Click here to view Canary Islands Startup Ecosystem Map
For the uninitiated, the Canary Islands are an archipelago, located off the coast of Spain. Major islands in the archipelago include Tenerife, Gran Canaria and Fuerteventura, among others. The Islands are best known for their mesmerising beauty, beaches and natural attractions such as the Teide National Park and one of the tallest volcanoes in the world, Mount Teide in Tenerife. Naturally, it is a major tourist destination, with a whopping 12 million visitors per year. You are likely to find people looking to retire in the Canary Islands, or relocate to the Islands in pursuit of calm and peace. But in the midst of this scenic paradise is brewing some interesting startup activity that we examine in this ecosystem report.
The Canary Islands are witnessing the first stirrings of a startup evolution since the past five years. The team at SEOintheSUN, an online marketing courses company in Tenerife, tells us the reasons for this, “The startup ecosystem in the Canary Islands has evolved rapidly thanks to recent successes and involvement of the government in this space. Especially the two main islands are standing out: Tenerife and Gran Canaria. This happened thanks to several events such as “Tenerife Invierte” (now known as “TF Gold Edition”) and new meeting spaces such as the “Mentor Day of Dyrecto Consultores”.
Here’s taking a detailed look at this budding startup ecosystem:
Most successful startups in the Canary Islands
VideoLean (@videolean ): As the name suggests, the app is for making great-looking videos using a set of templates and processes. It was founded in 2012 by David Macias Alejandro. The app now has more than 100,000 users and is used in 140 countries. The company has received 70,000 euros from the National Innovation Company (ENISA) and 100,000 euros from SODECAN, a public corporation of Canary Islands government.
Promineo Studios (@promineostudios): The developer of mobile games and apps was founded by Isidro Quintana (@isidro_quintana), and has gone on to raise a substantial amount of funding. The startup is the winner of the sixth edition of TF Invest, and aims to introduce its original games to a global audience.
Voiver (@voiver_com): A voice-over marketplace, Voiver was founded by Gerardo Diaz Polaino (@gerardodp) in 2014 and is a bootstrapped venture. It has been received well by customers who state that it is easy-to-use and the quality of recordings is good too. The startup has been featured by ProductHunt and BetaList.
Welovroi (@Welovroi): Founded by Kilian Barera (@kilianbarrera) and Alejandro Gonzalez (@AlejandroGQ), it is an intelligent dashboard for Digital Marketing Managers who need to monitor, measure, report and calculate the return on investment (ROI) of their online strategies. Welovroi uses data sources (Adwords, Advertising, Social Media, etc.) and saves the key performance indicators (KPIs) that are important to you and displays them in any digital device in real time.
GrapheneDB (@GrapheneDB): A Fully-managed cloud hosted Neo4j graph databases. It stores data in graphs, the most generic of data structures, and is especially suited for datasets where relationships are relevant. Available on AWS, Azure and Heroku, it was founded by Alberto Perdomo (@albertoperdomo) and Juanjo (@juanjoandres).
Quaderno (@quadernoapp): Founded by Carlos Hernandez (@polimorfico), Quaderno makes invoicing and tax handling a breeze. It organizes all different payment streams into one transparent, easy-to-understand platform.It works with payment gateways and automatically sends all the customers invoices.
ComparaDentistas (@comparadentista): It is the leading service for cost comparisons of dental treatments in Spain. They help patients get cheaper prices for dental treatments and dental offices get more customers. It was founded by Guido Kloess (@GuidoKloess).
Advantages of starting up in Canary Islands
We asked the team at SEOintheSUN what they thought were the main advantages of starting a company in the Canary Islands, and they summed it up for us, “We offer the best tax conditions in Europe, cheap labour, low cost of living, government funding for start ups and a great climate and surroundings to work. Apparently, the mild climate is the most appealing advantage (although it might seem irrelevant) and the cost of living, which is much more cheaper than in the European capitals, as well. Also, we have good technical conditions in regard of internet connections or other related services.”
Let us take a more detailed at each of these:
Tax incentives: This one’s no secret. The tax benefits of starting up in the Canary Islands are its biggest advantage. Canary Islands enjoys a different tax regime, operated by the Economic and Tax Regime of the Canary Islands (REF). Under this regime, companies are subject to a reduced tax rate of 4%, exemptions in the Canary Islands General Indirect Tax (IGIC) and Property Transfer Tax and Stamp Duty. Now compare this to the European average tax rate which rises to 23%, and you see what we’re talking about!
Low cost of living: As compared to the rest of Europe, the cost of living in the Canary Islands is much lower. And this is not due to the loss of technical and communication facilities, so all in all this is a great proposition for a startup. Low cost of living also translates to lower salaries, which are critical for startup in the initial stages.
Culture and leisure: This is perhaps not your first consideration when choosing a place to launch your startup, but the scenic beauty and rich culture of the Islands make it worth a mention. Many of the islands have a good mix of nationalities, so you may not necessarily feel like an outsider. And what better way to combat stress at work than an afternoon of surfboarding and cycling?
Disadvantages of starting up in Canary Islands
As mentioned earlier, the startup scene in the Canary Islands is still blossoming, and hence riddled with problems that a budding ecosystem is bound to fail.
Lack of access to private funding: One of the biggest disadvantages, this is a point echoed by SEOintheSUN as well, “It is difficult to access private investors and international networks.” While the government offers funding to startups and researchers, startups require large investments in order to scale, that are not available in the Islands. This forces startups to move elsewhere.
Lack of events and platforms: Networking and collaboration are both essential for a startup ecosystem to grow, but there are not many such platforms available for entrepreneurs to connect with each other and exchange ideas. Of course there are a few initiatives, as mentioned later in the article. There are also not many accelerators or incubators that propel startups to growth. Says team SEOintheSUN, “Although the atmosphere is changing step by step, we are still lacking the potential of contacts, events or platforms like they can be found in Madrid, Berlin or London.”
Lack of focus on global markets: A big thanks for this article is due to Google Translate, as almost all of the websites we visited for the article were in Spanish! Now, that may not be the biggest indicator of whether language is barrier in the Islands (some online sources indicated that a number of the major islands were inhabited by foreigners and language as such was not an issue), it does indicate a certain focus on the local markets. The internet is where most of the world lives, buys and spends, thus making most of the websites accessible in major languages in the world would certainly improve their visibility and outreach.
Small and isolated market: While low taxes and living costs may be tempting at first, startups will definitely want to move to a more global location, given the limited market that the Canary Islands offer. Also, since this is an island we are talking about, it is a bit far removed from the major startup destinations in Europe, which is a disadvantage for startup founders.
Investment in Canary Islands
TF Invest Investment Club: An initiative of the Scientific and Technological Park of Tenerife (PCTT), it is creating a network of investors and entrepreneurs in Tenerife. The startups must be technology based and have a global appeal. PCTT helps entrepreneurs establish connect with potential investors, and grow their enterprise.
Sodecan (@sodecan): A public corporation set up by the Government of Canary Islands in 1983, it provides loans to early stage tech-based startups. The loans range from 10,000-100,000 euros. The companies are given a grace period of 5 years to repay the loan. Companies with a private investor can approach SODECAN for funding at later stages too. Some of the startups it has funded include VideoLean, Promineo Studios and ComparaDentistas.
Red UNIBAN (@reduniban): University Business Angel Network is an initiative of the University of La Laguna (ULL) managed by its foundation (@fg_ull). It is a place where startups and investors can learn, meet each other and get mutual benefit. Its main goal is to create the culture of investment in startups, especially those who come from the university context, as well as showing the best investment opportunities.
RECABA: The Canary Islands Business Angels Network is managed by PROEXCA (@proexca). It is focused on contacting private investors from the network with innovative investment projects that have gone through a strict selection procedure, collaborating with national and international experts. It also aims guaranteeing the project’s quality and providing the best information about them.
WhyTenerife (@WhyTenerife): It is a project aimed at promoting the economic, social and cultural development of Tenerife through implementing activities that favour the creation of a solid business and commercial base on the island, driving growth in terms of development and employment. It is the one point of contact offering a full range of support and services to quickly established and develop your business in Tenerife.
SPEGC (@SPEGC): The Organisation for the Economic Promotion of Gran Canaria (SPEGC) is a business entity fully owned by the Cabildo de Gran Canaria and dependent on the Department of Economic Development, Public Works, Infrastructures and Transport. The mission of the SPEGC is to promote economic and entrepreneurial activities that contribute to the island’s development and expansion.
Accelerator Program in the Canaries
YuzzTenerife (@YuzzTenerife): In association with coworking space Dyrecto Consultores, YUZZ is a five-month accelerator program that provides participants access to mentors, working space and capital, among other things. At the end of the program, the best startups take home prize money ranging 10,000 euros to 30,000 euros.
Canary Islands Coworking Spaces
Surf Office (@surfoffice): The coworking space came into being when its founder, Peter Fabor (@faborio), realised how he longed to work under the sun and take breaks to go surf-boarding. He launched Surf Office in Gran Canaria for those who crave for calm and a beach to surf, close to their workplace, as opposed to a regular office. The coworking space is a 10-room property, that professionals from all over the world visit, as a welcome change from their humdrum work routine. It offers all facilities that other coworking offices do; team and individual working spaces, high-speed internet and access to a kitchen.
Dyrecto Consultores (@DyrectoConsult): Dyrecto Business Centre, in Santa Cruz de Tenerife, provides startups with a host of personalised services such as financing, marketing, help with Canary taxation, among other things. The coworking space has a fully equipped office, landlines, printers, high speed internet facilities and conference rooms. In addition to being a coworking space, it also organises startup events such as Mentor Day.
Coworking in the Sun (@seointhesun): Billed as a “workation”destination in Tenerife, Coworking in the Sun is an initiative of SEOintheSUN, that offers more than the average coworking space. Entrepreneurs and startups can also sign up for their co-living facilities, online marketing classes and a myriad activities such as Spanish lessons, adventure sports and Salsa lessons! Of course, they are fully equipped with office supplies, internet, meeting rooms and IT support.
Paletexpress (@paletexpress): It is a shuttle for projects and ideas, a magnet for talent and technologies, all based on our spaces, style and a different environment. A way of working that allows talented professionals and entrepreneurs, small businesses and multinational employees from different sectors to share the same workspace, both physical virtually and to develop their professional projects in an independently or collaboratively way as they want.
Franja47 (@Franja_47): It is a coworking space in Santa Cruz de Tenerife, designed for professionals seeking a quiet environment but live where they can develop their projects and join other initiatives.
Events and Organisations in Canary Islands
Tenerife Invierte: Tenerife Invierte, now known as “TF Gold Invest”, is organized by the Island Council Tenerife, through PCTT. The event aims to discover and develop innovative startups, by providing them with funding.
Mentor Day (@mentordaytfe): A non-profit organization, Mentor Day is a monthly meeting of entrepreneurs with a focus on solving problems such as funding, training, taxation, partnerships, etc. It takes place at Dyrecto Consultores. Eight startups present their companies and receive feedback from startup mentors.
FGULL (@fg_ull): The General University Foundation (FGULL) creates a link between academic and social fields. Its aim is to promote closer relations between the University and its socio-economic environment. It organises courses on a variety of topics for students and entrepreneurs. FGULL also offers Spanish courses which combine face-to-face classes with online classes.
All in all, the Canary Islands have some important financial incentives for startup founders such as tax concessions and low cost of living. However, the startup ecosystem is still in the initial stages of development. There is a critical need of private funding and establishment of better platforms and networks, in order to help startups flourish and rise globally.
A big thank you is also due to the following for their invaluable insights into the Canary Islands startup ecosystem: