European Next Tech fund first European unicorns steps - The Next Tech fund is just a first step: Spain proposes in Europe to create a transnational "fund of funds" to promote more European unicorns.

The Next Tech Fund was presented a few days ago as an initiative that expects to mobilize up to 4,000 million euros between public and private resources (with a participation of the State of up to 49%) in an initial period of 4 years. The objective: to project and promote the Spanish scale ups, that is, companies that have already raised more than a million dollars, whose model works and that aspire to scale it.

The initiative is part of the State Secretariat for Digitalization and Artificial Intelligence (SEDIA) under the Ministry of Economic Affairs and Digital Transformation, and the Official Credit Institute (ICO). But, in the words of Secretary of State Carme Artigas, the Next Tech could be just a first step.

"We are leading at the European level that national funds such as Next Tech come together to create a transnational European fund of funds," highlights Artigas in an interview. Artigas would have already transposed this proposal at one of the last meetings of the Council of the European Union.

The idea is that Spanish companies not only access the funds of the Next Tech, but they can also go to Europe to seek co-financing. "It's the way forward," says Artigas. "New Spanish companies, if they do not find funding in Europe, have to sell off or go outside to look for money. They neither grow nor create jobs in Spain."

European Next Tech fund first European unicorns steps

"That is a problem that occurs in general at European level that in Spain we wanted to tackle," he says. "The reason for Next Tech is to raise 4,000 million euros in investment. But not for any type of company: only for those that require it. The benefit is that talent will be created here, the intellectual part will stay here, the patents will stay here and unicorns can be generated [companies with a valuation of more than 1,000 million dollars]."

Already at the presentation of Next Tech, Artigas herself outlined that 60% of the venture capital invested in Spanish companies comes in seed phases. "The problem is when companies grow. In the technological field, companies need large capital injections to be competitive at European level. And they must access other investment phases from Series B to compete."

Next Tech's investment capacity will be one of the largest of the European national funds. It's only behind the German fund in volume. "The endowment is double that of the French fund, despite the fact that we have a smaller digital entrepreneurship ecosystem." The idea is that, for a Spanish startup to become a unicorn, it doesn't have to leave the country.

European Next Tech fund first European unicorns steps

Although Artigas clarifies something about the concept of unicorn: "We are at a time when the valuation of companies does not respond to necessarily technical or objective criteria. We are in a situation where we are trying to create companies of the XXI century with balance sheets of the XIX century: the balance sheet of companies does not capture the real value of their talent or their innovation".

Therefore, "the traditional mechanisms of economic valuation of companies "do not reflect" the reality "of the"most disruptive" business models. "The market tries to compensate for that and, in the end, the growth expectations of companies that only have a stable business model are overstated," details the Secretary of State for Digitalization and Artificial Intelligence.

But that does not happen in Spain. In reality, something diametrically opposite is happening. "This is what cannot happen. This is happening all over the world and not in Spain. In Spain, companies receive lower valuations than companies in Israel or the United Kingdom, with Spanish companies being exactly the same or even better, " he denounces.

European Next Tech fund first European unicorns steps

"Why? Because there is no access to capital and therefore less supply. We want to change that dynamic. That there is no problem of access to capital in Spain and that Spanish companies can improve their valuations and their recognitions at an international level, and that we can create large companies". But, he warns: "Not for a speculative purpose. In order to create jobs and quality work and an ecosystem around".

"Talent calls talent," recalls Artigas. "When companies, entrepreneurs and good professionals come together, a hub is created. Spain is proving that it is a great country capable of attracting international talent."

Carme Artigas ' counterpart in Portugal, the Secretary of State for Digital Transition Luso André de Aragão, also participated in the presentation of Next Tech. Therefore, in the conversation that this medium had with Artigas herself, it was raised whether in the neighboring country things had been done better or had been done before.

European Next Tech fund first European unicorns steps

"Different things have been done," ditch. "It is attracting companies thanks to a kind of very aggressive tax incentives for people and foreign citizens. He played the tax card, so to speak. There were conditions for startups in Portugal that [with the new Startup Bill] in Spain we have matched or even exceeded."

"Spain does not want to play the card of being a tax haven. (...). We are making transnational initiatives, defending the power of southern Europe and the Iberian pole. And Spain has added values: talent, powerful universities, which is not just Madrid or Barcelona...".

"During the pandemic it was said that many people came to telework because Spain invested a lot in the large broadband telecommunications networks, which are the best in Europe. That generates traction. Until now, a digital nomad could come and settle in Spain for 3 months with his family".

European Next Tech fund first European unicorns steps

Now, with the new Law on Startups, he, his family and even his company will be able to move: "It will move those networks of relationships, access to investment and talent, which Spanish entrepreneurs will also enjoy".

"We are convinced that we are going to change the face of this country in 2 or 3 years," he emphasizes.