Your experience

Hi, I'm Carmen Bermejo, CEO of Tetuan Valley, a non-profit in Spain that helps early stage startups. We are one of the key nexus of the startup community in Spain and we run one of the oldest and more respected startup programs here.

We recently published the Spanish Startup Manifesto in collaboration with other key players and we are in the process of creating an association to be the voice of the startups in Spain.

Your ideas

First of all, I'd like to say that we agree 100% with everything Guy said here.

Also we want to share our manifesto that compiles the headlines of what Spain needs in order to be a country where startups can thrive. I'm copying down below some of the most relevant parts for the Digital Single Market.

Something we haven't include on the manifesto explicitly, but we consider common sense: Don't approve laws that make some startups illegal suddenly, in a rush and without much dialogue or warning. That is not only bad for the startups you are killing, it also make other startups and investors afraid. It makes them think is a way better idea to create their companies in any other place where they know they are valued and don't have to be worrying about that on top of making their company work.

I think Guy summarized it perfectly: "The role of regulation is to protect consumers from harms, not protect incumbents from competition."

Regulatory Environment

We think that government shouldn't be the primary driver of a country's entrepreneurial ecosystem, but it does play an important role in its success. The legal framework has to be stable and favourable so that it promotes the creation, management and closing of companies.

Upgrade and homogenize the regulatory environment

Startups are creating business models that are ahead of obsolete regulations, which were created without taking into account on-line marketing and distribution.

The situation will improve greatly if governments in the EU jointly created a minimum legal framework that would act as a guide for innovative technological startups until specific regulations are developed for their activity.

Simplify procedures for creation and management of companies

In Spain, the process of creating and managing companies is still very long and expensive. This is one of the reasons why many Spanish founders choose to build their startupsin other countries, like the UK or the USA. We need to continue to support, improve and simplify those procedures in order to promote growth and the creation of new jobs

Improve the options after failure

Society penalizes failure enormously. Besides the social consequences, entrepreneurs who fail have to face legal and financial consequences. Legislation should reduce financial consequences of failed businesses, so that entrepreneurs can learn from their mistakes.

Buy more from SMEs

In general, government agencies and corporations minimize their risk by hiring larger firms. "For many entrepreneurs, selling to the government is all but impossible [...]. If EU governments want to kick start the engines of growth in their countries, they must commit to shifting a certain percentage of their procurement contracts to smaller firms"[1] . We suggest policies that encourage government agencies and corporations to work more with SMEs.

[1] http:// startupmanifesto.eu/files/manifesto-es.pdf

Talent

In Spain, we are suffering from a severe brain drain which has a negative impact in all aspectsof our economy.

There is a strong desire for talent in the startup industry. For Spanish startups to be able to compete on equal terms with other companies they need to be able to pay better wages. To achieve this goal we suggest that we:

Ease social charges

The social chargesthat companies have to bear are really high. It will be very helpful to create a new system to calculate social security contribution rates linked to the turnover, especially during the first years of a startup.

Facilitate stock options for employees

Often times, startups need to hire professionals that are outside of their budget. Hence, many startup offer stock options ?suplementary to salary earned. However, in Spain stock option taxes are so high that rather than it being a motivation for them, it cost them money.

Therefore, we recommend revising legislation in regards to this issue.

Simplify the recruitment of foreign talent

Spanish startup ecosystem is really young and experienced entrepreneurs are scarce. Attracting foreign talent to work in our startups would give startups the necessary experience to increase their possibility of success. We suggest simplifying legal procedures for startups and employees, so that it is easier to hire people with the necessary technical skills and to work from outside the European Union.

Capital

We need to increase accessto capital in Spain. In order to succeed, we need to promote reinvestment of profits by entrepreneurs and experienced investors, attract foreign investment and improve accessibility aswell as conditions of crowdfunding.

Improve fiscal policy and promoting reinvestment

Capital gains bear such high taxes they discourage investment in startups and successful entrepreneurs from pursuing new ideas. Investors prefer traditional forms of investment because they are less risky and they pay less taxes, while successful entrepreneurs do not like to see their earnings go to taxes.

Attract international investment

- New public co-investment initiatives should foster the presence of international funds with proven experience in startups.

Improve the efficiency of public investment

To ensure equal opportunity, we think it is important for small public aid to exist for the early stages of a startup.

However, at the same time, we think it is essential that this aid is screened and supervised by evaluators with proven experience in startups.

Public financial structures have to be flexible and capable of adjusting to the local ecosystem because more money doesn't always mean greater success.

Boost investment in Spain

The percentage of failed companies is really high and very often investors don't know the valuation mechanisms and criteria of startups as well as how to investment in them.

It is advisable that both public organisations as well as investors and business angel associations:

- drive up reinvestment of profits from entrepreneurs and experienced investors;

- open small investments through positive regulations and tax policies towards equity and crowdfunding platforms;

- promote access to public capital marketsand make them more attractive to high-growth companies;

- provide training about the peculiarities related to investing in startups, especially around the valuation process;

- boost co-investment with experienced investors;

- advertise the advantage of investing in startups to big companies because large firms are one of the key drivers of investment, collaboration and acquisition of startups in more developed ecosystems.