While startup valuations have plummeted since the bull run of 2021-2022, a factor that particularly hit the European startup ecosystem, there is one region of Europe where the correction worked slightly in its favor: the South.
Evidence of this was seen during Mobile World Congress in Barcelona earlier this year, as repeatedly your TechCrunch reporter ran into Northern European VC startups in the “Iberian Peninsula” (Spain and Portugal). These new companies bring a killer combination that VCs love: significantly lower operating costs and far fewer hard valuations.
Further evidence of this ‘southern trend’ comes with news that a new venture capital fund, Plus Partners, is launched by Enrique Linares, one of the co-founders of the breakout European unicorn letgo, and Oriol Juncosa, a veteran of the Barcelona VC scene. While Plus Partners hasn’t released a figure for the launch of their new fund, the rumors I’m hearing are that it will be somewhere between $30 million and $50 million.
Looking at the co-founders of the fund, Linares led letgo, a second-hand goods marketplace, to become the first Spanish startup to achieve unicorn status, attracting investment from Accel, Insight Partners and Prosus, among others. Prior to letgo, he co-founded Captalis, a fintech company with a significant presence in LatAm.
Juncosa started his VC career at Nauta Capital in Barcelona and then co-founded early stage VC firm Encomenda Smart Capital. He then became CFO of Carto, a US and Spain-based data visualization SaaS company that has raised more than $100 million. As an investor/shareholder he has invested in more than 75 startups — including Carto, Cobee (which spun out of Pluxee), Holded and Housfyincluding.
So what is the Plus Partners thesis? It will focus on “health and nutrition,” “financing and ownership” and “future of work and productivity,” per Juncosa. The fund will focus on pre-seed and seed-stage startups in Southern Europe, with a significant percentage of them coming from Spain.
Juncosa told me the fund is backed by founders and former C-Level executives from companies like Carto, Luzia, Kantox, Red Points and Typeform, among others.
He said he believes Spain and Portugal need much more professional VC funds because too many early-stage investors, especially non-professional angels and family offices, tend to “do more harm than good” to the nascent tech scene there by either overblowing the valuations or enter rounds with punitive terms to the founders.
“The big news in Spain for me is that we have standards. Also, the tech community in Spain and Portugal is extremely open, everyone is happy to support everyone,” he told TechCrunch after a call.
Which country does the new fund consider “hottest” when it comes to startups? “I would say, overall, we have three big business cities in Barcelona, Madrid and Lisbon. If you go back 10 years, Barcelona was the biggest tech city. But Lisbon and Madrid have played very well. Now, entrepreneurs have the opportunity to choose where they want to establish their company.”
Linares reiterated that Southern Europe is now “full” of entrepreneurs who are role models for young startup founders, stressing: “We have a lot of talent and founders can internationalize very successful startups from here.”
“Barcelona and Madrid are equivalent to each other as ecosystems, but Valencia is growing,” he added. “There is a summit in October called the Valencia Digital Summit. We have been speakers for the past year and it has been fantastic. I was surprised. It was my first time there.”
The fund will also look at startups originating from Italy, completing its ‘Southern Europe’ thesis.
“We will have a significant share of our investments in Spain, but domestically [Southern Europe], Italy is much overlooked. Rome and Milan are approaching. We’re very excited about it,” Linares said.
Plus Partners arrives at a time when VCs are turning their attention to Southern Europe.
Yellow, a new VC firm created by Oscar Pierre, Sacha Michaud (the founders of Glovo) and Adam Lasri (a former investor for VC giant Atomico), recently placed their bets on the area, with €30 million of capital raised in less than five months.
In addition, the Spanish VC Kfund lifted up $75 million to fund technology projects earlier this year.
According to a report by Dealroom on the Spanish tech ecosystem, the combined enterprise value of Spanish startups exceeded 100 billion euros in 2023. It also found that venture capital investments in Spanish startups remained stable last year, with 2.2 billion euros raised in approx. 850 rounds of funding.
The annual “State of European Tech” report. for 2023 found Spain’s ecosystem ranked fourth overall and had the highest number of startup fundings last year.
Finally, the venture capital arm of the European Investment Bank also backed a new fund in Spain this year which aims to invest 1 billion euros ($1.1 billion) in early-stage technology startups.
