Why Spain has an entrepreneurship problem (and why there’s hope)



We wrote yesterday about the brain drain in Spain and Portugal, where highly educated graduates choose migration as a way out of the crisis. An alternative to migration would be to start your own business – and while we wrote about a few entrepreneurs who did just that, entrepreneurship in Spain is still not a popular choice.

In fact, a report by the EU in 2012 shows that the level of entrepreneurship in Spain hasn’t made a lot of progress since 2007.

Here’s a graph which shows that Spaniards are not very enthusiastic about starting and running a business. In Spain, a very high percentage of the population is self employed, compared to the rest of the EU. But a lot of them content themselves with being a freelancer, instead of developing a business with with employees: 

1. Schools don’t encourage entrepreneurship

As Luis Ivan Cuende, a 17-year old Spanish entrepreneur and young adviser to Neelie Kroes said in an interview with Whiteboard recently, the Spanish educational system is not really beneficial to fostering entrepreneurship. The Spanish school system is about rote memorization of ‘things you can find on the internet’, he said. “If we keep doing that, things will crash soon.” 

And recently, Juan Angel Hernandez, founder of financial portal Estrategias de Inversion, bemoaned the fact that 70 % of the Spanish graduates want to find a job at a corporation. In the US, he says, 70 % of the students want to become their own boss. He said: “We should instill a culture where people want to work for themselves – where they at least consider it.”

A whitepaper on entrepreneurship in Spain seems to support this view on the educational system in Spain. In a 2011 whitepaper, ESADE wrote:

“Entrepreneurship can be learnt at school and should be actively promoted so that young Spaniards can develop skills such as independence, self-confidence and decision-making in situations of risk.”

2. Spaniards are risk averse

The Spanish are more risk averse than other Europeans. 45 % of the interviewed in the ESADE whitepaper indicate that they are afraid of failure – this is the hightest number in Europe, except for France (47 %). Only 12 % of the respondents said they considered themselves ‘risk takers’, as opposed to almost 40 % of the Americans.

Spaniards, said the researchers, are also a fatalistic bunch: they are more likely to think that what happens to them is determined by their luck or by others. And they’re less likely than other nationalities to think that they’re creative.

So there’s very little positive drive or ambition to start a company. If Spaniards start a business, it’s often (40 %) because they feel that they have no other choice. That’s not a great start for your business, and it’s also not very likely to lead to investments from VC’s or business angels.

Paradoxically, Spain scores good when it comes to giving entrepreneurs a second chance. While it’s more expensive to close down a business, solving an insolvency takes only 1,5 years in Spain, instead of 2 years for the EU. Also, failed entrepreneurs are not less supported in Spain than elsewhere in the EU:

 

3. The image of entrepeneurs is bad in Spain

In general, Spanish entrepreneurs have a bad image. Entrepreneurs enjoy a 73 % popularity rating in the US and still a healthy 62 % in France (a country that is sometimes felt to be anti-entrepreneurial by French investors and entrepreneurs). In Spain it’s 48 %. Media barely pay attention to entrepreneurship, ESADE concluded from its research.

For the Spanish, says SmartPlanet, a job is something that you don’t need to enjoy, but something that pays the bill that you endure between 9 and 5. 

4. Thinking small

As Luis Ivan Cuende already indicated, Spanish entrepreneurs don’t think big: “they copy successful business models from elsewhere.”

In fact “thinking small” is one of the few entrepreneurship indicators for which Spain scores better than the European average (the others are ‘second chance’ and ‘environment’). While the European Union sees ‘thinking small first’ as a positive thing for entrepreneurs, for startups it’s not a great idea to think too small.  In fact, Ben Horowitz recently said that when he considers investing in a startup, he prefers to invest in people who have “crazy ideas in tiny markets”. 

5. Procurement

It also doesn’t help that the Spanish government isn’t exactly fast when it comes to paying bills – while large corporations can tide over long waits until they are paid, fast cash flows are essential for young companies that need to scramble to make their payroll every month: in Spain, it take 66 days on average to get paid by the public authorities. The EU average is 25 days.

 Why there is hope

The EU’s 2012 entrepreneurship report for Spain does show that a lot of progress where it comes to “skills and innovation”:

Due to the current economic crisis, the government  passed new measures to help credit flow into the real economy, remove administrative charges and boost the  competitiveness of Spanish firms by investing in R&D. Spain has endorsed the principles of the SBA and plans  further measures to boost its implementation, including the  creation of a national SME council.

So maybe we’ll see a boost in the Spanish entrepreneurial scene soon (see the feature photo of a Seedrocket ‘Day of the Entrepreneur’ in Barcelona). If you know any great Spanish entrepreneurs, accelerators or business angels, let me know!

[SmartPlanet, EU report, ESADE][Photo: Seedrocket, Flickr]

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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