The Government launches the Next Tech Fund, which will mobilize up to 4,000 million euros of public-private investment to boost the growth of digital companies and investment in high-impact innovative technology

The Government launches, through the Ministry of Economic Affairs and Digital Transformation, the Next Tech Fund aimed at boosting the growth of digital companies and investment in high-impact technology projects.

Next Tech’s objective is to mobilize joint public-private partnership resources of €4 billion (half of public funds and the other half of private investment) in an initial period of four years, with reference contributions in that period of approximately €2 billion of joint resources between ICO-AXIS and SEDIA depending on the capacity for absorption and annual materialization of investments by the private sector.

The launch of the fund will boost digital entrepreneurship and enabling digital technologies, as well as consolidate the growth of highly innovative technology-based companies. This will promote competitiveness, innovation, the investment of international funds and the attraction and retention of talent.

Next Tech is constituted as a venture capital fund, for the financing of growing companies of high technological value, either directly or through venture capital funds, corporate funds or other investment vehicles.

This new mechanism will promote public-private partnership and the development of venture capital, with a division of the State into funds and companies of up to 49%, which will increase investment capacity in companies and technological projects.

With this objective Next Tech will participate in funds and companies that develop their activity in the digital field, in the promotion of projects related to artificial intelligence, internet of things, technologies of mass data processing, cloud computing, blockchain, natural language processing, cybersecurity, biometrics and digital identity and green algorithms, among others.

The objective of the investments will be mainly to position the entities in the scale-up stage (growth), located between the sizes of the target companies of the expansion funds and the target companies of the venture capital funds, incubation and technology transfer.

The minimum investment ticket will be three million euros, although the Fund will also be able to invest in start-ups with investment tickets of around one million euros, only through funds and vehicles, as long as these entities develop technological development projects in Deep Tech technologies (high-impact innovative technology) such as artificial intelligence, cybersecurity, big data, machine learning or computing, among others.

The promotion of entrepreneurship and the scalability of projects in new digitization technologies is essential to promote the recovery and transformation of the Spanish production model, providing it with higher levels of competitiveness and capacity to generate employment.

In this sense, the Government of Spain aims to promote entrepreneurship and situate us as an entrepreneurial nation. And digital entrepreneurship is one of the axes of action included in the Spain Digital 2025 strategy and in the Recovery, Transformation and Resilience Plan, one of the great objectives being the modernization of the public financial architecture to support entrepreneurship.

The implementation of this fund will make it possible to respond to financing needs that are not currently covered by the existing mechanisms, both in relation to the different phases of business growth and by technological area. In fact, according to data from the Entrepreneurship Map 2020, Spain is more prone than the rest of Europe to financing through the resources of family and friends and, in fact, financing with its own funds remains the main tool (46%) and only 5% use public resources to finance themselves. In addition, there is an unequal distribution of risk capital between companies in the different phases: in Spain the majority of risk capital (60%) serves to support companies in the “seed” phase. It is followed by “intermediate” companies (32%) and finally “scaling” companies (8%).

Some financing difficulties that, on the other hand, is accompanied by a maturity of the entrepreneurial ecosystem in Spain with startups that already add up to 2.5 years of life and where scaleups (startups in the most developed phase) already represent 15% in Spain.

Therefore, it is important to implement measures that complement the current public financing mechanisms for startups, favoring the development in Spain of private equity funds with capacity to finance large-scale operations, boosting business growth, competitiveness and innovation of the Spanish economy, as well as attracting and retaining talent.