Spanish scaleups are not "just" about LATAM anymore

Updated: May 14

Spanish scaleups are taking a global leap of faith outside of "just" Latin borders which has been a previous concern from international investors.

What is the best expansion route for a Spanish scaleup? Or for any tech scaleup for that matter? One thing has become super clear though; the fear of failing in markets with different cultures or a lack of willingness to try to expand outside the traditional and snuggly comfort zone of Spain/Italy, and maybe later into LATAM, seems to have disappeared.

While many international investors and VC's -increasingly so from European VC's - have expressed their interest in Spanish startups in recent years, especially in the mature ones i.e. the attractive scaleups, they have also voiced their concern in Spanish founders not being ambitious enough. Claiming that they don't have a global vision from the start and are too satisfied with succeeding"only" in Spain and Italy, to maybe later also expand into LATAM.

Positive evolution of expansion routes from Spain

The positive evolution of international market expansion plans made by Spanish founders, that we are now seeing, taking the leap of faith and bringing their digital products and services to all corners of the world, may very well be partially the result of honest and valuable feed-back from prominent, international investors over the last couple of years.

Peter Specht, investor at VC Creandum, expressed their strong interest in Spain but also his views on the Spanish founders' limited geographic focus in his post "Looking at the Spanish tech ecosystem from an international perspective", from November, 2018:

"The second issue international investors have is the predominant geographical focus on Spain by Spanish companies. In early stages of a company, founders tend to limit themselves to the Spanish market, whereas great startups have an international horizon from the moment they are constituted.", he writes and continues;

"From a language and cultural perception, LATAM is often the first international market approached. However, for large international investors to be attracted to Spanish companies, we are often more intrigued by the boldness in terms of geographical markets — why not expand to the UK, the US, or Asia?"

Glovo busts the myth - best growth stories are Ukraine and Kazakhstan

This perceived missing character trait of "Global boldness" in Spanish startup founders in general was both confirmed, as well as simultaneously completely put to rest, at Slush, in November 2019, where Oscar Pierre, the Spanish co-founder of Food delivery service Glovo, shared their global growth journey in an opened and rich-with-advice interview.

Yes, Glovo did focus "only" on Spain and Italy in the very beginning. And Yes, they then proceeded to expand into LATAM markets. But.. Did you know that the two best growth stories of theirs are from Ukraine and Kazakhstan?

Glovo's CEO - now one of the best ambassadors for Spanish startups seeking international funding - also shared that it wasn't exactly a smooth ride for them to raise series B money. Back then (although only a few years ago) this kind of amount of money just wasn't available from Spanish investors so you had to go outside Spain for fund raising. Finally this is now changing and more international VC's are now spending more time and money in Spain.

Glovo, when trying to raise expansion capital in London and other go-to-places for venture cash, got big NO's from 116 investors until they finally found interest from Japanese Rakuten, by then "only weeks from having to shut down".

Interview by Amy Lewin, Sifted

Spain to LATAM to Asia to?!

The Spanish scaleup Jeff has a similar growth story to tell. They, initially offering laundry and dry cleaning services, have now broadened their scope (rebranded from mr Jeff) to being "a service platform for people's well-being".

This poster child startup for the Valencia startup hub has achieved a lot in a very short time and consistently shares lessons learned from their rapid growth.

After having rolled out their services all over Spain they, very much through the typical unglamorous, entrepreneurial trial and error process, found their golden business model in being a franchise.

They then proceeded to (you guessed it) expanding into LATAM and after a huge success and humble learnings in markets like Brazil, they now have their eyes firmly set on Asia.

Jeff opens of its first franchise in Asia, in Muntinpla, the Philippines.

The leading executives from Jeff told online newspaper Valencia Plaza in September, 2019 that they were in the process of opening "new franchises in other Asian countries, reaching Vietnam, Thailand, Indonesia, Singapore and Hong Kong in the coming months."

According to Eloi Gómez, CEO and Eduardo González Requena, co-founder and expansion director, the number of franchisees is expected to reach 3,000, spread across Europe, Latin America and Asia.

So what is really the best expansion route for a Spanish scaleup?

After all, maybe best to try your wings in neighboring countries/markets with similar culture before going for other foreign countries? Or once you have worked through all the bugs in the systems -both tech and human dependent - and have solidified the launch processes you can basically do a "copy and paste" to any market worldwide?

In my opinion and from my own experience at Sony Ericsson (a former corporate operating very much like a startup, for good and for bad..), I think that once you have launched in enough markets, have learned from enough different customer behaviors and have adapted your product accordingly, you can launch anywhere where the unit economics make sense.

This conclusion is supported by what Glovo's CEO Oscar Pierre shares in the above interview, as he concludes that they now have a tried-and-true launch process:

"I think now we're in a moment where our product can launch in any country. We have been in cash-heavy markets, we have been in super cold and super hot markets."

Regardless the chosen expansion route, with these two great examples of Spanish startups proving themselves to be truly global, can we at least agree to give Spanish founders the benefit of doubt that they are increasingly having a global mindset when it comes to setting growth metrics outside of Latin borders?

Did you find this interesting? Do you agree? Or disagree? I so love an interesting conversation and would love to hear your thoughts. Please do leave a comment!!

Crafted by Caroline Lagergren.

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