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2023,a pivotal year for deep tech investing and venture building in Spain?

Updated: Nov 30, 2023

4 Deep tech products from Spain
Examples of Deep tech products from Spain: Holedeck, Circe Scientific, Evoenzyme and AEInnova

I believe that deep tech companies can lead the way to re-creating a healthy planet for us to share in much holistically smarter ways. Why I wanted to understand what the investment- and venture-building landscape, for this often mystified asset class, looked like for Spain.

Could it be that the stars are aligned for deep tech investing and deep tech venture building to really take off in Spain? When exploring the conditions for the usual suspects; Capital, Public-private collaboration, Talent and Timing, 2023 looks like it could be a pivotal year.

Rather than trying to define "deep tech", my passion lies in what actual societal benefits these deep tech companies offer. Simplifying it to myself, they are companies solving real and crucial, planet-facing problems based on extensive scientific research, often with a proprietary hardware component*. Therefore, they are inherently hard to "copy and paste".

* 83% of deep tech ventures are building products with a hardware component.

With this definition as a baseline, the areas where Spain could stand out internationally are within renewable hydrogen, energy efficiencies, for example within real estate development, biotech including Nanomedicine and the legacy sectors agriculture and automotive industry.

Scroll to the end if you are mainly interested in the 4 examples of Spanish deep tech's given.

Deep tech provides one of few paths to 10x exits

The most commonly mentioned hurdle is the lack of enough funding in the early phases of building deep tech's. Who in their right mind would launch a deep tech venture in 2023, a highly capital intensive project with at least five, or more, years before the commercialisation process can even start? Why would these entrepreneurs have a better chance raising funds now - or at least not a more difficult time than before?

The American tech magazine TechCrunch recently (2023/01/24) gave some answers in an article titled A VC’s perspective on deep tech fundraising in Q1 2023: "As it becomes increasingly difficult to realize big exits in the years ahead, the technologies within deep tech that are transforming entire industries offer some of the only paths to “10x exits.”

Billions of Euros in public EU grants to build Spanish impact startups

If only there were billions of earmarked public capital to exactly these kinds of high-risk, high-societal-reward ventures, explicitly for made-in-Spain impact tech ventures. Wait! There is. Most probably you have already heard about the Next Generation EU funds.

Spain's NRRP, short for Spain's National Recovery and Resilience Plan, is financed by this EU recovery instrument and contains the largest amount, in terms of grants, "under the unprecedented EU response to the crisis caused by the coronavirus pandemic."

Spain's national allocation for grants under the Recovery and Resilience Facility (RRF) amounts to €69.5 billion and represents 9.6 % of the entire RRF. In June 2022, the grant allocation was revised upwards to €77.2 billion (+11.1 %). In addition, Spain's general state budgets plan investment of €27 billion, aligned with the NRRP, according to the latest state of play, Briefing 26-01-2023.

A lot of these funds, in total €104 billion+, will go to the digital transformation of Spain and €30 billion are being invested, and will be invested, in the strategic projects called PERTE's, which translates to Strategic Projects for Economic Recovery and Transformation. These projects, (in Spain everyone says PERTE's), are"a new public-private collaboration instrument in which the different public administrations, companies and research centers collaborate."

The Spanish government writes that "to date, 11 of these strategic projects have been approved and launched, which will mobilize public investment of more than 30 billion euros. The PERTEs launched are developed in key areas for the present and future of the country":

  • Automotive

  • Cutting-edge health

  • Renewable energies

  • Green hydrogen and storage

  • The agri-food system

  • The circular economy

  • The shipbuilding and aviation industries

  • Digitalization of the water cycle

  • The new care-taking economy

  • The new economics of language

  • Microelectronics and semiconductors

Being a friend of simplifying with an optimistic attitude, I would argue that these 30 billion euros have deeptech written all over them. For more details of what, when and how much, you can study this image.

11 launched Strategic Projects for Economic Recovery and Transformation in Spain
11 launched Strategic Projects for Economic Recovery and Transformation in Spain

The ETCI, European Tech Champions Initiative, Fund of funds, back Spanish VC's firms

A public‒private collaboration and co-investment in deeptech companies seems to be the most viable route since the stakes in terms of time and money are so high. Following this logic, the fund of funds ETCI, European Tech Champions Initiative, has recently announced initial commitments of €3.75 billion to"channel much-needed late-stage growth capital to promising tech innovators in Spain and in the European Union."

Ricardo Mourinho Felix, EIB Group Vice-President commented:

"The vibrant high-tech Spanish ecosystem will benefit greatly from the ETCI, thus playing a key role in boosting growth and creating a large number of skilled jobs in the country". (extract from a longer quote.)

This is especially great news for mature Spanish tech companies, often referred to as scaleups, needing to raise more than €50 million, while still being able to keep their headquarters and pay taxes in Spain.

“Spain is one of the biggest contributors to ETCI and it is a great pleasure for me to join its venture capital community in Madrid to present this European initiative", stated Marjut Falkstedt, Chief Executive EIF, European Investment Fund.

On this news, well-known Spanish VC Miguel Arias commented in a personal post:

"The interesting thing for Spain and its entrepreneurs is that of those 10-15 European funds (being created), 2-3 are expected to be established in Spain".

This injection of both capital and expertise from the European Investment Bank (EIB) might have something to do with more thought-leaders in the Spanish VC space now increasingly sticking out their necks in favour of a longer investment-cycle.

Samuel Gil, another prominent VC, writes in his popular newsletter in Spanish, addressing the State of the Spanish deep tech ecosystem:

"When I imagine going to convince an investor that instead of 10 years, we are going to raise a fund with a term of 15 or 20 years, I get cold sweats. Think of what you would say if they asked you, even if you had a lot of money." (translated)

And yet this line of brave questioning is exactly what is needed for a change of direction of the flow of venture money to take place. Samuel Gil ends with saying:

".. (from the perspective of) private investors, I believe that managers need to improve the narrative around deep tech. Aren’t people willing to make some kind of sacrifices to invest in causes they care about like social impact or climate change?" (translated)

Private investors may also be turning into deep tech-founders themselves, as with the example with AEInnova below.

Spanish Presidency of the EU Council 2H 2023

Spanish media refers to 2023 as the year of the Next Generation funds, claiming it will be a key turning point for the transformation of the national economy toward research, development and mission-driven innovation. To me it has a certain "now or never" ring to it.

From July 1 to December 31, 2023, Spain will hold the Presidency of the Council of the European Union for the fifth time. The last presidency was in 2010 and the next opportunity to preside will be in thirteen years. Needless to say, it will be an important period of time to showcase concrete milestones so far.

Critical voices have questioned the slow allocation of the Next Generation EU and PERTE funds in Spain. There is nothing like the sense of urgency to get things done. As July 1st is quickly approaching it should imply a speeding up of executing payouts of grants to the deserving, innovative businesses, for the transformation to actually begin to take place.

End of brain-drain as Entrepreneurship is finally encouraged

There has been a national debate, going on for a decade or more, concerning the brain-drain of scientists leaving Spain for better work conditions and higher salaries elsewhere. For reasons we all know by now, many people, including scientists, engineers and researchers, returned to their home countries during the pandemic, and many seem to be staying there.

For the average Spaniard, their country's long-lasting depletion of R&D talent is a deep wound that is yet to be healed. Every time that the present, or former governments, say they are committed to betting on scientists and innovators, it naturally gets met with a dose of mistrust. What has changed this time around?

We have already talked about the fresh EU capital wanting to finance their brilliant output. Another key factor is the changing view of Entrepreneurship in Spain overall. You will definitely still find slightly bitter voices in the ether saying that Spain is too conservative and is only encouraging stable corporate careers or working for the public sector. However, when observing the behaviours of the younger generation, there are hopeful signs that they are more motivated than ever to stay and build the future from Spain, and for Spain and Europe.

Global tech talent continue to choose Spain as their base camp and Spanish business heros, traditionally based in Silicon Valley, like Javier Olivan, COO of Meta, recently announced that he is moving back to Spain to build the metaverse ecosystem from his home country.

From the existing deep tech founders in Spain there are also optimistic voices:

"It also helps that the OTRI's (Oficina de Transferencia de Resultados de Investigación) facilitates and enhances the contact and interaction between researchers and entrepreneurs, since not all scientists want to abandon their academic career to set up a company, but they may be interested in the results of their research reaching society in the form of products or services by the hand of others who have the motivation and expertise to do so." - comments María Eugenia Martín Hidalgo, Cofounder and CEO of ColorSensing on the mentioned newsletter. (translated.)

Spain's startup ecosystem has a solid 10 year track-record

Using the proof-of-concept analogy, the budding deep tech entrepreneurs now have solid data points incentivising them to take the less traveled, and historically much less encouraged, path to become a startup founder in Spain.

The recent 2023 Spain ecosystem report, put together by key local VC players and dealroom, looked at the evolution of the Spanish startup ecosystem since 2010. Key facts given:

  • The Spanish tech ecosystem is now worth €93B, up 3.6x since 2018.

  • €4B of venture capital raised in 2022, Spain’s second highest annual total.

  • Spain ranks 6th in Europe and 16th globally for total investment raised in 2022.

Jaime Novoa behind the popular newsletter, commented the report:

"This is a consequence of a number of things, but most notably the result of an increasing number of founders that have decided to build tech companies and that see entrepreneurship as a career path, and also the fact that a significant amount of investors (business angels, VCs, corporate VCs) launched investment firms to provide the necessary capital for companies to compete globally."

Although the majority of the receivers of these large funds belong to the domains of pure software (marketplace, Saas, Fintech etc.) there are examples of "Deep tech-ish" companies as well, Wallbox being the most known when it comes to hardware and impact.

Everything happens in cycles and just as the Nordic tech ecosystem grew into prominence in the recent decade, it is likely that other ecosystems, like that of Spain, stand next in line to really take off, boosted by professional support and capital from its European friends.

"(..) the data also shows that Spain showed stronger resilience than many of its global counterparts, with just a -15% drop in VC investment in 2022 compared to 2021, and initiatives like ETC, Next Tech and the growth of the startup and venture ecosystem in general, makes us believe that this resilience is not a one-off but one more sign of the maturation of the Spanish technology sector", Jaime Novoa, further commented.

In addition, to find more attractive valuations, as in better deals, it could be good timing to travel to the sun in southern Europe for business rather than pleasure. The notion that capital efficiency drives international investors to Spain seems even more valid today.

Proven deep tech knowledge, 4 examples in Spain

Below are four Spanish deep tech companies already covered on our Linkedin page. Please take note that this is NOT a top list of any sort. I am just taking the opportunity to highlight these heroes in a longer format. And as per usual, these companies are chosen without any external interference or compensation.

AEInnova - Alternative Energy Innovations

AEInnova founder Raúl Aragonés Ortiz and CEO David Comellas Vogel.
cropped images from LinkedIn accounts, from the left founder Raúl Aragonés Ortiz and CEO David Comellas Vogel.

Based in Barcelona, the company recovers waste heat from the industry. Or, "heat is electricity" as their tagline reads. AEInnova has been developing its technology during the last five years, offering thermoelectric solutions through IOT devices/autonomous sensors. The devices need no battery .

Apparently, as much as 65% of the energy being consumed in a typical industry plant is being lost as heat. That wasted heat can and is being transformed into clean energy.

Another statistic, according to the CEO David Comellas Vogel, is that every day about twenty five million batteries are thrown away around the world."Being able to reduce this impact is vital", he says. Prior to becoming the CEO he was an early investor in AEInnova.

Some of the national industry players that have integrated their technology are Repsol, Cepsa, Ferrovial and CEMEX. Ending 2022, they did their first sales in the Japanese market.

Their product the Indueye is said to be the first battery-free, waste heat recovery IoT device in the market. "It allows the industry to create a wireless sensor network to monitor its processes avoiding the cost in huge investments for wired solutions, reducing the needs and cost for maintenance and eliminating the batteries from the devices", says the company adding:

"These devices are able to recover part of the waste heat from the industry, converting it into green and sustainable electricity to be used in the process, or injected into the grid."


EvoEnzyme co-founder Dr. Miguel Alcalde
EvoEnzyme on Twitter + co-founder Dr. Miguel Alcalde

The university spinoff, biotech company EvoEnzyme in Madrid is co-founded by Dr. Miguel Alcalde, a Research Professor at the Institute of Catalysis and Petroleum chemistry of the CSIC.

Their products and services stem from his work and 15 years of research on enzymes engineered by directed evolution for the pharma and industrial sectors, called customized biocatalysts.

Together with the other co-founders Maria Urbano, CEO and Francisco Plou, Advisor, Bernardo José Gómez Fernández, CTO and Javier Viña, Scientist Manager, they claim to be the first Spanish company specialised in directed enzyme evolution.

Enzymes are key in circular designs: They can transform contaminants into safer and more environmentally friendly products, provide waste recovery and reduce the amount of waste generated.

"We can design more efficient enzymes, with improved or completely different functions from those shown in nature, for very different applications, from the synthesis/degradation and valorization of plastics to the synthesis of drugs or chemical compounds", explains CEO Maria Urbano in this interview by Spanish GDEmpresa. (translated) Their applied tools in protein engineering include both directed evolution (random mutation, recombination and artificial selection) and ancestral resurrection (prediction and design of ancestral enzymes which worked in already extinct organisms with unexpected properties in our world today).

"All this is supported by artificial intelligence tools that accelerate the process of discovery, design and improvement of new biocatalysts", she says.

CIRCE Scientific

CIRCE Scientific co-founder Fernando Barrera and product image showing a powder and a spoon.
CIRCE Scientific co-founder Fernando Barrera

CIRCE Scientific was founded in 2012 by Fernando Barrera, expert in technology transfer and Dr. Rafel Prohens, expert in Crystal Engineering. This biotech with HQ in Mallorca, has discovered new solid forms (cocrystals) of selected nutraceutical ingredients to improve healthy living and longevity.

They recently announced a fundraise of 1.7 million euros from current, and also from new national and international shareholders.

Fernando Barrera, CEO and co-founder, writes:

"By applying our proprietary crystal engineering platform, we aim to dramatically optimize the health benefits of known functional nutritional ingredients such as pterostilbene, ubiquinol, sitosterol and vitamin D, in order to develop innovative nutraceutical products in emerging health and longevity markets for humans and pets."

Their competitive edge is said to be a "unique technology with significant improvements compared with original ingredients in regards to key parameters such as solubility, stability, and/or bioavailability unlocking their health benefits and market potential."


2 merged images showing Holedeck, CEO Alberto Alarcón García.
Holedeck, CEO Alberto Alarcón García from Cropped screenshots .

Holedeck, sustainable building material, led by CEO Alberto Alarcón García in Madrid, is another Spanish deep tech, hardware company worthy of more media attention.

They claim to have developed the most sustainable concrete structure in the world, able to reduce the carbon emissions of a building structure by more than 50%. The system also promises to save up to 20% in construction costs.

Their patented system consists of "voided slabs for buildings". With their words: "It can be pierced all through its thickness by the building conductions and services. This means that services in cross-sections occupy the same space as the structure itself and thus no additional suspended ceilings are required to hide them all."

Thanks to the geometry of the slab it is also said to significantly improve the acoustics. The technology was recently applied in the building at Calle Badajoz 97, in the district called 22@ in Barcelona. This building is said to be the second office building in Spain to use this innovative beam structure.

"In fact, the project (the building) has followed the highest standards of environmental sustainability at the design and construction level, which has allowed it to obtain the Leed Gold certification", says this article where you also can see the building.

Looking for more Spanish deep tech/impact tech examples? Three more within Fashion, Agriculture and Automotive are mentioned here: 3 Spanish, impact unicorns: present, short- and long-term.

Co-creating 2023 into the year of deep tech boom in Spain?

After reading through this thought-piece, a Spanish impact investor asked me if I think these outlined support factors are enough to successfully develop more deep tech companies in Spain. Both he and an American impact investor, both living in Madrid, voiced that a cultural shift still needs to happen in Spain.

Whether it is enough or not, paraphrasing Peter Thiel from his book, Zero to One: Let's cheer on entrepreneurs wanting to build something unique, something that completely changes the market, a solution that does not yet exist (going from 0 to 1), rather than building something that is incrementally better than an existing solution (going from 1 to n).

In plain English, Spain has received plenty of monetary encouragement from the EU. The returned R&D talent, and the tech ecosystem in general, show a strong willingness to make their country into more than just a sunny theme park. If the deep tech investment horizon can be extended to 15 - 20 years, there are most probably some good deals to be made here. Both counted in return of investment, as well as in speed of return to a healthy planet.

NOTE to reader: All companies have been selected by Caroline Lagergren, founder Expand To Spain, without any outside interference, based on what kind of innovation and people drive actual societal change for the better. We also try to dig up the lesser-known diamonds.

--> To get updates on continuously added impact startups that are fundraising in Spain, make sure you are subscribing to our newsletter here.

By Caroline Lagergren, founder of Expand To Spain

--> Do you agree or disagree? I always write with the intention to provide an international perspective, based on 6+ years of following Spain's innovation ecosystem. All constructive thoughts, opinions and suggestions are greatly appreciated in the comment section below.

1 Comment

Kate Bovk
Kate Bovk
May 12, 2023

Firstly, I wanted to express my heartfelt appreciation for the exceptional job you did in writing such a comprehensive and insightful article on this topic⚡️

After reading your article, I couldn't help but feel grateful for our decision to establish our startup in Spain😌 Our platform, Kaleido, is dedicated to transforming users' pain points into innovative product solutions. I strongly believe that targeting companies in the deep technology sector as our customers will enable us to provide them with significant value through our tool. It's reassuring to see that our choice of Spain as our headquarters was a wise one, as your article emphasized the country's potential to become a prominent player in deep technology investment. This, undoubtedly, will open…

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