Why Barcelona ticks the boxes as one of Europe’s tech hotspots

A favourite among start-ups, Barcelona balances high quality of life for workers with low comparative costs and good infrastructure for companies

July 17, 2019

On the surface, Barcelona’s economy may seem to be all about tourism but underneath, its thriving IT and telecoms industry is a huge contributor to Spain’s second largest city.

Now, its growing startup scene is adding a fresh edge to complement established names like Candy Crush-owner King and Amazon - and boosting its reputation for innovation and entrepreneurialism.

The Catalan capital is home to 1,197 startups, which last year received €871 million in investment – nearly twice the total invested in 2017, according to data from Dealroom. Buy and sell portal LetGo, founded in 2015 ​​alone raised €430 million last August. The city has received more startup investment than Madrid every year since 2014.

Meanwhile, the number of ICT companies in Catalonia has grown by 4.5 percent in 2018 and by 27 percent since 2013, according to the Secretariat of Telecommunications, Cybersecurity and Digital Society.

The foundations of success

Barcelona’s tech success comes down to three main factors, explains Vanesa Carceller, managing director for Catalonia, JLL Spain. “It’s really thanks to its comprehensive network of public and private organisations working together, its strong talent pool and its attractive comparative costs.”

With its Mediterranean climate and vibrant social scene, Barcelona has many factors on its side to appeal to highly skilled tech professionals. Lower costs of living than other European capitals are a further incentive; Mercer last year ranked the standard of living in the city equal to London but 41 percent cheaper.

Strong public transport links have also opened up areas across the city. “It’s given professionals more choice over where they live, whether that’s Gràcia, Poble Sec, or down by the coast at Barceloneta,” says Carceller. “Equally, it’s helped businesses looking to relocate feel less restricted when choosing new locations.”

For companies, lower office rents compared to other European cities and a skilled tech workforce are major draws.

“It’s a competitive time for cities across Europe as they look to attract both startups and large corporates – take Dublin’s competitive corporate tax levels for example,” says Carceller. “But Barcelona office rents, despite growing annually by around five percent, still compare well.”

Many tech firms such as Cisco, Ebay, Yahoo, Deutsche Telekom and SAP are clustering in the 22@ - also known as Districte de la Innovació, an ambitious urban renewal project launched over a decade ago which is now home to universities, research centres and tech firms of all sizes.  

“It’s an area where staff from the more established names from the tech sector rub shoulders with fledgling startups, researchers from top universities and innovation centers,” says Carceller. “In many ways, that sums up Barcelona’s dynamic today and reflects the strength of the ecosystem that the city has created.”

Keeping hold of talent

Yet as Southern Europe tends to have lower labour costs than cities further north, Spain also tends to lose some of its home-grown talent to countries where salaries are higher.

It’s something that Barcelona is looking to counter, says Carceller, by setting up new initiatives to train up the next wave of tech talent. While a range of innovator hubs such as B-Combinator, Barcelona Health Hub or Pier 01 Barcelona Tech City support firms in their infancy, there’s also a focus on school age tech enthusiasts.

“The Catalonian government has an eye on the long term,” she says, pointing to two initiatives aimed at capturing and building talent:

Barcelona Digital Talent and education schemes such as Mschools that sponsor programming classes from an early age, and the use of technology to enhance the learning experience.

“More training in schools is not only a promising sign for the city, but also for those companies who have or are considering locating their business here in the long term,” says Carceller.

“As well as attracting professionals from Europe and beyond, Barcelona also needs to be a sustainable, credible source of local talent.”

Connecting for the future

Barcelona is also investing in its tech future in other ways, from the growing levels of smart tech on its streets - which can feed many of its startups with data to develop their products - to hosting high-profile events like IOT, Smart City Congress, EU-Startups Summit and the established MWC that attracts over 10,000 delegates from the mobile telecoms sector.

Yet other European cities are snapping at its heels. “Barcelona is not alone in innovating and future-proofing, with competition from the likes of Lisbon and Madrid keeping the city on it toes,” says Carceller.

A lack of available office space could also hinder its progress. That could see new firms who are conscious of costs think more creatively about how they take space, Carceller believes.

New options are nevertheless coming onto the market. Take tech hub Pier03, which opened in May, to house more than 800 entrepreneurs and employees of startups and corporates.

“Making sure quality, affordable well-located office space is available for those looking to locate staff here will be a real test in the coming years,” Carceller says. “It will go some way to determining who claims the title of being southern Europe’s top tech city.”