Canary Islands Startup Ecosystem Overview
With a special involvement from both the government and the key players of the private sector, the Canary Islands startup ecosystem is rapidly developing and attracting talent from all over the world. The infrastructure, paired with good policy, tax incentives and community make the Canary Islands a pro-business location. Attesting to the Canary Islands potential and vision is its capacity to develop past the service-based economy that was heavily dependent on tourism, to a knowledge-based economy with a growing tech sector.
In 2021, two main startup ecosystems in the Canary Islands have registered massive jumps in their rankings. Las Palmas de Gran Canaria leapt 124 spots to sit at a global rank of 229th, and Santa Cruz de Tenerife sprinted to 237th with an increase of 147 positions. On the national level, Las Palmas de Gran Canaria has achieved a Top 5 spot, with Santa Cruz de Tenerife following close behind in the 6th overall position. The Canary Islands startup ecosystem excels in software and the tourism & travel industries, but huge gains have also been registered in areas of game and animation, sustainability, and renewable energies. While the ecosystem is still in its early development stages and there are some challenges to be addressed, there is an undeniable potential for growth and some unique advantages for startups to tap into.
Due to their unique location, advantageous tax laws and European regulations, the startup ecosystems of the Canary Islands enjoy a special status. Here is what makes this startup ecosystem special:
The Canaries are part of the EU’s Outmost Regions which gives businesses the security and protection of the European legal framework. Moreover, the islands benefit from a special tax regime that allows them to offer the lowest corporate tax and VAT in Europe and massive incentives for businesses.
To put it into perspective, the Canary Islands Corporate tax of 4% is 5 times lower than the European average, and the VAT falls to only 7%. Moreover, the Canary Islands pride themselves on the best incentives on the planet for R&D and audiovisual projects. The R&D tax credits of 75,6% with the cashback option allow startups to succeed with bootstrapping as they reduce their annual costs and increase profits.
The startup ecosystem of the Canaries naturally attracts talented remote workers and digital nomads. The government has planned a massive budget to better promote the destination and aims to attract 30,000 teleworkers in the following years.
Apart from having a large pool of talent from overseas, the Canary Islands is also home to 6 universities that produce over 2300 STEM graduates every year.
This unfair advantage makes it possible for the Canary Islands to position themselves as an innovation hub that can offer human resources as well as investment opportunities.
The Canary Islands are located off the coast of Spain in the Atlantic Ocean with a good connection by air and sea to both Europe and the African continent. The advanced infrastructure of the region is transforming the “remote” and “isolated” character of the islands into an ideal location for businesses who want to have access to the European, African and American markets.
According to the CanaryIslands, there are hundreds of weekly direct flights to the United Kingdom, Germany, Africa and of course, Spain.
Not only are the Canary Islands well connected to the world by frequent flights and ships but also through the “state of the art” high-speed internet.
Moreover, due to the region’s proximity to West Africa, the Canary Islands have developed good relationships and economic partnerships with their neighbors, making it a great place to relocate to.
In the Canary Islands, startups have the opportunity of accessing funding at 4 levels: the European Union, the Spanish National Government, the Regional and Local Government. Apart from the public sector incentives and multiple programs that come to meet the founder’s needs, the Canary Islands also offers the Canary Business Angel Network RECABA which connects founders with investors and mentors.
Archipelago Next: a VC fund formed by 15 leading Canary companies in different sectors that invest in growth-phase startups. They recently launched a Venture Building program with 34 challenges to boost the creation of new startups in the archipelago.
Mentor Day: a one-week intensive mentorship program. They are part of Draper B1 Fund and Draper Venture Network and have invested in more than 100 Startups. They also offer resources and information on the startup ecosystem of the region.
Other relevant accelerators include Olympo boxes, Boxlab 4.0, Reta-T lab, Triple Helix, and ProtoAtlantic.
All these unique advantages create a favorable climate for startups to be established and grow. It is no wonder that the region has managed to produce successful companies such as Wooptix, AdQuiver and GearTranslation. Woodptix has achieved the impressive performance of being the first Spanish startup to receive investment from Intel Capital while AdQuiver raised over €500,000 in its first round of financing.
These success stories attest to the Canary’s Islands potential and innovative spirit. As the ties between the local ecosystems are continuously nourished and strengthened, the Canary Islands are redefining their role within the global startup ecosystem. Their offer of a distinct atmosphere of fun, low cost of living, fast fiber connection, and a business innovation mindset, has earned them international recognition.
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Canary Islands Startup Ecosystem