Catalonia’s Entrepreneurial Surge: The Hub for Young Entrepreneurs in Spain

Catalonia is experiencing an entrepreneurial surge as nearly 50% of its young population embarks on the journey of starting their own businesses. Recognized as a thriving entrepreneurial hub in Spain, Catalonia’s vibrant start-up scene reflects a rising global trend of entrepreneurship.

The Leading Role in Spain’s Entrepreneurial Activity

According to the Global Entrepreneurship Monitor (GEM) 2021-2022 report, Catalonia leads entrepreneurial activity in Spain, with a striking 7.2% of its population involved in early-stage businesses. This means 7 in every 100 people aged between 18 and 64 in Catalonia are pursuing entrepreneurship. The IV Young Business Talents Report reveals that young Catalans lead in entrepreneurial spirit (46.16%) in Spain, followed by the Canaries (44.02%) and Aragon (43.48%).
The GEM report indicates that over 70% of professionals consider unemployment as a primary reason for turning to entrepreneurship. On the other hand, fear of failure prevents 42% from venturing into the entrepreneurial realm. For those willing to brave the risks, Liberal shares three essential tips: thorough knowledge in their chosen area, robust planning, and building a strong network.

The Growth of Entrepreneurial Centres in Catalonia

One of the key factors contributing to Catalonia’s entrepreneurial surge is the significant growth in centres dedicated to nurturing startups. These hubs provide entrepreneurs with access to networks, investors, mentors, and suppliers. The Mobile World Capital Foundation study highlights that there are a total of 96 such hubs in Catalonia, nearly double the number from five years ago.

Navigating the Competitive Job Market through Entrepreneurship

Flavio Liberal, CEO of WorldEd School, suggests that entrepreneurship might be the solution for many navigating the highly competitive job market in Spain. Successful entrepreneurship, according to Liberal, requires discipline, concentration, and resilience. The educational system can play a significant role in instilling these traits.

Catalonia’s Entrepreneurship Compared with Europe and Spain

Catalonia has a higher entrepreneurial rate than Spain’s average, with 10% of Catalans aged 18-34 venturing into businesses. The average age of these entrepreneurs is 39, and there’s a rising trend in female entrepreneurship. However, Catalonia faces challenges in starting businesses, with a confidence score of just 3 out of 10, mirroring the sentiment in Europe. The GEM report indicates that Catalonia, and Spain in general, lag behind Europe in entrepreneurial conditions such as business environment and funding accessibility. Despite available funds, there’s a scarcity of quality projects to attract investors. The GEM study in 2021 showed that 31% of Catalans saw business opportunities, a rise from 2020 but less than 2019. This perception is lower than that in high-income European countries. Moreover, 51% of Catalans feel they have the skills for entrepreneurship, and 35% know other entrepreneurs. The data for this report was sourced from the International GEM Consortium and analysed by a team including Carlos Guallarte.

Entrepreneurial Activity and Dynamics

The GEM project examines entrepreneurship in stages, from intending to start a business to ending one. The project emphasises early business stages when assessing entrepreneurial initiatives, since policies typically focus on these phases. The GEM approach uses several indicators:

1. Potential entrepreneurs: adults (18-64) intending to start a business in the next three years.
2. Nascent entrepreneurs: adults who’ve started a business in the past year, operational for up to three months.
3. New entrepreneurs: adults owning a business paying salaries for 3–42 months.
4. TEA (total entrepreneurial activity rate): the combined percentage of nascent and new entrepreneurs.
5. Established business owners: adults owning a business paying salaries for over 42 months.
6. Business activity abandonment: percentage of adults who’ve closed or transferred a business in the past year.

In 2021, Catalonia led Spain in entrepreneurial activity with a TEA of 7.2%, meaning 7 in 100 adults aged 18-64 were involved in early-stage businesses. By region, Barcelona had a TEA of 7.2%, Girona 5.9%, Lleida 11.2%, and Tarragona 6.4%.

Dynamics of Entrepreneurial Activity

This analysis examines entrepreneurial dynamics from 2004-2021 across Barcelona, Catalonia, Spain, high-income European countries, and other affluent nations.

In 2021, Catalonia led Spain’s entrepreneurial activity with a TEA of 7.2%. After a drop in 2020, it rebounded by 0.6 points in 2021, a recovery rate double that of Spain. Historically, Catalonia and Barcelona consistently exceeded Spain in TEA, averaging 7.1% from 2004-2021, matching Europe’s average but trailing other high-income countries’ 8.0% and surpassing Spain’s 5.8%.

Although Catalonia’s average was close to Europe’s, the difference has grown in Europe’s favour recently, and it’s even more significant when compared to other high-income countries. Catalonia’s recent TEA growth stems from an increase in emerging entrepreneurs, offset by a decline in new entrepreneurs. Notably, since 2015, new entrepreneurs have outnumbered emerging ones in Catalonia, a trend opposite to Europe. Over the past three years, Europe has seen a significant lead in emerging entrepreneurs compared to Catalonia. However, Catalonia has consistently had higher rates of both emerging and new entrepreneurs than Spain since 2005.

Intrapreneurial Activity

For the past decade, the GEM has studied not only independent entrepreneurial activities, but also intrapreneurial actions performed innovatively within existing organisations by employees.

Intrapreneurship or Entrepreneurial Employee Activity (EEA) involves employees leading the creation of new products/services or launching new businesses (like spin-offs) within their current employer.

Recently, there’s been growth in both TEA (Total Entrepreneurial Activity) and EEA globally and nationally. In the past three years, Catalonia has seen growth in its intrapreneurial activity. While 2.2% of Catalans were intrapreneurs (up by 1.0 point from 2020), this number still lags behind the European rate of 4.2%.

The increase in EEA (+80% from 2020) was substantially higher than the growth in TEA (+9%). Previous GEM reports suggest that Catalonia’s EEA should ideally be between 3.5% and 4% based on its GDP per capita, implying the need for more intrapreneurial efforts for future organic growth.

Motivation for entrepreneurship

In the 2021 GEM survey, Respondents were given four reasons for starting a business:

1. Make a difference in the world.
2. Generate high income or wealth.
3. Uphold a family tradition.
4. Start a business due to the scarcity of jobs.

Main Insights:

• Reactive/“push” motivations, like starting a business due to job scarcity, are more common than proactive/“pull” ones, such as wanting to make a difference.
• The surge in reactive motivations in 2020 and 2021 for new entrepreneurs is likely due to the impact of the coronavirus pandemic.
• Established businesses, older than 3.5 years, have more stable motivations, but there’s a noted increase in “push” motivation in 2021.
• Comparatively, the desire “to continue a family tradition” is stronger in European and high-income countries than in Catalonia.
• Catalonia has a higher rate of reactive motivations than high-income countries, and has 11% fewer people starting businesses for proactive reasons.
• Established businesses in Catalonia have a reactive motivation rate that’s 2% higher than Spain and 16% higher than in high-income countries.
• The Covid-19 pandemic had a more pronounced effect on changing the motivations of new startups in Catalonia and Spain compared to high-income countries.

Implications: 

These variations in motivations will likely influence the quality, growth potential, and longevity of newly-formed businesses, which will be explored in subsequent chapters.

Gender Distribution in Entrepreneurship in Catalonia:

• Historically, men have been more active in starting businesses than women, but the gap is closing.
• In 2021, male entrepreneurs dominate established businesses at 62% compared to women at 38%. Yet, in the early entrepreneurship stage, men account for 54% and women 46%.
• Barcelona shows promise for women: potential female entrepreneurs make up 52% and new ones 51%. However, more women (55%) than men (45%) abandon entrepreneurship, hinting at potential challenges for women.
• Catalonia’s 2021 early-stage entrepreneurship (TEA) index reveals a closing gender gap: 7.6% for men and 6.7% for women. Interestingly, Spain as a whole had female TEA surpass male TEA.
• Age matters: In 2021, the TEA for young women (18–34 years) in Catalonia jumped from 4.7% to 6.4%, while that for young men remained at 4.7%.
• Initial and established entrepreneurship stages show minor gender differences in 2021. However, potential male entrepreneurs feel it’s easier to start a business, while females express slightly more fear of failure.
• As involvement in entrepreneurship deepens, both genders in Catalonia perceive higher capability and know other entrepreneurs. Interestingly, potential female entrepreneurs see more opportunities than those more established but also express more fear.

Conclusion: Catalonia as a Promising Hub for Entrepreneurs

Catalonia’s rise as a beacon of entrepreneurial spirit in Spain is undeniable, with nearly half of its young population drawn to the allure of starting their own ventures. This surge, fuelled by both external pressures like unemployment and an intrinsic desire to make an impact, positions Catalonia as a formidable hub for young entrepreneurs in Spain. The ever-expanding ecosystem of entrepreneurial centres in Catalonia stands testament to the region’s commitment to fostering and nurturing innovation. Yet, as the numbers suggest, challenges remain, from fears of failure to addressing the gaps in gender representation.

However, what shines through is Catalonia’s resilience and adaptability. Its ability to bounce back post-2020 and the notable growth in female entrepreneurship signal a positive trajectory for the region’s entrepreneurial landscape. But with the evident reactive motivations for entrepreneurship, especially due to the pandemic, there’s a call for a structured and informed approach to entrepreneurship. Here, organisations like ours play a pivotal role. As a leading HR firm, we recognize the importance of harnessing this entrepreneurial spirit. We remain committed to guiding budding entrepreneurs through their journeys, offering support in talent acquisition, management, and mentorship, ensuring that Catalonia not only remains a hub for startups but thrives as a global entrepreneurial powerhouse.