This chapter examines how Spain’s startups and scaleups access domestic and international markets. It represents the fifth element of the ten-part entrepreneurial ecosystem framework used to assess the country’s ecosystem. The chapter highlights strengths and areas for improvement, showcases an international example for inspiration, reviews recent policy developments, and provides recommendations to support further progress.
Entrepreneurial Ecosystem Diagnostics of Spain
Abstract
Access to large and dynamic markets – both domestic and international – is an important influence on productive entrepreneurship. According to the OECD entrepreneurial ecosystem framework (OECD, 2025[1]), the size of the market (often proxied by GDP), trade openness, and ease of doing business internationally are all seen as influencing the capacity of startups and scaleups to grow and attract investment. Market size provides a foundation for consumer and business demand, while trade openness and low transaction costs expand the potential reach of entrepreneurial ventures beyond national borders. Startups benefit from early customers – whether private sector, government, or international clients – that validate products, generate revenues, and attract follow-on investment. Conversely, limited or risk-averse domestic demand can constrain growth and lead to premature internationalisation, which may increase costs and failure risk (Gripsrud, Hunneman and Solberg, 2023[2])
Furthermore, demand-side mechanisms such as public procurement, corporate supply chains, and global export channels play a vital role in shaping entrepreneurial outcomes. Research from (Uyarra et al., 2020[3]) and (Zabala-Iturriagagoitia, 2022[4]) highlights that innovation-driven firms are more likely to thrive in environments where public procurement systems are open to small firms and corporates actively engage in co-development or purchasing from startups. Effective market access thus requires not only openness in trade and regulation but also strategic demand-side policies that activate domestic buyers – public and private – as early adopters and partners in innovation (European Commission: Directorate-General for Internal Market, 2023[5])
Spain has a large market and is open to trade
Spain’s performance on the Markets element is above the European OECD average. These results are explained by the fact that not only Spain features one of the largest GDP among European countries, and is somewhat less globalised than other European countries, but it has in place much better border procedures than other countries (Figure 7.1).
Note: Data are presented as normalised scores obtained by applying min-max transformations to the raw values, where the max/min are equal to the sample mean +/- 2*sample standards deviations, relative to the average of data from the 2020-2023 period. 2016-2020 scores are anchored to the 2020-2023’s data and must be interpreted as relative performance the 2020-2023 period.
A large market allows startups to roll products and services out on large scale. Typically, US companies have an advantage over companies in smaller economies because they can market the same product to a very large, homogenous market and structure their operation accordingly. Access to a large market is therefore an important underpinning of an entrepreneurial ecosystem. However, serving the domestic market is not the only option. Entrepreneurs in smaller economies can leverage exports and access to foreign markets as a strategy to overcome the limitations of operating in a smaller domestic market. Spain performs well on the Markets element, and above the European OECD average, reflecting both its large domestic market and openness to international trade.
In terms of overall domestic market size, Spain is the tenth largest market in the OECD and the fifth largest among European countries measured by GDP. Spain’s GDP is about 2.2 trillion USD, which is roughly 40% of Germany’s, 60% of France’s and 70% of Italy’s. Spain is at least as well integrated in the European market as these larger European economies. Exports of goods and services to the European Union represent almost 22% of Spain’s GDP, while the exports of France, Italy and Germany to the EU are 17%, 19%, and 25% of their GDP, respectively (Figure 7.2). The European market is therefore relatively more important for the Spanish economy than it is for Italy and France, and almost as important as it is for Germany. The EU share of total trade (the sum of imports and exports of goods and services) is about 39% for France, Italy and Spain, indicating that their value chains are roughly equally integrated within the European market. Depending on sector, Spanish entrepreneurs can in principle take advantage of both the Spanish domestic market and the EU market, and while there are some frictions within the EU single market, the access to international market opportunities through the EU market as well as the domestic market gives large market opportunities to Spanish startups and scaleups (Drumm, 2025[6]).
Note: Data refer to 2023
Source: UNCTADstat
Spain also features an above average performance on the trade facilitation index, which assesses the efficiency of border procedures that affect trade flows. On this aspect, Spain attains a score of 62.7, well above the European OECD average (50.3). Notably, Spain outperforms other larger countries such as France, Italy, and Germany, indicating a relatively better access to international markets. The EU-Mercosur trade deal negotiations may represent a further opportunity for Spain, which can leverage the Spanish language – common to many South American countries – as a way to more easily access these markets compared to other European countries.
At the same time, Spain’s score on the globalisation index (a de-jure measure of trade agreements, taxes, tariffs, regulations and non-tariff measures in each country) is below the European OECD average, indicating that there could be opportunities to further take advantage of international trade to expand global market access for startups and scaleups.
Internationalisation support programmes play an important role
While Spanish startups benefit from a large domestic market, many, particularly those in highly specialised B2B or regulated sectors, such as health and AI, report being compelled to internationalise early, often turning to the United States or northern European markets where procurement processes, regulation, and investment ecosystems are perceived as more agile and supportive. For example, some startup founders shared that their commercial strategies were geared toward external markets due to limited domestic demand or regulatory bottlenecks in Spain. In addition, startups often face entry barriers set up by established domestic firms and large multinationals.
Startups that wish to expand abroad can count on the support of the Spanish Institute for Foreign Trade (ICEX), which is playing an increasingly visible role in facilitating startup internationalisation. Through programmes such as DESAFÍA and Rising Up in Spain, Spanish startups are supported to participate in global events (e.g. Slush, Web Summit, 4YFN) and receive strategic guidance from ICEX’s global network of over 100 offices. More than 500 startups are assisted annually through these efforts. The DESAFÍA programme - a joint initiative by ICEX and Red.es - offers Spanish tech companies immersive experiences in innovation hubs like San Francisco and New York. These programmes have helped over 250 startups scale internationally, collectively raising more than USD 230 million and creating over 3 000 jobs. Notably, the DESAFÍA San Francisco programme has been recognised by the World Trade Organization for its efforts in promoting gender equality in trade, particularly through its dedicated cohorts for women entrepreneurs.
The Rising Up in Spain programme targets foreign startups aiming to establish themselves in Spain. It provides a comprehensive soft-landing package, including legal assistance, mentorship, and networking opportunities. Participants benefit from customised acceleration plans, support in obtaining entrepreneur visas, and integration into Spain's innovation ecosystem. The programme also facilitates connections with local partners and investors, enhancing the startups' prospects for success in the Spanish market.
Despite the success of these programmes, several ecosystem actors (especially scaleup founders and investors) rate the existing instruments as not yet sufficiently tailored to the specific needs of high-growth firms and consider that services such as foreign market intelligence, access to procurement opportunities abroad, and engagement of foreign investors are currently not sufficiently developed. In addition, more support could be offered to startups to navigate foreign regulatory requirements or domestic administrative hurdles. For example, long procedures for foreign investors and entrepreneurs to obtain Spanish ID discourage international capital participation and partnerships with Spanish startups.
A working group has been established within the national Startup Forum to improve startup internationalisation policies, aiming to better align public programmes with the realities of globally oriented ventures. These efforts, if scaled and co-ordinated effectively, could help Spain strengthen its position as an entrepreneurial hub with global reach. In this space, Spain could learn from the experience of France’s “French Tech International” as a way to support startups to scale internationally (Box 7.1).
Public procurement can become an instrument to boost startups and scaleups
Stakeholders have often mentioned public procurement as a large, untapped opportunity. The public procurement market is large, accounting for around 11% of Spanish GDP, but startups cannot easily access it (OOIReScon, 2024[7]). About 42% of the value of public procurement is assigned to SMEs, yet most of them are medium size enterprises with 50-249 employees and revenues above 10 million EUR (Obeservatorio de contratacion publica, 2021[8]).
Startups reported that it is hard for early-stage firms to be successful in public procurement processes. The system is still heavily driven by lowest-price criteria, and while there are frameworks for innovation procurement, very few of the “innovative procurement” calls for 2023-2024 reached smaller firms. In some cases, startups are not successful in public procurement because they cannot provide a sufficiently long track record or because they cannot overcome the fact that incumbent firms have built long-lasting relations with client public entities.
Another challenge for startups to participate in public procurement contracts is that contracts can take over 24 months to materialise, leaving firms vulnerable during early growth stages. Startups also struggle with late payments from clients, both public and private. This affects their cash flow and increases the perceived risk of doing business in Spain, especially for capital-intensive or service-based models. As a result, startups often cannot use relevant public procurement opportunities to support their scaling up.
Some policy initiatives have been introduced to facilitate the access of startups to public procurement contracts, but they could go further. For instance, the Royal Decree 364/2024 created an Inter-Ministerial Commission to supervise the implementation of innovative public procurement criteria. It also has the mandate to produce guidelines and objectives for the inclusion of innovation considerations in public tenders. However, it does not include specific rules for the participation of startup firms. In addition, the Gobe Ventures’ GovTech challenge model has launched 47 challenges over 18 months, receiving over 700 expressions of interest from companies, and piloting selected startup solutions with public bodies. A working group on innovation procurement has also been established under the Secretary General for Innovation to address the systemic bias toward incumbents and price over value.
Overall, while Spain is beginning to experiment with more start-up-friendly public procurement models, the dominant perception remains that public procurement is a slow, rigid, and opaque process. If reformed, it could become a significant market-based instrument to scale domestic innovation, especially in sectors like health, energy, and digital public services. This would require clearer rules, faster processes, and more visible pathways for startups to engage with public clients.
Corporate procurement can be further stimulated for startups
In addition to public procurement, large companies can represent another important market opportunity for the growth of startups. Becoming a supplier of a multinational or large corporate can allow startups to scale up and secure multi-year revenues that can be invested in business development. However, Spanish stakeholders report that large Spanish firms seldom purchase from domestic startups. It is argued that typically large corporates in Spain have a culture of lack of trust towards young firms and are reluctant to adopt innovations from startups. This limits B2B sales to large national firms, representing a missed opportunity for de-risking and validating the business models of startups. In response, many Spanish startups look abroad to expand their client portfolio and scaleup opportunities, weakening domestic value capture.
There are, however, some positive cases, which might open the way for more corporate engagement with startups. For example, the Global Smart Grids Innovation Hub (GSGIH), established by Iberdrola in Bilbao in 2021, serves as a central platform for advancing smart grid technologies essential to the energy transition (Iberdrola, 2025[9]). Spanning over 1 000 m², the hub is equipped with laboratories, collaborative workspaces, and training facilities, fostering an ecosystem that brings together more than 100 partners, including suppliers, universities, technology centres, and startups. With over 200 professionals involved, the GSGIH focuses on developing and deploying innovative solutions in areas such as grid digitalisation, integration of renewable energy sources, electric mobility, and energy storage systems. Since its inception, the hub has identified over 120 projects worth EUR 130 million, aiming to double Iberdrola's smart grid innovation initiatives. The GSGIH represents a good example of a market-oriented, public-private collaborative approach to innovation, supported by funding from the Provincial Council of Bizkaia, which aligns with regional strategies like Biscay Startup Bay to scale energy sector startups.
In Asturias, a collaborative initiative is underway involving multinational companies operating R&D centres within the region1. These companies are engaging in open innovation challenges designed to encourage startups to co-develop solutions addressing specific industrial needs. This approach aims to foster a dynamic innovation ecosystem that leverages the expertise of established corporations and the agility of startups. The Asturias Business R&D&I Centres Network, promoted by the Government of Asturias, facilitates the creation of research and innovation centres linked to large companies. This network aims to enhance company competitiveness and act as a driving force for the regional economy. One example is TSK's Open Innovation Programme, which supports projects proposed by SMEs, startups, and technology centres in Asturias, as well as research groups from the University of Oviedo. The programme underscores TSK's commitment to retaining regional talent and serving as a catalyst for other companies embracing innovation as a growth strategy2. These initiatives are part of the Asturias Industrial Strategy 2030, which aims to transform its industrial landscape into a more sustainable, digital, and innovative model.
A national example of this kind of policy attempt to better connect startups with large firms is ICEX’s international promotion programmes, which support open innovation connections between mid-caps and startups and seek to bridge collaboration gaps. There is a clear opportunity for Spain to create incentives for corporates to procure from or co-create with startups, especially in sectors aligned with national strategic priorities like green energy, mobility, and digital health. Targeted policy measures could include preferential procurement criteria, or structured corporate-startup matchmaking platforms.
Description
Launched in 2019 by the French Tech Mission under the Ministry for the Economy and Finance, French Tech International is a comprehensive initiative designed to support French startups in their international expansion efforts. The programme offers a suite of tools, including financial instruments, market-entry bootcamps, and diplomatic support, to bolster the global presence of French startups, particularly in key markets such as North America, Asia, and Europe.
A cornerstone of this initiative is the French Tech Bridge, a EUR 100 million co-investment fund established to assist startups in securing international capital and bridging funding rounds during their scaling phase. Additionally, French Tech collaborates with Business France and French embassies abroad to provide structured ‘soft landing’ services and enhance visibility at global tech events like CES Las Vegas, Web Summit, and VivaTech.
Another component of French Tech International is the French Tech Next40/120 programme. Some 88% of the 2024 cohort of supported firms had a physical presence or significant commercial activity abroad, generating 35.6% of their revenues outside France. In total they had net revenue of EUR 10 billion in 2023, and combined employment of 40 000 workers. Moreover, 31 companies reported revenues above 100 million EUR.
Key Success Factors
One of the key ingredients of the success of this programme is public diplomacy. This leverages France’s embassies, Business France, and trade attachés to facilitate foreign market access for startups. This support is combined with business development services and dedicated internationalisation finance for companies in the critical ‘post-early stage’ scale-up phase. In addition, internationalisation of startups is boosted by the strength of the ‘La French Tech’ label, which is supported by French Tech communities in over 100 cities worldwide. The initiative also strategically targets key sectors, in particular fintech, health-tech, and green-tech, aligning with the EU’s broader industrial strategy.
Lessons for Spain
Spain could increase its mobilisation of embassies and trade offices to offer startup-focused soft-landing services and facilitate connections with local entrepreneurial ecosystems abroad. This would require co-ordinating efforts between innovation agencies, diplomatic services, and trade promotion entities. In parallel, Spain could enhance national branding to improve international visibility for Spanish startups.
Moreover, Spain could further support internationalisation through dedicated internationalisation funds or co-investment instruments designed to bridge the scale-up financing gap for companies expanding into global markets.
Sources: French Tech Mission Press Release, 2024: https://presse.economie.gouv.fr/award-winners-of-the-5th-edition-of-the-french-tech-next-40-120/ French Tech Next40/120 Programme Details: https://lafrenchtech.gouv.fr/en/programme/french-tech-next40-120/
Startups and scaleups in Spain have access to a large domestic and international market. However, they do face some obstacles, including risk-averse clients and regulatory bottlenecks domestically and difficulties coping with foreign regulatory barriers and understanding foreign markets.
Internationalisation support programmes such as DESAFÍA and Rising Up by ICEX Spain are impactful, but gaps exist in tailored support for scaleups, including market intelligence, international procurement access, and investor facilitation.
Public and corporate procurement have strong potential to offer additional avenues for startup growth in Spain. The public procurement system is still price-driven, and startups participation is relatively limited, while domestic corporates are not routinely engaging startups as suppliers or partners. Pilot efforts exist both in the public procurement and corporate markets but remain isolated.
The following policy actions are recommended to strengthen the Markets element of the ecosystem:
Enhance startup internationalisation through co-investment bridge funds, legal support, B2B matchmaking and soft-landing services delivered via embassies, ICEX, and local hubs.
Modernise public procurement to become a strategic innovation lever by including clearer innovation criteria, faster decision-making, and dedicated calls for startups. Expand successful GovTech and innovation procurement pilots across national and regional governments.
Incentivise corporate-startup collaboration by introducing match-making mechanisms between startups and corporate supply chain management to facilitate purchase of innovative goods and services solutions from emerging startups. Consider introduction of preferential procurement conditions for large firms to source solutions from startups, especially in strategic sectors.
Continue working at European level to foster greater harmonisation in goods and services markets as well as access to public procurement.
References
[6] Drumm, S. (2025), Why fragmentation in Europe is holding back its startups - and how to fix it.
[5] European Commission: Directorate-General for Internal Market, I. (2023), Public procurement of innovation – How do start-ups fit in – A brochure for public buyers.
[2] Gripsrud, G., A. Hunneman and C. Solberg (2023), “Speed of internationalization of new ventures and survival in export markets”, International Business Review, Vol. 32/4, p. 102121, https://doi.org/10.1016/j.ibusrev.2023.102121.
[9] Iberdrola (2025), Global Smart Grids Innovation Hub: Changing the present to lead the future in smart grids, https://www.iberdrola.com/innovation/global-smart-grids-innovation-hub, https://www.iberdrola.com/innovation/global-smart-grids-innovation-hub.
[8] Obeservatorio de contratacion publica (2021), Contratos públicos reservados a micro y pequeñas empresas (MYPE), https://www.obcp.es/opiniones/contratos-publicos-reservados-micro-y-pequenas-empresas-mype#:~:text=Se%20informa%20que%20el%20nivel,de%2038.067%20millones%20de%20euros.
[1] OECD (2025), Entrepreneurial Ecosystem Diagnostics Report, https://www.oecd.org/en/publications/entrepreneurial-ecosystem-diagnostics_7096961f-en.html.
[7] OOIReScon (2024), Las cifras de la contratacion publica en 2023.
[3] Uyarra, E. et al. (2020), “Public procurement, innovation and industrial policy: Rationales, roles, capabilities and implementation”, Research Policy, Vol. 49/1, p. 103844, https://doi.org/10.1016/j.respol.2019.103844.
[4] Zabala-Iturriagagoitia, J. (2022), “Fostering regional innovation, entrepreneurship and growth through public procurement”, Small Business Economics, Vol. 58/2, pp. 1205-1222, https://doi.org/10.1007/s11187-021-00466-9.
← 1. For more details refer to https://www.investinasturias.es/en/asturias-business-rdi-centres-network/
← 2. For more details refer to https://www.grupotsk.com/en/rdi/open-innovation-programme/