, “especially for those with limited access to traditional bank financing,” with the advantage of “much less dilution than equity and lower cost.”

Regarding whether revenue-based financing (RBF) or equity financing is better, De Dreu said, “The important thing is that it makes sense for the stage the company is at, to avoid over-indebtedness and to be proactive.”

Startups’ needs

At the exclusive brunch with startups and investors organized by BBVA Spark during South Summit, several entrepreneurs highlighted the importance of having alternative financing options to VC investment. Javier Guerrero, CEO of the sports nutrition startup Indya, emphasized that the benefits of financing through an entity specialized in the ecosystem like BBVA Spark go beyond value and growth capacity. “It’s not just the ability to receive investment, but how they help us turn the business wheel and be at events like this, where we can connect with other investors and entrepreneurs and see how competitors are growing,” he said.

Both Guerrero and other entrepreneurs at the brunch also valued the importance of gathering all ecosystem players at events like South Summit. “It helps us, above all, to establish the Barcelona-Madrid connection. We have a strong ecosystem in Barcelona, but there’s a part we don’t know that is in Madrid, and South Summit allows us to create ties, learn about other projects, and contact investors,” noted Sara Werner, CEO of Cocunat. “The entire European ecosystem converges in Madrid at the South Summit. Here you connect with investors and gain knowledge of the ecosystem and trends. You mark the date every year and have to be here,” Guerrero added.

South Summit, which this year brought together 17,000 attendees from the entrepreneurial ecosystem, concluded with the Startup Competition awards. Out of the 100 finalists, the jury selected Invopop, a startup offering an API to automate invoice issuance, as the global winner. Additionally, Sycai Medical won in the healthtech category and was recognized as the most disruptive startup for its pancreatic cancer diagnosis software; Embat triumphed in fintech and received the Best Team award; Sunthalpy won in climatech with its solar-powered building, and Shakers, a startup using an AI engine to connect freelancers with companies and projects, was chosen as the most scalable company.

Once again, BBVA Spark stood shoulder to shoulder with all of them and the entire ecosystem of entrepreneurs, investors, and institutions in an event that boosts innovation in our country.