Spain’s Patient Prince
Unemployment rates in Spain are one of the highest in the developed world, hovering around 25% this year. Worse, for those under the age of 25 the joblessness rate is more than double (57%). On a recent visit to Barcelona, I met a Prince doing something about it.
His Royal Highness the Prince of Asturias and of Girona, Felipe de Borbón y de Grecia, might seem like an unlikely champion for startups. To my knowledge he is not an entrepreneur, not to mention the fact that he has the slight complication of being the heir apparent to the Spanish throne. But he might just be what the doctor ordered.
I accepted his invitation to visit Girona initially on account of his strong support for Global Entrepreneurship Week / Spain. I found much more—an approachable man troubled by the fact that more than half of his country’s young population is out of a job despite talented minds graduating from world-renown universities in Spain. The occasion was a two day event he personally directed for startup leaders and young nascent entrepreneurs at the end of last month. He launched the so-called “IMPULSA Forum” as an annual meeting in 2010 through the Prince of Girona Foundation “to engage with restless young people and to turn them into job creators.” I was there to help encourage hundreds of future leaders selected to participate by speaking alongside other entrepreneurship evangelists from Spain and abroad. But it was the presence of the Prince of Girona and his popular wife who captured their imagination—and mine.
Entrepreneurship in Spain is focused in large part on communities, much along the lines of what Brad Feld discussed in his book Startup Communities: Building an Entrepreneurial Ecosystem in Your City. Barcelona attracted Unreasonable at Sea for a productive three-day stop-over in late April, and the city boasts a 1,000-member Lean Startup Circle. Madrid, in turn, has been offering business incubator programs that provide free office space to young entrepreneurs for up to a year as well as opportunities for interaction with mentors. Program leaders say firms built in the business incubator system have a 95% chance of surviving their first five years, and that the number of entrepreneurs in Madrid jumped from 8,000 to 28,000 between 2005 and 2012. Of course, this 350% growth in Madrid entrepreneurs is likely a response to so many people losing their jobs as former employers close their businesses—but whoever complained of finding good from bad situations.
While such community-based initiatives are important, leadership at the national level is just as vital in a nation that, like much of Europe has little tolerance for failure and where people are more drawn to job security provided by existing firms rather than taking a risk of starting their own companies. Further, beyond these cultural challenges, there are other major national roadblocks to overcome such as “red tape” which is perhaps best captured in comparative statistics. This year, the country ranks 136th out of 185 countries on the World Bank’s ease of starting a business indicator.
The Spanish national government is trying to respond, issuing last month an "entrepreneurship law" focused on helping young people. The government’s plan offers funding and fiscal incentives for entrepreneurs (e.g. lower contributions to the pension and unemployment-benefits system for hiring startups). While this is a start, it is not enough. Talented Spaniards, like Columbia University MBA graduate Luis Sanz, will prefer to launch their ideas in other entrepreneurship ecosystems with a more supportive entrepreneurship environment and as I have written about often, other nations are working hard to attract entrepreneurial talent in an environment conducive to startups and scale-ups.
Spain has to establish a stronger foundation for entrepreneurship in order to begin to solve the unemployment crisis and in order to draw entrepreneurial funding as more startups blossom. Structural reforms that make Spain friendlier to entrepreneurs are therefore important. But in the face of a shrinking national economy, and while the Spanish government may eventually act on simultaneous, longer-term moves to build a more permanent economic entrepreneurial engine, it remains questionable as to whether the political system can take action soon enough. If, as I suspect, the real drivers of discovering new opportunities in Spain can best be found in the imaginations of a new generation, it may take a Prince and Princess outside of politics to lead the people to a more prosperous Spain.