Iberian Startup Scene

I am a VC at Armilar, covering Enterprise Software/B2B SaaS and Blockchain.

In my free time, I write startup-related topics, including this newsletter. Content, opinions, and typos are my own!

Feedback is welcome.

HIGHLIGHTS

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Investments

I was late to write the March newsletter, so I decided to rebrand it to Q1 2022… 🙂
So, what happened in Q1 2022?
- In the first quarter, I counted 181 rounds in Iberia, of which 159 were in Spain and 22 in Portugal. Versus Q4 and Q1 2021, rounds are down by -1% (183 rounds) and -18% (208 rounds). Breaking it down by geography
  - In Spain, the number of rounds increased (+6 and +15 vs. Q4 and Q1 2021), driven by a higher number of seed rounds (+4 and +26 vs. Q4 and Q1 2021)
  - In Portugal, the number of rounds decreased (-8 and -42 vs. Q4 and Q1 2021), mostly due to a lower number of pre-seed rounds announced (-6 and -44 vs. Q4 and Q1 2021)
    - FYI Q1 2021 was an outlier quarter, with Portugal Ventures investing in 39 pre-seed rounds
- In Q1 2022, €1,466M was raised by Iberian startups, of which €128M in Portugal and €1,338M in Spain. Versus Q4 and Q1 2021, the amount raised was down by -16% and -18%
  - In Spain, the amount invested was +/- in line with the Q4 and Q1 2021 (+7% and – 6%). Despite the contraction in series C and beyond (€796M vs. €851M and €1,082M in Q4 and Q1 2021), pre-Series C rounds increased (€542M vs. €399M and €336M in Q4 and Q1 2021), driven by a higher number of pre-series C rounds and the increase in Series A rounds tickets (more below)
  - In Portugal, the amount invested decreased by more than -2/3, as there was limited later stage activity (only 1 round above €20M)
- In both markets, Series A median round size increased and reached €8M in Q1 2022 (vs. ~€6.3M last year), while Seed round slightly reduced to €1M (vs. €1.1M)
Going forward
- I am bullish on the short-term (but also long-term) potential of IberiaOn the demand, I see an increasing number of high-quality startups, particularly in Spain
  - Last quarter there were ~100 seed deals across the 2 regions, of which >2/3 were B2B and with a high relevance of deeply technical startups
  - On the supply side, there seems to exist sufficient capital available
    - Angels with operational experience are increasingly investing in startups
    - Local funds have announced/raised significant funds in the last 2-3 years (and particularly in the last months) to back pre-seed to Series A startups in the region
    - The Iberian ecosystem is more connected than ever with international investors
- As such, I expect 2022 to be in line with 2021 in terms of the number of deals
- Having said that, I expect a tougher market for Series C and beyond startups, given current market conditions (IPO window closed, strong market valuation correction, etc.), potentially negatively impacting the total amount invested in startups in 2022
- Pre-Series C startups’ valuations might also be negatively impacted, but is too early to tell
- If you are interested in further understanding the current macro venture capital and startup landscape, you should read this post from Matt Turck – “The great VC pullback in 2022”
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