In December 2022, Spain approved the so-called “Startup law” — a move widely celebrated by the Spanish ecosystem. Finally, Spanish technology received the kind of political support long supported by countries such as the United Kingdom and France.
The sweeping law reformed stock options, expanded residency permits for students and would-be entrepreneurs, and introduced a new visa for digital nomads. It also created an attractive tax system for expats.
“With these incentives, Spain can now compete with countries such as Portugal, the United Kingdom, France and Germany, and I am convinced that our companies will benefit greatly from them,” Francisco Polo, then Spain’s high commissioner, told Entrepreneur Nation . Sifted said last month.
But just days after speaking to Sifted, Polo resigned and the Spanish government he got rid of the post altogether. The reason? President Pedro Sánchez considered the mission to have successfully achieved its goals since its creation three years ago.
Now that the government has shut down the institution that supported the Startup Law, there are questions about Spain’s ability to carry out any other policies to help startups or attract international talent.
Spain needs international talent
Most of the additional support that politicians and members of the ecosystem say is needed is focused on attracting international talent – but even with the Startup Law in place, there is little evidence that Spain has made progress.
Various studies point out that in the next three years, the country will need between 90,000 and 120,000 workers in fields ranging from data science to cyber security and artificial intelligence.
And while some companies like Wallbox or Globo have already had layoffs, other Spanish scaleups are looking to hire in 2023. Factorial, one of the most recent Spanish startups to achieve unicorn status, aims to hire 380 more people this year. 70% of Spanish startups plan to hire in 2023, according to research by South Summit, one of the largest technology conferences in the country.
Sifted contacted the Ministry of Inclusion, Social Security and Migration for the exact number of digital nomad visas that have been approved and applied for so far since applications opened earlier this year.
“We face obstacles mainly in the immigration process, which is still very complex when you bring people from outside the European Union and then there is the tax disincentive”
Eva Ruiz-Hidalgo, spokeswoman for the ministry, could not provide an exact number and responded that “it is too early to pull data as there is a March 31 deadline” for a task force to set specific requirements for digital nomads to apply and be accepted – even if it was reported that visa applications are already accepted.
“However, it seems to be well received, according to the foreign affairs departments,” added Ruiz-Hidalgo.
Although the digital nomad visa has been widely celebrated and publicized by the Spanish government, it is not clear how long it takes to get an approval. Online information provides different time frames, ranging from 15 to 45 days.
The Spanish founders argue that the visa won’t go far enough in solving the problem of lower wages and red tape that have squeezed tech talent out of the US and other more developed tech ecosystems.
Jordi Romero, founder and CEO of Factorial, says that when it comes to hiring engineers, product and design professionals or executive team members, that’s when the difficulties begin.
“We face obstacles mainly in the immigration process, which is still very complex when you bring in people from outside the European Union and then there is the tax disincentive. Let’s say that part of the Startup Act gives some relief to these early years, but it’s still a disadvantage that we have compared to other regions of the planet,” says Romero.
He says “it’s very hard to pluck people who have been hired by Google or a big tech company at salaries that far exceed what any local company can offer.”
Foreign talent also seems to be aware of the red tape and visa issues that moving to Spain might entail.
A former North American Microsoft employee tells Sifted: “I’m not worried about the standard of living, which I think is similar in the US and the EU, but more about how companies can support visas and resettlement.”
A points-based visa system
Opposition parties are already pushing for more legal support to bolster Spain’s entrepreneurial ambitions.
Ciudadanos (CS), a liberal political party that has nine deputies in the Spanish Congress, is urging the government to take action to attract workers affected by global tech layoffs and introduced a bill to reform immigration laws.
“We have proposed the introduction of a points-based visa system, similar to the one that exists in Canada and which Germany is currently considering implementing. These systems have proven successful in attracting and retaining talent and stimulating the integration of these people into Spanish society,” says SC spokesperson for economic affairs and digital transformation, María Muñoz.
She adds that the parliamentary group proposed to provide more human and economic resources for the services of processing applications, which Spain has lacked for decades.
The startup law “didn’t affect something basic for attracting talent, like the visa system, because the government didn’t dare to make a major reform,” says Muñoz.
The work has just begun
There was general concern over the question of why Polo was let go after a successful tenure. And the founders say the government must continue to do more if Spain is to compete globally as a technology powerhouse.
“But we are still not at the same level as other countries. The more facilities are made available to Spanish entrepreneurs, the more venture capital we will be able to attract and therefore the easier it will be for us to attract more international talent and create great companies,” says Avinash Sukhwani , co-founder of Payflow, a Spanish company. fintech.
“The reality is that the impact of the Startup Law is still too small for Spain to become, as the name suggests, an ‘entrepreneurial nation’. So I don’t know if the dissolution of this Commission is what is needed for this project to be integrated in all ministries and all areas of the government or if the government considered that it has done its homework and that it is finished”, says the founder of Factorial. Romero.
“I don’t think the work is done, I think we’ve only just begun and we still have a long way to go to compete with Silicon Valley, but also with Berlin and London.”
Stefano de Marzo is a freelance writer based in Barcelona. Find him Twitter and LinkedIn.