Spanish Social Venture Market Analysis
By Dina Al-Qawasmeh - Investment Analyst at Fundie Impact Fund
A look at the market
Social InvestorsEven though it had a slower start compared to the UK and US, Spain’s social investment market has reached its point of exponential growth in the last five years. Ranking the 3rd in Europe for social business ecosystems, Spain is experiencing growing numbers of social enterprises, incubators, accelerators, and impact investors.
According to Eurosif, Spanish social impact investing reached €267 million in 2015, compared to just €87 million in 2013. Recording a 200% growth has made impact investing the second fastest growing SRI (Sustainable and Responsible Investment) strategy.
This increase was supported by:
In addition, this exponential growth in impact investing has facilitated growth in renewables investments, which has developed in response to Spain’s financial crisis. Consequently, new financial tools have come to the fore, driven by public financial players, namely the “Instituto Oficial de Credito” (ICO) that issued “the first Social Bond in Spain” in 2015 to create employment in the Spanish regions that were strongly affected by the crisis. ICO’s initiative was successful and they issued the second bond in 2016.
Social EntrepreneurshipCEPES social economy study stated that there were 44,500 social enterprises in Spain in 2013. However, applying the EU operational criteria to this study reduced the suggested number to around 8,000 enterprises (exploding social initiative cooperatives). Social investments finance mainly “environmental projects, health and social services, and job creating initiatives”. These projects are headed by scalable social entrepreneurs with measurable social impact.
Social enterprises still face key challenges in terms of starting-out and sustainable growth, mainly:
Government RoleThe European Commission Report states that the Spanish government has been taking actions to support the Spanish social economy in general (not only the social enterprises specifically) both on a national and regional level. The institutional framework for the social economy include:
Their actions include tax breaks, budget support, technical assistance and employment policy.
ConclusionThe growth in the Spanish social impact market is promising. However, for this market to thrive further, the Spanish government needs to strengthen its policies encouraging transparency and increasing investors’ awareness of the possibilities present within social enterprises and entrepreneurship specifically. If successful, this market can be the key to stimulate the growth of the Spanish economy in general. One of the main reasons why Fundie Impact Fund started was to plug the funding gap that exists in Spain (and Europe) for early stage startups seeking for investment to their next round (typically below €300k).
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