European Investment Bank to invest in €1bn VC fund for Spanish startups

The European Investment Bank's backing of a €1bn venture capital fund in Spain will provide a significant boost to the country's entrepreneurial landscape. Deal set to close before summer.

The European Investment Bank’s venture capital arm is set to support a new fund in Spain with a goal of investing €1 billion in growth stage technology startups. This initiative is part of the 2023 European Technology Champions Initiative, which has received a total pledge of €3.75 billion from the European Union development institution and five member states, including Spain. The ETCI has already allocated close to €1 billion to four funds, such as Atomico and Keensight Capital.

Despite a funding slump for startups in Europe last year, the EIB’s European Investment Fund has received 34 applications from VC firms across Europe to participate in the initiative. The fund aims to select between 10 and 20 firms in total, with the new Spanish fund falling under its umbrella. This state-backed investment comes at a crucial time as venture capitalists globally are facing challenges in raising money due to high interest rates and a lack of exit opportunities.

In Spain, the funding slump has been less severe compared to other European countries, thanks to a higher proportion of early-stage companies with smaller valuations. However, there is a lack of VCs that can support growth and later-stage companies requiring larger rounds. To address this, the Spanish government launched a fund of funds in 2021 with an initial allocation of €2 billion to support the growth of technology companies, with plans to increase its size.

Overall, the investment from the European Investment Bank’s venture capital arm in the new Spanish fund is a positive development for the tech startup ecosystem in Spain and Europe as a whole. It will provide much-needed support for companies at various stages of growth and help drive innovation in the region.