Newly created companies with billion-dollar valuations are scarce in Spain, due to their limited international projection. Only a handful of companies are well placed to sell themselves with that appraisal.
It is the dream of every emerging company, but it is not available to anyone. The unicorn companies, like the mythological animal, are scarce and only a few startups in Spain are in a position to be considered as such. But what is it to be a unicorn? In the world of technological entrepreneurship means having a market valuation of more than 1,000 million euros. To get there you need to grow fast, very fast, have a disruptive business model and warm up the market with previous rounds of financing that open the appetite for venture capital funds or large international companies.
Ideally, the highest valuation is achieved in the first five years of activity, because beyond that time window to the company you can pass the rice.
Carlos Blanco, one of the most reputable serial investors in Spain and founder of Conector and Nuclio Venture Builder, has conducted a survey of the next unicorns after consulting with the main business angels and directors of venture capital funds operating in the Spanish market , such as Atomico, Nauta, Seaya, Kibo Ventures, JME, Nekko, Axon, The Venture City, Bonsai, Samaipata, KFund, Inveready, Bankinter, Banco Sabadell, Encomenda, All Iron, BigSur, SeedRocket or Faraday.
One of the main conclusions is that Spain is a country with few unicorns compared to its number of emerging companies, which reached 4,115 last year, according to the Startup Ecosystem Overview developed by the Mobile World Capital Foundation (MWCapital).
According to a GP Bull-hound report, the main unicorns of the European ecosystem are concentrated in London (United Kingdom). Something logical, because it is the city with the most emerging companies in the continent (8,974).
This shortage of startup valued at more than 1,000 million also contrasts with the fact that Spain is practically the only country in Europe with two major innovation hubs, Madrid and Barcelona, which are always in the top 10 of the large technology hubs of the continent.
“Portugal has more unicorns than Spain,” says Carlos Blanco. This opinion may clash, but not so much if one takes into account that, due to the small size of the Portuguese market, its emerging companies develop an international vocation since they are launched.
This does not happen in the same way in Spain, where newly created companies prefer to consolidate their activity in the national market first before making the jump abroad. This fact delays them when it comes to contacting the large international funds, which are usually the protagonists of the large acquisitions.
The first great Spanish unicorn was eDreams. Born in 1999, the online travel company has gone through all the stages of a new generation technology firm: sold to TA Associates for 150 million in 2006, resold to Permira for 350 million in 2010, merged with Go Voyages shortly after, until go public four years ago.
Now, only two companies can be considered with this name: Letgo and Cabify. The first is only four years old but has managed to position itself as the Spanish start-up with the highest valuation premoney. Some doubt in qualifying this company as a local because it is based in New York (USA). Even so, its main office is in Barcelona and most of its managers are Spanish. The great supporter of Letgo is the South African fund Naspers, which last year alone injected 431 million euros in the second-hand classifieds company. In that round, the company raised its market price to more than 1,300 million euros.
Cabify is behind, with a valuation of more than 1,000 million. “To be a unicorn you have to be successful in two or three countries and develop a powerful international growth strategy,” underlines Carlos Blanco. That kind of trajectory seduces like the honey to the big capital funds of the United States or the United Kingdom. Cabify is at the peak of its evolution since the conflict with the taxi is discounted from its market valuation. Something similar happens with Glovo and the controversy over his work model, in which his autonomous distributors play a central role. The signature of deliveries at home still does not reach the level of unicorn, with an appraisal of between 500 million and 800 million euros, but it is one of the best located in the Spanish ecosystem.
Carlos Blanco does not hesitate to get wet and predicts a merger between Cabify and Glovo in the medium term, which would make sense for his complementary business in urban mobility and delivery. “The resulting company is the safest to go public,” remarks the investor.
More companies
In the list of candidates, there are six other companies with possibilities to reach the level of 1,000 million. They are still far away but their evolution credits them: Holaluz, MásMóvil, Flywire, TravelPerk, Spotahome, and Logitravel. Some of them still have two or three years of growth, such as TravelPerk or Spotahome, and others, such as Logitravel, have been in the market for 20 years and have an appraisal of between 700 million and 800 million euros. In the case of Holaluz or MásMóvil, these are projects that have moved away from the concept of startup but are on the list due to their disruptive business models.
Outside of the most advantaged companies, there is a large squad that could get a sale close to 300 million euros. These are businesses such as TradeInn, which sells all types of sports equipment through the Internet; Ontruck, specialized in transport traceability, or Devo, focused on data analysis for third-party companies.
In this group, there are also some companies whose moment of maximum popularity passed and which will hardly reach the category of unicorn. Name (s? Wallapop, Atrápalo or Carto, for example. Do not forget that other firms with similar fame played some of the best-known sales of the Spanish technological ecosystem, such as Privalia, sold to Vente-privee for 470 million euros in 2016, or Social Point, acquired by Take-Two two years ago. years for 250 million euros.
Other companies had a brilliant evolution in the past but have suffered a slow decline in recent years. Now they could get a sale close to 100 million euros. This is the case of Scytl, the electronic voting company with more than 100 million euros raised in venture capital funding, or CornerJob, one of the stars of the 2016-2017 period, “which has not evolved well” since then and has reduced the workforce to 50 people.
Among the youngest start-ups (see the fourth list attached), industry experts point to Housfy (online real estate), Colvin (flower delivery at home) and Signature (electronic signature services) as the best positioned to sell above the 100 million euros.
Letgo, a ‘rocket’ powered by the Naspers fund
Naspers has a fix with Letgo since the classified company was launched in 2015. The venture capital fund, investor in firms such as Tencent or Delivery Hero, saw something in this second-hand object exchange platform, which has been It has become a unique case in Spain, and since then it has not stopped injecting money. The last round, of 431 million euros, triggered the valuation of the company founded by the entrepreneurs Alec Oxenford, Enrique Linares and Jordi Castelló well above the 1,000 million euros. Immediately, Letgo turned its activity in the United States and ended up creating a joint venture with Wallapop to operate in the American market.
In the end, Wallapop sold its stake for 166 million euros, decided to fold candles and concentrate its activity in Spain. Now, the great challenge of Letgo is to generate income and for this has launched new vertical businesses, such as one dedicated to the rental of second-hand housing. Co-founder Enrique Linares, who completed an MBA at IESE in 2006, declared that one of the main lessons he learned in business school is to “study what other companies have done in comparable situations to integrate those lessons into our strategy”.
In addition to Naspers, the company has multiple venture capital funds in its shareholdings, such as Accel Partners, 14W, Eight Road Ventures, FJ Labs, Insight Venture Partners or Mangrove.
Cabify, the European king of the VTC
The company founded by Juan de Antonio is one of the safe values of the Spanish innovation ecosystem. Maxi Mobility, the holder of which hang Cabify and the Brazilian app Easy, is valued at more than 1,000 million euros after achieving 160 million euros in January 2018, in a round attended by funds such as Rakuten or Seaya Ventures. Since then, the company has intensified its activity in Spain and Latin America. De Antonio is not a manager who surrenders easily. Cabify has not shied away from the confrontation with the taxi drivers, who hit the center of the big cities first in August of last year and then in the middle of January. After the decree of the Generalitat of Catalonia that limited the activity of the platforms of rental vehicles with driver (VTC), the company temporarily abandoned its activity in the Catalan capital. But shortly after he returned to the charge taking advantage of a loophole in the decree of the Government in reference to the 15 minutes of pre-contracting required to this type of platforms. Last summer some media reported that the company was negotiating its sale to mobility giant Lyft, a rival of Uber in the United States. Even figures were placed on the table: 3,000 million euros. However, Cabify denied that he was in talks with the American company. The case exemplifies the attraction that unicorns can generate in the big companies in the sector.
Outstanding aspirants: Glovo and TravelPerk
The 4.0 revolution has generated new business models that are upsetting all types of sectors. Glovo and other similar companies, such as Deliveroo, are doing it with home deliveries. The story of this Catalan company is that of Oscar Pierre, a young aeronautical engineer who, after entering the industry mecca, Airbus, left everything behind and set out to create his own project.
Glovo, founded in 2015, is following all the steps to become a unicorn a year ahead: it is increasingly popular, has more and more foreign presence (in 100 cities in 22 countries) and has closed financing rounds that have raised progressively its premoney valuation (the last of 115 million euros in July of last year).
An even more recent case is that of TravelPerk. The company has developed a corporate travel management platform that includes hotels, airplanes, urban transport and everything necessary for the organization of business trips.
The trajectory of its founders is of film. After a hard beginning in which they worked from their shared flat in the Catalan capital, the entrepreneurs Avi Meir and Javier Suárez inaugurated two weeks ago the new offices of the company in the Torre Glòries (the old Torre Agbar), one of the most emblematic of the second city of Spain. Meir gathered the 250 employees of the company at the foot of the tower to see how the name of the company was projected on the luminous panels of the building. Its ‘momentum’ can be summarized in the two rounds of investment that closed last year – of 38 million and 17 million, respectively.