Zaragoza, the smart city helping startups find their feet

A virtual tour of the Plaza del Pilar to participate in the offering of flowers, attending cultural events remotely and looking for baskets in 3D filled with typical sweets called adoquines (cobblestones) to get NFTs (non-fungible tokens, virtual objects associated with a certificate of authenticity thanks to blockchain) of symbolic regional characters. Zaragoza City Council celebrated the recent Fiestas del Pilar – the city’s most important festivities – with this mix of tradition and cutting-edge technology.

It was a successful initiative – the website received over 100,000 visits and there were 21,000 digital floral offerings. “We’ve managed to promote our culture and position Zaragoza as an innovative place”, says Pedro Lozano, co-founder of Imascono, the local creative technologies studio that was responsible for this project for the second year running.

Zaragoza is known for the river Ebro, which crosses the north east of the Iberian Peninsula, and the city has 680,000 inhabitants. This figure makes it the fifth most populated city in Spain and it is home to more than 50% of the population of Aragon, the autonomous community of which it is capital. It is also the region’s economic heartland – Aragon contributed 3.1% of national GDP in 2019, with the province of Zaragoza contributing 2.3%. The city’s importance also comes from the weight of the logistics industry, with its airport being the second busiest in Spain for volume of commodities and its Plaza platform being the largest cargo terminal for goods in southern Europe.

“Zaragoza has been a logistical hub since Roman times, and there are more and more large companies picking our community because of its location. In a hyper-connected world, that’s a competitive advantage”, according to Celia García, Director of the Aragon Business and Innovation Centre (CEEI Aragón), which is funded by the local Government. One such company is Amazon, which has just installed a new logistics base and is building two more in the city. The giant is also going to establish the first three Amazon Web Services data centres in Spain, one in Huesca and two on the outskirts of the Aragonese capital.

“Aragon has become a European benchmark for digital – the ecosystem is booming”, notes García. Although its innovation hub may be less relevant at present than the major centres surrounding it (the Basque Country, Barcelona and Madrid), the city with the Ebro running through it is working to plot a future with technology.

An autonomous support network that stimulates investment

To contribute to the growth of the ecosystem, CEEI Aragón offers companies in Zaragoza, Huesca and Teruel help including co-working spaces, technical offices and industrial premises, as well as virtual advice to support startups throughout the territory, whether or not they are in the three Aragonese cities. Communication, marketing, internationalisation and creating business models are some of the areas where they support entrepreneurs in the different phases of startup. This comprehensive approach has led to the centre achieving a 78% survival rate for projects in its first 10 years, and it currently supports 62 companies.

Other autonomous initiatives to support innovation include the Society for the Industrial Development of Aragon, an investment instrument, and the newly formed Aragon Digital Innovation Hub, a centre that specialises in digitisation for industry. The regional government has even created innovative public companies, such as Asitel in Zaragoza, a telephone interpretation and text translation agency born in 1994. “A need for Aragonese SMEs to branch out overseas was identified, and one element that was missing was languages – they didn’t have the knowledge or the staff to help them with logistics”, explains María Ángeles Zuera, coordinator of interpreters and translators at Asitel.

The team, made up of professional interpreters and with extensive experience, offers services including “translation and cultural mediation so that businesses can succeed”, in Zuera’s words, to 150 regular clients in Spain and other countries in 35 languages. Asitel has also taken part in Fast Track, the BBVA Open Innovation programme to collaborate with startups, and is going to run a pilot to allow SMEs to access their translation service via the bank’s website.

A smart city in the making

Regional support services are joined by local initiatives to promote innovation, such as Zaragoza Activa, which includes consultancy services and an ideas incubator. That was where Imascono, which brought to life the digital flower offering for the Fiestas del Pilar, learned to take its first steps. Established ten years ago, this startup undertakes augmented and virtual reality projects – it creates virtual spaces or metaverses as they are known thanks to Facebook – for clients such as Disney, Telefónica and Marvel. “We’re looking to bring science fiction to businesses. Our geek DNA and a creative desire to be at the cutting edge unite us”, says co-founder Pedro Lozano. Their time with the incubator allowed them “to quickly make contacts with experienced professionals who can add value”.

Also noteworthy are the incubator CIEM Zaragoza and the accelerator La Terminal, which mainly promote projects related to smart cities. “Historically this is a city where companies try things out and we’re making great headway in smart cities; we want to improve the lives of our citizens using technology”, maintains Carmen Herrarte, Zaragoza’s councillor for the Economy, Innovation and Employment. This is illustrated by the recent opening of an urban space for the testing of driverless vehicles, where trials with delivery drones have been carried out.

The City Council is also committed to digitisation in the local business world. It has launched Volveremos, an app that rewards users for purchases made in the more than 2.000 establishments that have signed up, works on getting sensors into 12 shopping arcades to improve the customer experience with data, and is planning to launch challenges for the innovation ecosystem to encourage them all.

Startups with a track record in a growing hub

Zaragoza’s councillor for the Economy believes that the startups there stand out for ideation, but they still need to grow and become scaleups without leaving the region. Despite this, Herrarte argues that the digitisation accelerated by the pandemic helps this retention: “Many professionals can have their headquarters here and move around less than they had anticipated, with very low costs, cheaper labour and a better quality of life”.

In the city there are already experienced startups that have managed to grow. These include some that were nurtured by CEEI Aragón, like Libelium, a University of Zaragoza spin-off with customers in more than 120 countries that specialises in the Internet of Things and monitoring public spaces in Zaragoza; Certest Biotec, which develops in vitro diagnostic products and has seen its production skyrocket due to manufacturing PCR tests to detect COVID-19; and Bitbrain, another university-born project that combines neuroscience, artificial intelligence and hardware with applications in marketing and other areas.

There are also relevant initiatives in fintech and insurtech, such as Pensumo. This startup’s vision is based on an apparent contradiction – save as you spend. Its app allows users to generate small contributions to a savings plan from Allianz insurance company by making purchases in certain establishments. “The next step is to develop an API [set of functions that facilitate communication between two systems] and to connect with any other financial entity that wants to get the consumer pension to its users”, explains Pensumo’s director José Luis Orós. Their initiative, which has received European Union support, has entered the first call for the Spanish regulatory sandbox, a controlled test space for deploying innovative projects in financial services.

As well as working hard on social sustainability, the company is committed to environmental matters – the Recicla app rewards users who separate their waste on an ongoing basis. Their two platforms already have more than 15,000 users and their aim is to extend their consumers’ pension system to Latin American countries. “I’m proud of being an entrepreneur in Zaragoza, it’s an ideal city to live in. If you run your business from here, you won’t have any issues competing at the same level” reasons Orós.

Forging ahead despite obstacles

Beyond stimulating the creation of scaleups, Zaragoza’s ecosystem has other challenges to tackle, including coordinating the support network. “The challenge is to be capable of getting organised to be more efficient within the ecosystem”, acknowledges CEEI Aragon’s director. For his part, the director of Pensumo is focusing on the need to stimulate investment. “The community is lopsided – there are too many facilitators, not enough entrepreneurs and very few investors”, he claims. Co-founder of Imascono, Pedro Lozano, agrees that without financing from two local investors, the company would not have taken off. “We have to take more of a chance on crazy ideas to grow our ecosystem”, he adds.