A New Project
The most striking change in moving cities for the first time in twenty years is noticing a shift in my learning. As a good friend wrote me, "One of the real joys of living elsewhere is how perceptive you feel to the new orientation."
I thought I was a good learner before. But living in a new place forces a pace of learning I had forgotten about: navigating where to find food, friendship, and purposeful work, all in a new language. Even just where to run in the morning. You are open to novelty, searching for fit.
Professionally, this openness has brought me a new appreciation for the richness of the tech ecosystem in Spain. There is tremendous momentum in the market, despite the global headwinds of 2023. There is optimism for what the community is building. I find myself deepening my engagement in this world, and wanting to make my own small contribution to this collective project.
I'm launching a new podcast series, called Investing in Spain. My goal is to explore the venture ecosystem in Spain, and share this learning journey with investors, founders and technology partners in North America.
More than $7b of capital was invested in Spanish startups over the past two years, yet there is almost no North American capital invested in local funds. Why? How should US LPs think about allocating to Spain?
It could be that returns don't justify the investment. From the data of several GPs I've spoken to already, I don't believe that is correct. I don't believe capital markets in venture are particularly efficient. There is friction finding and underwriting new funds, particularly in distant geographies. There is home bias. And, there is sparse data in the European market to even begin the investigation.
(I'd love to find more hard data, particularly on the return correlations to the US venture market and to Spanish/European GDP. My hypothesis is these correlations are low.)
In one of my first conversations, a local GP shares that only 20% of the revenues in her portfolio are in the Spanish market. My mental model for Spanish startups today is 'micro-multinationals' - they are exposed to significant risk, but idiosyncratic risk, not macroeconomic risk like larger multinationals.
If the frictions between US investors and the Spanish venture market can be reduced, more capital would flow to the Spanish economy, and North American investors would find better diversified returns.
Investing in Spain is a series of conversations with the leaders of the most active venture funds, and the founders, regulators and service providers shaping the early stage technology market in Spain. My hope is that this project makes a positive contribution to the collective understanding of Spanish tech in this moment, and opens the door for new partners and collaborators from the US.
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