Accelerating the Spanish entrepreneurial system

^{Written by Iñigo Laucirica and Carmen Sánchez}

The role of founder mafias, stock options and exits

Ecosystem is quite a buzzword in the world of entrepreneurship and innovation. While I find it cringey, it does capture the reality of functional entrepreneurial hubs. These are definitely systems, where interconnectivity between different nodes is critical for individual and collective success. 

In this article we touch upon closely related drivers of interconnectivity - founder mafias, exits and stock options - and the role they play in accelerating the Spanish entrepreneurial system (or any other!).

The founder mafia phenomenon

Spain is waking up to a trend that has powered startup ecosystems from Silicon Valley to Stockholm: “founder mafias”. A handful of ex-employees who worked side-by-side at a startup suddenly start cropping up as founders, launching their own ventures and, in the process, building an interconnected network of talent, experience, and innovation. 

Perhaps the most iconic example is the “PayPal Mafia”. Some of the world’s most game-changing companies, including Tesla, LinkedIn, SpaceX, Palantir, or YouTube trace their origins to PayPal, both in terms of founders and early investors. 

In Europe, we are now seeing founder mafias of our own. Swedish fintech Klarna has produced over 60 alumni-founded startups, with most setting up shop in Stockholm, fostering an entire fintech ecosystem. Similarly, Revolut in London has become a founder factory, with former employees launching companies at a rate few Europeans can match.

In Spain, we are starting to see founder mafias emerge, with companies like Glovo, Cabify, Jobandtalent, eDreams, TravelPerk or Privalia becoming training grounds for future founders. These startup’s alumni have branched out to create ventures across various industries, including Deporvillage, Exoticca, Abacum, TaxDown or Invopop. Each of these budding “mafias” adds momentum to the ecosystem, but the critical mass needed to achieve the rapid, self-sustaining cycle seen in more mature ecosystems has yet to be reached. 

This phenomenon is close to our heart at Samaipata since La Nevera Roja’s exit marked the beginning of the Ontruck mafia (Cobee, Zylon, The Startup CFO), and our very own Samaipata mafia (Darwin, Komon, Bihar Batteries)!

The role of stock options

Mafias are fuelled by knowledge, network and capital. On the latter, stock options play a critical role. Stock options are the most effective tool to drive pro-cyclicality in a startup ecosystem. Options turn employees into stakeholders, giving them a vested interest in the company’s success. The result is a faster spinning flywheel: more startups, a stronger pull for talent, and an ecosystem that gains momentum with each success. 

All major tech hubs benefit when wealth is recycled back into the ecosystem, often as employees use their stock option gains to start new ventures or invest in others. But, in Europe, startups have traditionally lagged in offering employee ownership, partly due to cultural factors and partly due to complex regulatory frameworks. 

European policymakers have taken steps to improve stock option plans. Leading scaleups and VC firms have recently called on the EU to create a unified employee stock options framework across the bloc. Germany, which historically had some of the most restrictive options rules, has moved forward with the Future Financing Act, a law that defers taxation on stock options until they are sold, provided the startup meets certain criteria. This approach makes options a less risky proposition for employees and is helping Germany close in on countries like France and the UK, where options have long been more accessible.

Unfortunately, Spain’s stock option policies lag behind those of its European peers, resulting in a more slowly spinning flywheel. Although the recent Startup Law introduced some changes, its impact has been limited. The framework is not designed to scale with companies as they succeed, resulting in a lot of legal and fiscal uncertainty. The reality check on the ground is that companies are still using phantom shares, a classic workaround to the limitations of Spanish stock option regulations. 

To accelerate Spain’s entrepreneurial flywheel, simplifying regulation around stock option plans is essential. Aligning with UK-style policies would reduce tax barriers and make options a more powerful incentive. Equally important is educating employees on the financial value of options, challenging the prevailing “cash is king” mentality and building a stronger ownership culture. Conversely, founders and investors should be much more transparent about the convoluted world of company valuation, expected dilution, and fundraising terms, enabling employees to fully understand what their stock options are, and are not, worth. 

Spain’s exit pipeline

Exits are mandatory for Spain’s tech ecosystem to complete its cycle, crystalizing gains, rewarding founders, investors, and employees, and feeding the next wave of ventures. Yet, in Spain, the divestment landscape still significantly lags investment activity. While investment in Spanish tech has surged over the past decade, most seeded projects still need time to succeed, scale and - market conditions permitting - exit.

We are bullish on the outlook for tech exits in Spain regardless of the current liquidity slowdown. The next decade holds promising prospects for successful divestments that could reshape the ecosystem. While recent market conditions and M&A sentiments have not been conducive, a maturing pipeline of high-growth companies signals that a new cycle of exits is on the horizon. 

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Let’s not fail at addressing what is under our control

Creating and crystallizing value for stakeholders is the number one pillar of a functional entrepreneurial hub. An entrepreneurial ecosystem cannot legislate its way to value creation but removing obstacles and oiling incentives towards value creation seem like attainable goals. Furthermore, the opportunity cost of failing to take actionable steps to harness the second-order effects of value creation is really high and at the same time easily avoidable. 

Entrepreneurship and early stage investing in Spain really took off in the last decade. Looking ahead, founders, operators, investors and the public sector need to continue laying the foundations of compounding in the Spanish entrepreneurial system.