The Spanish startup ecosystem has surpassed €1.35 billion in investment so far this year, signaling a steady recovery in tech company funding activity, which had slowed due to the pandemic and subsequent inflation and interest rate hikes.
In Valencia specifically, startups raised €66.3 million, a 33% increase over last year, far exceeding 2023 figures.
These findings come from the prestigious State of European Tech report, prepared by Atomico, a European venture capital firm founded in 2006 by Skype co-founder Niklas Zennström. Now in its 10th edition, the report offers a detailed analysis of Europe’s tech landscape.
State of European Tech 2024: What it says about Spain in the European Digital Economy
Spain leads Southern Europe in tech company investment, ahead of neighbors like Italy and Portugal. However, the report identifies two key barriers to sector growth:
Lack of Local Funds. Spain remains heavily reliant on international investors to finance late-stage startups, limiting local companies’ ability to scale without seeking resources abroad. The report recommends fiscal incentive policies to encourage growth investments and potentially shift this dynamic.
Regional Comparison. Spain ranks 34th in venture capital investment as a percentage of GDP, far behind European leaders like Estonia (1.17% of GDP). This underscores a need for increased public and private investment to achieve more competitive levels.
On a positive note for Valencia, the recent announcement of AI-focused fund Next Tier Ventures, with €50 million earmarked for investment, is a welcome development.
State of European Tech 2024: A continental snapshot of the digital economy
To mark the report’s 10th anniversary, Atomico conducted a decade-long analysis of Europe’s tech evolution. It highlights three key drivers behind Europe’s emergence as a global innovation hub:
Investment. Capital invested in European startups has grown tenfold, exceeding €400 billion since 2015, compared to around €40 billion during the prior decade (2005–2014). While 2024’s figures are lower than in some previous years, the report emphasizes the resilience and recovery potential of the sector.
Talent. Europe’s tech workforce grew at a compound annual rate of 24%, reaching 3.5 million employees in 2024. This growth has positioned Europe as a global competitor in terms of talent.
Startups. The number of early-stage startups has risen from 7,800 in 2015 to over 35,000 in 2024. Meanwhile, the continent now boasts more than 300 unicorns (companies valued at over €1 billion).
When these findings are cross-referenced with Valencia’s ecosystem, it’s clear that investment is a key differentiator. Local and international talent in Valencia is at an all-time high, as is the number of startups relative to the resident population.
State of European Tech 2024: Europe’s leadership areas
The report identifies key sectors where Europe leads globally, presenting opportunities for Spanish startups:
Sustainability. In 2024, 21% of European startup investment focused on sustainability solutions—double the share in the U.S. Spain and Valencia, with strengths in renewable energy, have significant potential in this sector.
Fintech. Europe remains a global hub for financial innovation, with success stories like Revolut and Klarna setting benchmarks in the sector.
Deep Tech and AI. Investment in advanced technologies has grown by 33% since 2015, with emerging leaders like France’s Mistral in AI. This focus on cutting-edge tech can inspire similar innovation in Spanish startups.
State of European Tech 2024: How Europe can accelerate growth
Despite strong global figures, the European tech ecosystem faces structural challenges that must be addressed to close the gap with other leading regions:
Funding gaps for growth-stage companies. Europe has an estimated €350 billion shortfall in financing for growth-stage startups, hindering their ability to scale and compete globally.
Regulatory fragmentation. Nearly half (47%) of survey respondents cited bureaucracy and regulatory fragmentation as major barriers. Initiatives like the “28th Regime,” aimed at creating a unified market for startups, are steps in the right direction but require further progress.
State of European Tech 2024: Key takeaways and recommendations
The report offers several recommendations to enhance the value of Europe’s tech ecosystem:
Increase access to capital. Attracting pension funds and insurers to venture capital could unlock billions in funding for local startups.
Foster ambition. A cultural shift toward prioritizing global scale and aiming for international markets from the outset is crucial for Europe’s competitiveness.
Leverage european collaboration. EU member states already have frameworks for collaboration that the tech sector and its companies could better utilize.
In conclusion, looking ahead to the next decade, the report projects that by 2034, Europe could evolve into a tech ecosystem valued at approximately €8 trillion, creating 15 million new tech jobs.
Download the State of European Tech report here.
