Iberian Startup Scene | Q3 2022

I am a VC at Armilar, covering B2B SaaS and Web 3 infrastructure.

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

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HIGHLIGHTS

resources

Investments

Events

Web Summit and Slush will be happening in November this year, and I will be attending both events
If you are curious about the local ecosystem, I will be participating in a panel “Why Lisbon’s Ecosystem is ready to Scale” Thursday at 11 am | Startup Portugal Stand | E447, Pavilion 4

Q3 2022

For the past months, VCs have been warning that the “Winter is coming”
But during the first half of 2022, available data didn’t reflect what was happening due to the delay between the terms settlement and the announcement of the rounds
Q3 is the first quarter in which data starts to (partially) reflect the effect of the market contraction in Iberia
Q3 total
- Rounds: 150 | Delta vs. last year (YoY growth): -21 (-12%)
  - Portugal: 32 | Delta vs. last year (YoY growth): -2 (-6%)
  - Spain: 118 | Delta vs. last year (YoY growth): -19 (-14%)
- Invested amount: €929M | Delta vs. last year (YoY growth): -€447 (-32%)
  - Portugal: €185M | Delta vs. last year (YoY growth): -€192M (-51%)
  - Spain: €743M | Delta vs. last year (YoY growth): -€255M (-26%)
Pre-seed
- Rounds: 27 | Delta vs. last year (YoY growth): -26 (-49%)
  - Portugal: 3 | Delta vs. last year (YoY growth): -9 (-75%)
  - Spain: 24 | Delta vs. last year (YoY growth): -17 (-41%)
- Invested amount: €6.6M | Delta vs. last year (YoY growth): -€4.6M (-41%)
  - Portugal: €1.3M | Delta vs. last year (YoY growth): -€0.2M (-14%)
  - Spain: €5.3M | Delta vs. last year (YoY growth): -€4.4M (-46%)
- I believe that most of the pre-seed rounds aren’t announced. As such, it is hard to take conclusions from announced data
- Having said this, Q3 2022 was the lowest quarter since I started tracking the numbers
- I don’t think that the pre-seed market contracted 50%. But I do think investors, particularly VCs, over the past months have become more conservative in pre-seed and have reduced their pace of investments in companies with limited traction
Seed
- Rounds: 86 | Delta vs. last year (YoY growth): +13 (+18%)
  - Portugal: 19 | Delta vs. last year (YoY growth): +2 (+12%)
  - Spain: 67 | Delta vs. last year (YoY growth): +11 (+20%)
- Invested amount: €125M | Delta vs. last year (YoY growth): -€33M (-21%)
  - Portugal: €30M | Delta vs. last year (YoY growth): +3M (+11%)
  - Spain: €95M | Delta vs. last year (YoY growth): -€37M (-28%)
- The number of rounds increased in both markets, though in Spain the amount invested decreased due to a lower number of very large seed rounds that happened last year
- In Portugal, seed activity increased mostly due to increased activity from Private Equity firms investing with SIFIDE funds and also from increased activity from Portugal Ventures
- In Spain, local VCs and CVCs played an increased role in backing Seed rounds
- I expect the Seed stage to remain strong until the end of the year as there is sufficient dry powder in the market
- I also expect a higher level of international Tier I and II VCs investing in Seed (and also Series A), given that late-stage investors have migrated towards earlier stages, public markets, and follow-ons due to the current valuation of late-stage private companies
Series A
- Rounds: 27 | Delta vs. last year (YoY growth): -6 (-18%)
  - Portugal: 8 | Delta vs. last year (YoY growth): +5 (+167%)
  - Spain: 19 | Delta vs. last year (YoY growth): -11 (-37%)
- Invested amount: €351M | Delta vs. last year (YoY growth): -€170M (-33%)
  - Portugal: €120M | Delta vs. last year (YoY growth): +91M (+314%)
  - Spain: €232M | Delta vs. last year (YoY growth): -€261M (-53%)
- The 2 markets had very different dynamics this quarter
- Portugal had an increase in both the number and amount invested
- The increase in participation of Private equity firms led to an increase in the number of rounds, while the $80M Series A round from Fuel Labs led to an increase in the amount invested
- In Spain, B2C rounds contracted more than B2B and also international investors and CVCs reduced participation
- Going forward, Series A rounds are now harder to raise vs. previous quarters, so I expect the number of rounds but also invested amount to continue to contract
- On the opposite side, I continue to see a large number of bridge rounds that won’t be announced
Series B and beyond
- Rounds: 10 | Delta vs. last year (YoY growth): -2 (-17%)
  - Portugal: 2 | Delta vs. last year (YoY growth): 0 (0%)
  - Spain: 8 | Delta vs. last year (YoY growth): -2 (-20%)
- Invested amount: €446M | Delta vs. last year (YoY growth): -€239M (-35%)
  - Portugal: €34M | Delta vs. last year (YoY growth): -285M (-89%)
  - Spain: €412M | Delta vs. last year (YoY growth): +€46 (+13%)
- Series B and beyond seems to be the most affected stage, where several investors “left” the market to invest in public markets, earlier stages, bridge the existing portfolio, or not invest at all
- In opposition to what I just said, in October Factorial announced a $120M round with a Unicorn valuation