Innovación y Emprendimiento

OBS Report: Present and Future of Entrepreneurship

Informes |

AI and sustainability shape entrepreneurial activity in 2023

Informe OBS Emprendimiento 2024



  • The three challenges for entrepreneurs in Spain: access to finance, infrastructure and bureaucracy.
  • Investment in startups in Spain falls by 43% in 2023, in line with the EU. Investment strategy shifts towards early-stage companies with proven business models.
  • Catalonia and Madrid continue to be leaders in entrepreneurship and attractive for consolidated companies, although also with high closure rates. The Canary Islands, Andalusia, Castilla-La Mancha and the Balearic Islands stand out in terms of potential entrepreneurs.
  • One year after the Law for the Promotion of the Start-up Ecosystem, there are calls for improvements to support scaleups, reduce bureaucracy, promote innovation, technology transfer and extend tax incentives for investment and talent attraction.

January 2024. OBS Business School publishes the report The Present and Future of Entrepreneurship, led by Professor Ralph Michaud. The report looks at emerging challenges and opportunities, such as the emergence of new technologies and the growing importance of ethical and sustainable business practices, and also delves into the reality of entrepreneurship.

In recent decades, the world has witnessed a revolution in the startup scene that had its epicentre in Silicon Valley, and whose model has expanded and diversified around the world. This change has redefined the frontiers of innovation and entrepreneurship, and the use of new technologies now determines the success of companies. However, after a few years of explosion, in 2023 the global economy has experienced one of its lowest growth rates in decades, with a real GDP of 2.3%, and "startups face a more conservative investment market that re-evaluates valuations and the terms of each investment, forcing them to adapt to a challenging environment focused on economic sustainability and self-sufficiency. A correction that may have been necessary," says Ralph Michaud.

Three elements have influenced and continue to impact the entrepreneurial ecosystem: technological, social and business aspects. On the one hand, 2023 has been a key year for the consolidation of generative Artificial Intelligence in the startup ecosystem. This technology is revolutionising entire sectors, from art to advanced engineering, strengthening multiple business models, and the AI market is expected to reach 1.5 trillion dollars by 2030, with great relevance especially in research, content development, marketing and other business areas. On the other hand, sustainability has become a key focus for startups in 2023, with increased investment and interest in green credentials from both investors and business customers. Climate technology (ClimateTech) startups are driving everything from renewable energy sources to energy efficiency and sustainable food production. According to South Summit (2023), on average a startup pursues at least three SDGs and more and more entrepreneurs are including these goals in their strategies. In terms of impact investment (that which is made with the specific intention of delivering a positive social or environmental impact that is measurable, in addition to a financial return), last year it did not exceed $26 billion, less than 20% of the previous year. But it is important to recognise, the report says, that we are coming off the back of record years and therefore funds still have significant capital to invest. ClimateTech has led fundraising in 2023 partly thanks to Blackstone's Green Private Credit Fund III, to the detriment of infrastructure investment, which has fallen from 40% to just 16.3% of total fundraising.

Trends in business models

2023 stands out for innovation in business models with hybrid solutions that combine technology, personalisation and sustainability. Fintechs continue to be key in the startup ecosystem because they represent 21% of all unicorn companies despite the decrease in funding they suffered in 2022. These, together with Healthtech, lead investments both globally and in Spain where, although the Mobility and Data Analytics sectors have received more investment in volume, they head the number of operations.

GenAI has captured most of the investment in 2023 and its impact is expected to be even greater than that of the Internet, as its applicability in various sectors and for multiple functions makes it extremely attractive. Even in the current economic conditions, it is considered that "any business project may be worth less today than it was a year ago unless it is somehow related to AI", the report says.

Spanish entrepreneurial ecosystem

The value of an ecosystem is a key criterion when considering entrepreneurship: Silicon Valley tops the global list, followed closely by New York, London, Tel Aviv, Boston, Beijing, Singapore, Shanghai and Seattle. North America is home to 45% of the world's top 45 ecosystems. By countries, the five best for entrepreneurship are the United Arab Emirates, Saudi Arabia, Taiwan, India and the Netherlands. Entrepreneurs in Spain face three major challenges: access to finance, infrastructure and bureaucracy. The country has strengthened its position in the world with four ecosystems: Madrid, Barcelona, Biscay Startup Bay and Valencia, recognised in Startup Genome and with a growing attractiveness as an investment destination for international VCs. Spain's effectiveness in creating high-value companies has also improved, but the report considers that, despite these achievements, there are opportunities to be explored. Spain ranked 41st out of 51 in conditions for entrepreneurship in GER 2022-23 and, out of 13 conditions assessed, 10 were considered insufficient.

In 2023, startup investment in Spain declined to €2,254 million (down 43% year-on-year) but nevertheless remains healthier than Italy or Portugal in terms of volume, transactions and rate of decline, and close to the European average, which has seen a 45% decline in volume. There has been a noticeable shift in investment strategy towards early stage companies with proven business models. Late-stage investment has fallen by less than half. And the number of exits also declined, reflecting VCs' reluctance to sell in a devalued market.

By Autonomous Community

Although Spain shows increasing geographically diverse activity, Catalonia and Madrid remain leaders in entrepreneurship and attractiveness for established companies, but also have high closure rates. By 2024 cities such as Barcelona, Valencia, Malaga, Ibiza, Galicia, Madrid, Seville and Zaragoza will host startup and innovation events. The Canary Islands, Andalusia, Castile-La Mancha and the Balearic Islands stand out in terms of potential entrepreneurs, exceeding the national average. The Valencian Community, at an earlier stage, strengthens its ecosystem with technology parks and pro-startup policies. Cantabria, Aragon, La Rioja and Asturias, with fewer new entrepreneurs, maintain robust rates of consolidated companies, reflecting how population density and community size impact entrepreneurship.

As usual, Barcelona and Madrid received most of the investment in 2023, both in terms of volume and number of deals; third and fourth place in terms of volume went to A Coruña and Seville thanks to mega rounds such as Denodo and Universal DX, but well below Valencia in terms of number of deals, which was in third place as usual.

The regulation

Regulation is playing an increasingly decisive role in how companies and the financial sector integrate environmental, social and governance considerations into their practices. Stricter requirements in terms of disclosure and compliance with ESG criteria have been implemented earlier this year under the new NFRD, CSRD and EU Taxonomy reporting guidelines, which are sure to influence lending or investment as well as financing conditions.

In December 2022, Spain enacted the Law for the Promotion of the Start-up Ecosystem, an important step for the entrepreneurial sector. After one year, the law has boosted start-ups, especially in the early stages, by introducing tax incentives for investors and visas for international talent, which has improved the environment for innovation and business growth. However, there is consensus on the need for improvements in the law to focus on supporting scaleups, reducing bureaucracy, fostering innovation, technology transfer and extending tax incentives for investment and talent attraction.

Content by:
Carmen García-Trevijano
OBS Business School Press Office