Technology sector overview

technologic sector overview

General overview

COVID has brought about a heightened level of consciousness about how important digital transformation is and how fast it needs to happen

Global TMT Deals Volumes and Value

EMEA TMT Deals Volumes and Value

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In 2021, momentum has been maintained as a result of the necessity for digitization, which has  increased demand for Cloud Computing, Cybersecurity, SaaS, and IT services.

Deal activity globally has seen a record year and has mainly been driven by technological companies.

Many sectors are increasingly digitalizing their processes, and this phenomenon pushes the evolution to all verticals of the Technology industry.

Some segments like Cybersecurity, Cloud Computing, Data Science, Information Technology have  seen more activity than other sub-segments at the moment.

According to PwC experts, at a breakneck speed, technology is spreading across multiple industries. In the IT sector, record VC investments and IPOs are driving increased competition and
consolidation opportunities, resulting in M&A reaching new highs in 2022.

M&A, VC and PE activity

In 2021, PE and VC was mainly driven by cross borders transactions. PE reached € 36.799m in  total aggregate value in 2021 (82% increase from 2020), whereas VC reached € 8.916m (7%  increase from 2020)

Spain has experienced a strong increase in the total aggregate value and number of transactions in PE and VC

• In 2021, the Technology subsector ranked second and experienced an 83% YoY percentage increase reaching 33 deals (18 deals in 2020).

• Main active PE actors were KKR, Magnum Capital, Providence Equity partners, ProA Capital, GED Capital and Cinven.

• In 2021, the Technology subsector ranked first and experienced a 23% YoY growth reaching 324 deals (264 deals in 2020).

• Most active VC actors were Inveready Capital, Wayra, Sabadell Venture Capital,  InnvierteEconomía Sostenible and JME Venture Capital.

M&A activity in Spain also evolved positively in 2021, breaking news records, particularly in the tech segment

Why Spain?

Spain is a competitive economy that provides access to the global market

Spain is attractive to other countries for numerous reasons:

4th economy of the EU and 14th globally, with a GDP of $1.2 billion. More than 14.600 foreign  firms have set up their business in Spain. It is the 13th country that receives the most foreign  investments in the world. Further, 70 out of 100 top companies in Forbes Global 2000 operate in Spain.

Over 750 million customers –world’s most significant purchasing power.
Spain enjoys unlimited access to the European market.

Offers direct access to the LATAM region and its 660 million consumers.
High attractiveness for European companies looking to expand their business into the Southern and Northern American continent.

€ 8,9bn was invested in Spanish start-ups in the 2021 (6,7% increase compare to 2020)*. From 2019 to 2020, there was a 274% increase in the total aggregated value of venture capital transactions.

DESI index

Spain ranked 9th on the Digital Economy and Society Index (DESI) in 2021

In 2021, Spain ranked 9th (among 27 participants) on the DESI index below Luxembourg and above Austria. Over the years, the country has seen strong development regarding the four pillars evaluated by the European Commission: Human Capital, Connectivity, Integration of Digital Technology and Digital public services.

• In 2021, a National Plan for Digital Skills was initiated and provides an exhaustive set of measures to strengthen digital skills among the workforce and citizens in general . As for themoment, Spain is a medium performer on the human capital dimensionand this strategy will help the population.

• Spain launched in 2020 the Strategy for the promotion of 5G. This strategy aimed at improving spectrum assignment and management across pioneer rands and incentivize5G deployment and use.

• Spain also launched the SME Digitalization Plan 2021-2025. The plan aims to boost disruptive innovation and entrepreneurship in Spain through the enhancement of digital skills, and has usefully prioritized the country´s recovery and resilience plan (RRP) funding for that purpose with a strong set of coherent support actions.

• RRP, with a total budget of € 69,5 billions, devotes 28,2% of the total investment to digital (exceeding the 20,0% target) with a total amount of € 19,6 bn. The plan has a particular focus in promoting digitalization of businesses, particularly SMEs (25,0% of the total budget).

• The remaining plan´s investment will be focused on strengthening the digital skills of the Spanish Population (22,0%), Improving digital connectivity (15,0%), continuing the digitalization of the public administration (28,0%), and finally supporting digitalrelated R&D and the deployment of digital technologies (10,0%).

DESI index and investment opportunities

Although it is natural to see an upward trend in the adoption of digitalization, Spain is making faster progress than its European peers

Capacities that have seen the strongest improvement

• Throughout the numerous investment plans targeted at improving the digital capacities in all dimensions analyzed by the DESI index, Spain has made relatively rapid progress compared to the EU average.

• In fact from 2015 to 2021, Spain has made the four biggest increase in its DESI index (after Ireland, the Netherlands and Malta). Narrowing the gap with the leaders in digitalization in Europe, the Nordic countries.

• Spain mainly stands out in two dimensions which are the connectivity and digital public services. Regarding the former, Spain is among the countries with the largest deployment of
very high capacity networks covering 89% of the households in 2019 (whereas the average in Europe was 44%).

• In contrast, the country is lacking behind in human capital. Indeed, c.40% of the population still lacks basic digital skills and c.8% have never used internet. However, the investment plan
Digital Spain 2025 aims to tackle this issue through investments in the education system.

What are the best investment opportunities ?

Geographical focus

According to the Spanish Startup ecosystem Observatory, Madrid and Barcelona account for 93% of the total investment volume

Size of the Spanish ecosystem (nationality and per hubs) and most valuable tech Spanish Companies

The Spanish ecosystem has grown tremendously over the recent years and is now worth € 46bn as of H1 2021.

Notable Spanish companies are:

  • Flywire based in Valencia and valued at € 1,8bn
  • Glovo based in Barcelona and valued at € 0,8bn
  • Wallbox based in Barcelona and valued at € 1,5bn
  • Letgo based in Barcelona and valued at € 0,8bn
  • Cabify  based in Madrid and valued at € 2,6bn
  • Job and Talent based in Madrid and valued at € 2,0bn
spanish companies

VC investment per Spanish hubs

Naming and corporate identity by Little Buddha