Spanish VCs weigh in – What 2025 means for Spain’s growing startup ecosystem
In 2025, Spain’s startup ecosystem has seen several major VCs closing new funds, highlighting the country’s growing potential.
Although Madrid and Barcelona continue to dominate as the primary hubs, cities like Valencia, Málaga, Bilbao are emerging as key players in Spain’s entrepreneurial landscape.
To gain insights on this shift, we reached out to several Spanish VCs that closed funds this year, asking them to comment on the trends, capital movement, and the evolving startup ecosystem.
Armilar Venture Partners: Focusing on DeepTech across Iberia
Armilar Venture Partners, with its €120 million fund focused on DeepTech and digital transformation, has a keen interest in the growing potential of Spanish and Portuguese startups.
Joao Dias, Partner at Armilar, shared his thoughts on Spain’s startup evolution and the decentralisation of entrepreneurship:
“The Spanish ecosystem is maturing and entrepreneurship is expanding to other regions particularly Valencia but also Bilbao and others. These regions benefit from vibrant universities, a growing number of ecosystem enablers and an emerging group of scale-ups that set the pace and act as regional champions. Still, for most of these ecosystems, it is early days.”
Armilar has a strong Iberia focus and seeks Series A opportunities. Its investment thesis lies at the intersection of digital technologies and applied science, backing B2B startups with high technological content that solve critical business problems across a broad range of industries and applications – from AI to cybersecurity, from software development to infrastructure and computing, from digitalisation to automation, from FinTech to HealthTech, and including SpaceTech and dual-use technologies.
4Founders Capital: A broader look at Spain’s deal flow
4Founders Capital closed its third fund at €70 million, exceeding initial target. The firm completed the final closing of its new vehicle just six months after the first close, reaching €134 million under management.
This new fund has already made five investments in startups at pre-Seed and Seed stages.
Paula Blázquez, Partner at 4Founders Capital, discussed how the startup scene is evolving across the country, particularly in relation to entrepreneurship outside the traditional hubs:
“In relative terms, we are indeed seeing growth in entrepreneurship outside Madrid and Barcelona, although these two cities remain the country’s main hubs. Greater workplace flexibility after Covid-19, hybrid models, and competition for technical talent have made it easier for founders and teams to establish themselves in cities such as Valencia or Málaga, among others. Additionally, factors like the climate and quality of life are attracting international talent to these areas.”
Blázquez also emphasised that, despite the rise of regional innovation, 4Founders Capital’s approach remains unchanged:
“Our approach has not changed: 4Founders Capital has always looked for opportunities across Spain. Although historically the largest volume of deal flow comes from Madrid and Barcelona, we remain open to any location. What truly determines our interest is the founding team – their background, skills, and attitude – not the city where they operate. Innovation can emerge anywhere, and we’ve seen this repeatedly.
“It’s enough to note that the Spanish company with the largest market capitalisation was not founded in either of these hubs, but is headquartered in Galicia.”
Blázquez is of course referencing Inditex, the multinational clothing company known for brands like Zara, which is based in Arteijo, a small town in Galicia. Despite being headquartered outside the traditional business epicentres of Madrid and Barcelona, Inditex has grown to become the largest Spanish company by market capitalisation.
Blázquez’s point underscores the broader narrative that innovation and successful businesses can emerge from any region, not just the most obvious startup hubs, reinforcing the importance of nurturing talent and entrepreneurship across the country.
Suma Capital: Investing in ClimateTech and decentralisation
Suma Capital, which launched a €210 million ClimateTech fund, is another firm embracing the decentralisation of Spain’s startup ecosystem. Natalia Ruiz, Partner at SC Venture – Scale-ups, and Josep Miquel Torregrossa, Partner at SC Venture – Early-stage, shared their views on the shifting dynamics of Spain’s innovation hubs:
“At Suma Capital, we are seeing growing entrepreneurial momentum beyond the traditional innovation hubs. Cities such as Valencia, Málaga, and Bilbao have been consolidating their positions as centres of innovation for years, and we are now also identifying increasing activity in mid-sized capitals with strong technological or industrial foundations, including Toledo, Vigo, and Zaragoza.
“We believe that improved digital infrastructure, strong talent pools, and closer collaboration between universities and the business community are driving this shift.“
They further pointed out the impact of this decentralisation on their investment strategy:
“This decentralisation of entrepreneurship broadens our sourcing landscape and strengthens our ability to identify innovative solutions that contribute to decarbonisation. Many of these initiatives are emerging outside Madrid and Catalonia, making this territorial capillarity a competitive advantage for our strategy.”
They also highlighted the impact of the regional spread in Suma Capital’s portfolio:
“At SC Venture, through our funds SC Net Zero Ventures (scale-ups) and SC Climatech Ventures (startups), we invest in solutions that accelerate the climate transition, regardless of where they are based. In fact, 40% of the companies in our venture portfolio are headquartered outside the traditional hubs. This figure reflects a clear trend: a more diverse and specialised Spanish ecosystem, increasingly supported by institutional and corporate backing. Altogether, these developments point towards a more robust, less concentrated model with greater long-term impact potential.”
Toledo and Valencia Lead in Business Creation
A recent report by Iberinform and Remitly highlighted Toledo as the best province in Spain for starting a business, with 16% business growth and a 97% survival rate for startups. Valencia also made a strong showing, with 13% growth and a survival rate of 95%. These cities are increasingly becoming attractive destinations for entrepreneurs, offering strong business ecosystems and support structures for new ventures.
While cities like Madrid and Barcelona remain the primary startup hubs, the rise of other regions, especially Toledo and Valencia, reflects a broader trend of decentralisation. These areas are benefitting from strong digital infrastructure, quality of life, and access to talent – key factors contributing to their growing role in Spain’s startup ecosystem.
The Path Forward for Spain’s Startup Ecosystem
The growth of regional innovation hubs is one of the most exciting developments in Spain’s startup ecosystem. As more cities like Valencia, Málaga, and Bilbao build their entrepreneurial networks, the Spanish startup scene is becoming more diversified and less concentrated in the traditional hubs of Madrid and Barcelona.
See our previous coverage of Spanish cities and their startup activity and potential
- Madrid: The new face of Madrid: 10 startups defining the city’s entrepreneurial spirit
- Barcelona: Barcelona’s fresh wave of innovation: 10 early-stage startups to keep an eye on
- Valencia: 10 exceptionally promising Valencia-based startups to watch in 2025 and beyond
- Spain: The next big thing: 10 promising Spanish startups you should keep an eye on!
As noted by the VCs we spoke with, the future lies in supporting exceptional entrepreneurs no matter where they are based. With increased connectivity, digital tools, and a shift towards hybrid working models, the startup landscape in Spain will likely continue to grow and evolve in the years to come.
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