According to data from the Bankinter Innovation Foundation's Startup Observatory, the number of investment deals in Spanish startups rose 11% year-on-year in 2025. Although the total amount invested was 3% lower than the previous year, the National Forum of Emerging Companies states that they remain optimistic about surpassing €3.1 billion annually for two consecutive years.

This stability can be attractive to investors, in addition to the high returns many startups offer, especially fast-growing ones. In this article, we explain how to invest in Spanish startups, and we analyse changes at each stage of the business venture. This can help investors make sound decisions about where to invest their capital.

Key takeaways

• The early stages of a startup can be the most profitable for investors. However, these stages can also entail higher risk.
  
• Expansion phases offer less growth, but they make up for it with greater stability. This can appeal to more risk-averse investors.
  
• In Spain, individuals and professionals who invest in startups can benefit from important tax advantages, such as a personal income tax (IRPF) deduction equal to 50% of the invested capital. To benefit, they must meet requirements regarding the business's age, maximum shareholding, and minimum holding period.
  

How can investors invest in Spanish startups?

To invest in a startup, investors do not need connections within the entrepreneurial environment or considerable wealth. There are several ways to invest, involving varying minimum amounts and levels of involvement. Below, we outline some of the most common ones.

Crowdfunding platforms

Equity crowdfunding involves investors acquiring equity stakes in businesses. It allows multiple investors to contribute capital to the same startup via a platform.

While it is the investment option with the lowest minimum investment amount, it is also one of the most heavily regulated. For example, these platforms require authorisation to operate and are supervised by the National Securities Market Commission (CNMV). If the platform operates from another EU member state, it is supervised by the equivalent authority in that home country.

One of the leading crowdfunding platforms in Spain is Crowdcube. This platform has an agreement with Stripe to provide benefits to certain funded startups, including credits for payment processing with Stripe Payments.

Regulation (EU) 2020/1503 incorporates several protections for those investing without prior experience. For example, it is necessary to pass an initial knowledge test and review and accept a risk warning when the investment exceeds certain thresholds. A cooling-off period of four calendar days is also provided to revoke the offer.

Investment networks and clubs

These groups bring together individual investors who analyse deals jointly and invest together in the same round. Each investor contributes a portion of the total amount, which is known as "syndication." Typically, it involves one person leading the transaction and negotiating the terms, while the others make smaller contributions.

This type of investing is a middle ground between crowdfunding platforms and direct investments. It requires more capital than crowdfunding. However, it also provides access to deals that do not reach the open market and are evaluated by more experienced professionals.

Direct investment as business angels

Investing directly means contributing capital to a startup and personally negotiating the terms of entry. This option offers the greatest control over the terms, such as ownership percentage, information rights, and clauses regarding shareholder agreement protection. In addition, this investment option is also the one that relies most heavily on the investor's judgement.

With this type of investment, the contribution typically goes beyond finances. For example, many business angels invest in sectors they know well and support the team with contacts and experience.

Venture capital funds

Venture capital funds invest in the portfolios of startups managed by professional teams. This spreads risk across multiple holdings rather than concentrating it in a single one.

Although access to this avenue is generally limited to professional investors, Article 75 of Law 22/2014 provides two ways for a non-professional investor to participate:

• Minimum investment of €100,000: The commitment must be declared in writing in a document separate from the contract and must acknowledge awareness of the risks.
  
• Minimum investment of €10,000: If the investor's financial assets do not exceed €500,000, the minimum investment is reduced to €10,000. However, it cannot represent more than 10% of their financial assets. The investment must also be backed by the recommendation of an intermediary who provides advice.
  

Part of the capital in Spanish funds comes from public sources. One of the most important examples is Fond-ICO Global, which has been investing since 2013 in private funds that businesses select.

How to formalise an investment

In any of these scenarios, the equity investment is documented in the corresponding corporate transaction. Furthermore, when the transaction is facilitated through a platform, network, or fund, the other terms are also typically documented in a shareholder agreement. This includes valuation, percentage, information rights, and exit terms, among others.

For contributions from the founders' immediate circle, it is common not to reach that level of detail. The capital contribution is still documented in the corporate transaction but without a negotiated valuation or a shareholder agreement. In these cases, the investor forgoes the mechanisms that protect their position, such as anti-dilution clauses or exit terms.

When to invest in a Spanish startup

Investment can change depending on the startup's stage. The business's valuation, potential return, and associated risks vary, among other factors.

Below, we provide details about the stages of a startup. This can help investors determine the best investment stage based on the potential risks.

Pre-seed

This is the initial stage where the founder develops the business idea and evaluates the viability of the product or service. Providing pre-seed capital involves a high level of risk. However, the startup's valuation is typically quite low, meaning the potential return can be high if the startup develops a winning business plan.

Data from the Startup Observatory shows that the pre-seed stage accounted for about 2% of investment deals involving Spanish startups in 2025.

Seed

At this stage, the project has launched onto the market, and the business develops marketing tactics to raise awareness among the general public. As noted by the Startup Observatory, the seed stage saw the second-highest number of investment deals involving Spanish startups in 2025, accounting for over 23% of all investment rounds.

Series A

At this stage, the startup begins to generate revenue, but the revenue is not sufficient to hire more staff or increase productivity. For this reason, Series A startups seek to secure funding from investors that offer a balance between risk and return.

Data from the Startup Observatory indicate that, in 2025, the Series A stage recorded the highest number of investment deals in Spanish startups at close to 34%.

Series B

In this phase, the startup shows the first signs of profitability. Therefore, the capital required to participate in a Series B investment is typically higher than in earlier stages. The associated risk is also considerably lower.

According to the Startup Observatory, in 2025, the Series B stage ranked third in terms of the number of funding rounds within the Spanish startup environment, accounting for almost 17%.

Series C

This stage focuses on expanding the startup until it becomes established. Generally, the return on a Series C investment is more moderate than in earlier stages. However, the risk is also lower, which tends to attract more risk-averse investors.

The Startup Observatory reveals that the Series C stage accounted for about 7.5% of total investment deals in Spanish startups in 2025.

Growth

Once the startup has established itself on the market, it adopts various strategies to encourage growth. This includes expanding into some of the most attractive markets for Spanish businesses (e.g., France and China), forming alliances with other businesses, going public, and more. Given that the capital required is typically very high, this is not a suitable phase for most investors.

Figures compiled by the Startup Observatory indicate that almost 4% of investment transactions involving Spanish startups took place at the growth stage in 2025.

Exit

Upon reaching this stage, the startup's founders and investors can realise their investment and generate a return. There are several ways to achieve this, such as selling the business or listing shares on the stock market. In the latter case, the investment typically entails less risk.

As the Startup Observatory reports, practically the same number of exits – about 50 – occurred in 2023, 2024, and 2025.

Regulations on investments in Spanish startups

On 23 December 2022, the Law on the Promotion of the Startup Ecosystem (also known as the Startup Law) took effect. This law regulates investments in Spanish startups. Below, we outline the main measures included in these regulations.

Tax deductions for startup investments

When investing in a startup, 50% of the capital invested can be deducted. This personal income tax (IRPF) deduction can be up to €50,000 per year, based on a maximum investment of €100,000. This is provided that the contribution is made at the time of incorporation or during a capital increase within five years of incorporation. This period is extended to seven years if the business is certified as an emerging business under the Startup Law.

In addition, to apply this tax benefit, the investor must meet the following requirements:

• Participation limit
  An investor's stake cannot exceed 40% of the share capital or voting rights. This percentage cannot be exceeded even when combined with the investments of the investor's spouse or other relatives up to the second degree of kinship. Only the startup's founding partners are exempt from this limit.
  
• Holding period
  The shares must remain in the investor's portfolio for more than three years and less than 12 years. If the investor sells their stake before the three-year mark, they will lose the deduction and must adjust their tax return accordingly.
  
• Business requirements
  The startup must be incorporated as a corporation, limited liability company, employee-owned corporation, or employee-owned limited liability company. Furthermore, the business cannot be listed on an organised market and must engage in genuine economic activity using its own personnel and material resources. In particular, its activity cannot consist of managing a portfolio of movable or immovable assets.
  
• Certification
  The investor must have a certification issued by the business that attests to compliance with these requirements during the financial year in which the shares were acquired.
  

Please note that this state deduction is incompatible with other deductions that the various autonomous communities can apply to the same invested amounts. Therefore, it is important to review the specific conditions of each transaction with a tax advisor.

Tax incentives for fund managers

Managers of alternative investment funds, venture capital funds, social entrepreneurship funds, and long-term investment funds benefit from favourable IRPF treatment.

Specifically, carried interest is classified as employment income and included in the IRPF tax base at only 50% of its value. This is provided that the manager meets statutory conditions, including achieving a minimum return for other investors and holding the interests for a minimum of five years.

Foreign investments

The Startup Law eliminates the requirement to obtain a Foreigner Identity Number (NIE) for foreign nationals wishing to invest in Spanish startups. Instead, investors who do not hold Spanish nationality and do not reside in Spain must apply electronically for a Tax Identification Number (NIF).

The Spanish Tax Agency (AEAT) can revoke the NIF if the investment in a startup is not demonstrated within six months of its assignment. Furthermore, if the entity making the investment is a legal entity – such as a foreign business – the representative carrying out this procedure must already hold their own Spanish NIF.

Risks of investing in Spanish startups

Investing in a startup can offer returns far superior to those of other assets. However, investing also entails certain unique risks not found in more conventional investments. It is important for investors to assess the following four risks before carrying out transactions.

Total loss of capital

An early-stage startup has not yet validated its business model, so it might not generate sufficient revenue. Unlike other types of investments, the recoverable residual value is effectively zero. If the project is terminated, the equity stakes can become worthless.

This is the primary reason why professional investors do not concentrate their capital in a single startup. Instead, they operate with portfolios that include multiple holdings. This is based on the premise that a few success stories will compensate for the rest.

Lack of liquidity

Shares in a business that is not publicly traded cannot be sold at any time because there is no market where they can be offered. Transfers depend on finding a buyer and the provisions of the business's articles of association.

Added to this lack of liquidity is a tax constraint. The IRPF deduction for investing in newly formed or recently established businesses requires holding the shares for more than three years. Selling earlier entails losing the incentive.

Dilution in subsequent rounds

Each time the business raises capital to finance its growth, the shareholders' ownership percentage decreases if they do not participate in the capital increase. This dilution does not always result in financial losses for the investor because a smaller percentage stake in a larger business can be worth more. However, dilution does reduce the investor's influence on decision-making.

Shareholder agreements typically include mechanisms to manage these situations, such as pre-emptive subscription rights or anti-dilution clauses. Investors need to review these terms before signing.

Dependence on exit

Returns on startup investments typically do not materialise through the business's performance. Instead, they occur upon an exit event, which includes the sale of the business, entry of a fund purchasing shares at a higher price, or initial public offering (IPO). If the startup fails to achieve this exit, its appreciation in value does not offer a direct return for investors.

It is important to note that opportunities to exit an investment in a transaction of this type are less frequent than opportunities to invest in a startup. In 2025, there were 376 investment rounds in Spanish startups, compared to just 49 exits, according to the Startup Observatory. Although the figures are not directly comparable – because the exits correspond to investments from previous years – they offer an idea of ​​the imbalance between the two flows.

How can investors successfully invest in Spanish startups?

When investing in Spanish startups, several factors influence the final return on investment. Therefore, to make the right investment decisions, investors need to do more than select the development stage or understand regulatory frameworks. Below, we provide more key points for investors to consider.

Choose well-known sectors

It is important to have a thorough understanding of the startup's sector. This can help investors assess the project's ability to grow and potential success. In addition, it is important for there to be sufficient demand in this area, which is a key factor for the profitability of the investment.

According to data shared by Spain's National Entrepreneurship Office (ONE), startups that received the most investments in 2025 belong to the travel sector. They surpassed startups in the fintech and healthtech spaces for the first time in recent years.

Evaluate business models

A startup's business model defines how it generates revenue and, consequently, its profitability potential for investors. For example, if a startup typically engages in B2B transactions and decides to create a B2B marketplace to transform its business model, this can represent a strong investment opportunity. The platform can facilitate customer acquisition and increase revenue growth.

Another highly attractive business model for those investing in Spanish startups – especially more risk-averse investors – is recurring purchases. Revenue stability minimises risk during the consolidation phase. Furthermore, if the startup implements a method to increase monthly recurring revenue, it could more easily scale up to the advanced stages of growth, such as international expansion.

Analyse startup locations

The city where the startup operates determines key aspects, such as the level of competition and the ease of recruiting talent. ONE's data reveals that Madrid and Catalonia account for the highest number of investment deals in Spanish startups, with higher average investment amounts.

However, other autonomous communities – such as Andalusia, Castile, León, and the Basque Country – are gaining prominence in this regard. These regions offer investors a less competitive environment and greater potential for profitability.

Investigate founders' professional backgrounds

It is important to know who is behind the creation of the startup before investing. For example, the 2026 Spanish Tech Ecosystem Report states that founders who previously worked at high-growth businesses are best positioned to scale a startup. This prior experience enables them to acquire the contacts and knowledge needed to grow their own ventures.

Attend demo days

Although many startups are founded in Spain every year, it is not easy to find good investment opportunities. To find them, investors can attend demo days, which are events organised by startup accelerators where founders present their projects to potential investors.

In Spain, there are several institutions that organise demo days on a regular basis, such as the Spanish Chamber of Commerce and the Barcelona Chamber of Commerce.

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FAQs on investing in Spanish startups