Question

What are the risks of starting a business in Barcelona, Spain?

Answer 1

Spain's economy is more based on modern knowledge. Starting a business can be a difficult task without local help on board. Spain is the seventh largest recipient of foreign direct investment (FDI) in the world, but shrouded in bureaucracy and red tapism which can stifle private sector investment and make the day-to-day running of a business very complicated. No individual is interested to start business in Barcelona. No location for a startup is perfect, Barcelona has more to offer than most.

The time and money it takes to handle can make it difficult. The administration is building its understanding of startups and tech, yet some ridiculous costs continue to baffle us. The yearly 2% wealth tax or an exit tax on unrealized capital gains is a good example for this. Spain is the 5th country in Europe with a GDP of 1 trillion euros and 46 million inhabitants. Its a big market for a multi-local strategy, unfortunately it ranks way below in market attractiveness and available capital. Many non-residents decide to go south(Latin America) instead of north(Spain,France etc.) as language may be a barrier.

Only the locals startup business there. In Spain half the shares are gone when the company has raised quite a lumpsum amount. Plenty of those advisors tend to be close to the accelerators and dont invest any money. Draconian term sheets where investors try to control the company. An example would be the use of blocking rights on new funding rounds. Other times they try to maximize their returns with unfair terms like participation rights. There are even more drawbacks, but starting a business in Spain can be one individuals opinion.

Some do excel in it but its not that easy. Its not a bad place to start a business providing that your service provides an unfulfilled demand in the Spanish market. It could be an industry that takes advantage of local resources in a new way, a tech startup that caters to a specific local need, or something appealing in the consumer service in big cities or tourist areas. The problem is bureaucracy, which is absolutely Kafkian and difficult to navigate, and the very high price of being self-employed.