Barcelona has, for much of the past decade, been the dominant startup hub in Southern Europe. Its mix of international talent, relatively low operating costs, and a strong entrepreneurial culture have made it one of the region’s most dynamic cities for early-stage companies.
However, recent figures suggest that major cities like Madrid have begun to match – and even outperform – Barcelona. In the first half of 2025, Madrid attracted more venture capital than Barcelona for the first time in years – €806 million to €690 million, respectively.
Whether this is simply a blip or the beginning of something bigger is the pressing question for prospective business owners in Southern Europe and investors beyond.
Barcelona’s rise
Dídac Lee, former board member of FC Barcelona and co-founder of global fund Galdana Ventures, pointed to a generational shift as the driving force behind Barcelona’s recent momentum while in conversation with Novobrief:
“There is a new generation of young entrepreneurs – aged 20 to 35 – who have studied and worked abroad, speak native-level English, are fearless and globally ambitious,” he said. “Many of them are already backed by tier-one VCs.”
Lee is also bullish on Barcelona’s position relative to Madrid, pushing back on the recent VC figures. “I don’t see it that way — I would actually say the opposite. I see much more activity in Barcelona than in Madrid.”
The executive also pointed to promising startups “flying under the radar, often built by expatriate founders, which have raised multi-million rounds” as evidence that Barcelona’s ecosystem runs deeper than the headline numbers suggest.
Meanwhile, Carlos Blanco, chairman and co-founder of Encomenda Capital, emphasised the attraction to Barcelona as a city, saying that it has “benefited from being a very attractive city to live and work in, especially for international talent. The combination of quality of life, relatively competitive cost of talent compared to other European hubs, and a strong entrepreneurial community has helped attract founders from many countries.”
Unlike Madrid, this international appeal has been central to Barcelona’s identity as a startup hub, which draws companies through proximity to corporate power and institutional capital. Barcelona has built its reputation on lifestyle, culture, and the kind of diverse, global community that early-stage founders tend to gravitate toward.
Blanco also made a point of the growing strength of Barcelona’s ecosystem, stating that “founders who built companies 10–15 years ago have become business angels and serial entrepreneurs,” which rates a compounding effect that makes the ecosystem stronger as time goes on.
This compound effect suggests a city which, despite recent pressure from Madrid, can stay at the helm of entrepreneurial invention through consistent maturation of the ecosystem.
For David Tomàs, investor and co-founder of digital marketing firm Cyberclick, this process has been visible for over a decade:
“Companies like Grupo Intercom, Privalia, Glovo, and Factorial have fueled this growth by training a new generation of entrepreneurs. Additionally, initiatives such as Seedrocket, Nuclio, and Aticco have played a crucial role in mentoring and preparing new startups.”
The result is an ecosystem that feeds itself; each successful company produces the founders, investors and mentors that help build the next one.
The Madrid challenge
Data shows that Madrid is narrowing this lead, however. Beyond its recent VC gains, Madrid also benefits from structural advantages, as Blanco explained:
“Madrid has also had a more flexible fiscal policy, which makes starting a business more attractive.” The Spanish capital’s proximity to major corporate headquarters and institutional decision-makers also makes it a natural home for larger, later-stage funding rounds.
Barcelona’s defenders argue that the raw funding figures don’t tell the full story. Tomàs noted that despite Madrid’s growth, “Barcelona still maintains a more entrepreneurial mindset,” a point which was echoed by Lee. As per the Galdana Ventures co-founder, a thriving layer of activity hides beneath the surface, including startups “flying under the radar, often built by expatriate founders, which have raised multi-million rounds.”
Barcelona’s structural advantages also remain significant: its ability to attract international talent is unmatched in Spain. “Many founders and employees from abroad are willing to relocate to Barcelona,” Blanco said, which gives companies the ability to build globally diverse teams from an early stage – something Madrid, for all its financial muscle, struggles to replicate.
Yet, challenges remain. Blanco was candid about Barcelona’s shortcomings: “There is still less depth of late-stage capital compared to larger ecosystems,” adding that Spain’s regulatory and fiscal framework is less competitive than some European counterparts – and the education system does not always align with the needs of fast-scaling tech companies.
Beyond Madrid, a broader shift may be underway. Cities like Valencia, Málaga and Bilbao are emerging as credible startup destinations in their own right. Tomàs mentioned Valencia as a city with a “very vibrant community” – a sign that Spain’s startup economy may be diversifying beyond its two traditional powerhouses.
Strong, but not untouchable
Whether diversification strengthens or dilutes Barcelona’s position remains to be seen. For now, the consensus among those building and investing in the city is that the fundamentals remain strong, but complacency would be a mistake.
“Barcelona’s position is strong, but not untouchable. Maintaining leadership requires constant improvement, not relying on past achievements,” Blanco stressed.
Tomàs put it more simply, reaching for a local analogy: Barcelona needs to replicate La Masia – the famed youth academy that produced a generation of world-class footballers – but for entrepreneurs.
Nurture the next generation from within, he said, and the city’s place at the top of Southern Europe’s startup ecosystem is likely to remain secure.