It takes the effort of a generation to change the future of the following generation
The confinement by COVID-19 has left me time to reflect on the future, what is to come. It fascinates me because it is impossible to know how it will be, or rather: how and when it will be. However, there are people that are closer to the future than others; these people are the ones who are building the future. I am referring to entrepreneurs in sectors that are small today but that will be key in one or two decades.
Thanks to the European Venture Capital Association, Invest Europe, I have been able to see in detail what measures each European country is applying to their respective startup and innovation ecosystems in response to the Covid-19 crisis. I have been struck by the contrast between countries. Spain, Europe’s fourth largest economy, appears at the bottom instead of the top.
Support from different European governments for Innovation and Venture Capital in the Covid19 crisis
Government Support for Innovation and Venture Capital – Crisis Covid19
In Spain, the star measure of liquidity for businesses, the ICO lines, are not reaching the startups. Even a startup pledging the non-guaranteed portion of the ICO guarantee to its bank is unable to access state-guaranteed bank credit. The income statement of a startup, which is not the same as a newly created business, is incompatible with the risk committees of the banks, which in this crisis are part of the solution.
Spain and its future deserve a second chance
This fact has made me reflect on the importance that we Spaniards are giving to those people who are building the future with companies. Spain is losing another opportunity to emerge from a crisis with one foot firmly anchored in a sector, technology, which is going to generate many quality jobs, and which will be competitive with other nations. And let me emphasize “quality”, because if there is one thing that young Spaniards need, it is salaries that match their talent. A problem that probably explains much of the demographic crisis that our country is experiencing.
In other words, we Spaniards have another opportunity for the next generation to have more high value-added jobs; and therefore, more taxes to be distributed in social policies. Where is the Ministry of Digital Transformation at this moment of greatest acceleration of this transformation? In addition to Basic Income, why don’t we talk about how to create the business champions of the digital future in Spain?
Some may not understand why we need to “invest” in the sectors of the future if the short-term return is not clear or we do not have a competitive advantage today. But, have they stopped to think about those sectors that are in the radar of the great technological companies and that were not there just five years ago (banking, mobility, health…)? Even our Tourism could change radically if Virtual Reality is completely successful. In short, we are living the 4th Industrial Revolution; it would be ridiculous if we did not learn from the dynamics that transformed societies in the three previous revolutions.
The world’s largest listed companies by market value and sector 2001-2016
And beyond the geostrategic need to have national champions in certain digital fields (i.e. cybersecurity, Artificial Intelligence) or life sciences (i.e. biotechnology), our country has the talent to capture the opportunity of the digital transformation. Why be content to be Europe’s “spa” when we can do so much more?
Nevertheless, the real challenge, however, is not a set of measures, but a long-term vision shared by a political majority sustained over time. Where is the intergenerational generosity? In Europe, 1000 years ago, cathedrals were built in an effort shared by several generations; today these temples still stand, as a symbol of a culture and a heritage.
In short, we need the effort of one generation to change the future of the following generation. In 1957, we saw the French and Germans bury their hatred in order to give birth to the European Union after a war with more than 60 million dead. Today, my generation enjoys the most lasting peace in the history of the old continent. If we Spaniards do not think about the economic wealth of our next generation, who will?
An interesting post. Unfortunately Spanish fiscal incentives and policy for young, innovative and high risk ventures is poor and incomparable to, for example the UK’s SEIS and EIS investment schemes. Structurally a few, noisy operators dominate the eco-system. The nature of competition is one of containment rather than one of mutual expansivity and there is an over-dependency on EU-state sources of capital, with limited incentives for international PE Capital! There has been some significant funds arrivals in the last 4-5 years but nothing in comparison to Spain’s neighbours. The brilliant technology and talent available in Spain- as you highlight above- therefore either emigrates or gets wasted!
This has been the case pre-the financial crisis and continues until today. Portugal adjusted rapidly and now has nascent yet accelerating innovation eco-system. Lessons to be learnt! Until the tax system offers significant capital gains (not income) incentives, then it is unlikely that much of the above will change!