Spain's SMEs at a Glance: Small, Scrappy and Growing (Albeit Slowly) The country's startup ecosystem should take note: the foundation is there, but the growth levers still need pulling.
By Siobhan Parnell Edited by Jason Fell
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Spanish small- and medium-size enterprises (SMEs) are small and scrappy — and they're making an economic recovery (at least on paper).
According to CESGAR's 14th annual SME Financing in Spain report, the country is now home to 3.5 million SMEs, which make up over 99% of the total number of businesses. However, 95.4% of these firms employ 10 or fewer people, and over half are freelancers or one-person companies.
Most are service-based businesses (76% of that total). The Business Services sector alone added over 20,000 new companies in 2024, while traditional areas like trade and manufacturing saw a decline.
Spain's SME economy is also largely local. Only 9.1% of SMEs are exporting — down from 9.7% in 2023. Of these, most ship just 1% to 20% of their total output abroad, and even fewer are consistent players in foreign markets.
Furthermore, the innovation scene is on the decline. The number of companies reporting R&D activity has been steadily dropping over the past decade (20.1% in 2016, to 11.3% in 2024), despite a brief surge in 2023.
On the bright side, financial stability does seem to be improving. Debt levels are down, and financial expenses rose only slightly in 2024 after a sharp spike the year before. Nearly 21% of SMEs reported growth and improved balance sheets — an increase compared to the previous year. Meanwhile, the proportion of vulnerable businesses — those with declining revenue — has dropped to just 2.2%.
Investment into startups, too, is looking to be turning a corner. Spanish startups raked in €3.1 billion in 2024, up 36% from the previous year, according to Bankinter's Investment Trends in Startups survey. Much of the funding, however, was funneled into more "mature companies, with larger rounds." The average fund raise approached €10 million with companies like SeQura (€410 million), Zunder (€225 million) and Boopos (€162 million) topping the list.
The trend seems to be continuing into this year as well. Spanish business newspaper Cinco Días reported in March that Madrid's Fracttal plans to raise a new round of up to €25 million. The AI maintenance management platform had earlier received investment from Seaya Ventures, BBVA, and Telefónica.
Despite an uptick in funding, for some SMEs, profitability remains a sore spot, according to the CESGAR report. While revenues rose for many, costs (labor, energy, supplies) outpaced gains, squeezing margins across multiple sectors.
Despite all this, the future is looking surprisingly optimistic. More than 43% of SMEs expect revenue growth in 2025, up from 37.7% last year. The number of SMEs predicting significant growth has nearly doubled. And only 12.4% expect a drop in sales this year, compared to 19.2% in 2024.
The Spanish government, too, has been actively encouraging the SME innovation ecosystem. Whether through the 2022 Startup Law; the three-year Spain Startup Entrepreneurial Nation plan; or the most recent Acelera Startups program from the country's EOI Business School, a public educational institution operated by the Spanish Ministry of Industry, Energy and Tourism.
Acelera Startups, through partnerships with leading accelerator programs in the country including ISDI's IMPACT Accelerator, NTT Data Spain, and Wayra (from Telefónica), from 2023 until recently, offered a completely subsidized acceleration program for startups.
Speaking about the process of educating entrepreneurship, last year, IMPACT Accelerator's director, Jesús Tapia, told El Español that he firmly believes "that innovation and entrepreneurship imply the use of frameworks, methods, and tools. The famous aha moment doesn't just happen, and entrepreneurship isn't just about genes. We believe more in execution than in the idea itself."
With global capital continuing to search for scalable opportunities, Spain's startup ecosystem should take note: the foundation is there, but the growth levers still need pulling.
