Language Startup Busuu Is Exploding & Why Spain Missed Out

Busuu, the London-based startup, is making a run to become the largest online language learning software in the world.  With the community approaching 30 million users in over 200 countries and adding nearly 45.000 new members per day, Busuu is reaching dizzying heights.Busuu the language learning social network

But from where I stand, I can’t help thinking that this is a missed opportunity for a much-needed Spanish startup success story.  You see, Busuu began its journey in Madrid in 2008 when founders Bernhard Niesner and Adrian Hilti decided that a collaborative, online community with a touch of gamification is a great motivator to build your language learning skills.  In fact, they only moved to London last year when it became increasingly difficult to find the right capital partners and build the team necessary to take their product to the next level.  And therein, lies the problem.

Spain is increasingly being labeled as a great place to create new projects but not grow companies.  Sometimes it’s weary entrepreneurs that have relocated to Spain in need of rest and relaxation that are inspired to create something new. Other times recent graduates, fresh from the study hall and full of passion find a co-founder and turn their ideas into reality.  What’s not to love?  A perfect Mediterranean climate with a reasonable cost of living, access to great (yet transient) talent at low costs, and a plethora of seed stage financing vehicles ready and willing to make a bet on an early venture.  But more than a few barriers creep up, just as the startup is gaining traction.

First, the transition from a project to company creation is needlessly long and filled with red tape.  On average, it takes more than two months and €3.300 to fulfill the requirements necessary to open a business.  On top of that, social security taxes begin on day one, with a €250 monthly withdrawal by the Spanish government. Without a proper tax holiday, bootstrappers are lacing up elsewhere.  

Second, strict visa requirements are forcing the great minds that come here to learn out of the country the day after their graduation.  Look at this way, Spain is home to four of the top MBA programs in the world, top-flight engineering and science universities, and an environment of extra-curricular activities the rest of the world can only dream of putting on their brochures.  But what’s the point of training the world’s best minds only to ship them off at the exact moment they are ready to return the favor.

Third, there is a significant funding gap for early and expansion stage startups. Of course, where there’s a will there’s a way and great ideas with highly proficient teams can get funded even if they’re coding from an igloo in Siberia. However, the fact remains, Spain is horribly deficient in this crucial phase of startup growth.  The few VCs that operate in this space may tell you otherwise, but it’s against their best interest to bring in competition to poach their exclusive deal flow of investment opportunities.

Oftentimes, despite their willingness to stay, great startups like Busuu are forced to follow the trend of relocating to London, New York, or Silicon Valley at the exact moment the revenue starts pouring in and they can actually contribute to Spain’s GDP.  It’s not as if these obstacles are overwhelming or even out of reach to improve in the not so distant future.  In fact, poco a poco, Spain is starting to get the picture and implementing measures to make it slightly less difficult to start a company, build a team, and get funded.  But there’s still a long way to go before Spain can boast a success story on the level of Skype, Spotify, or even Busuu – the one that got away.

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