Spanish start-ups get boost from Telefonica

Madrid: Juan Hurtado Bravo wants you to look good and he would like to show you how — before you buy your clothes online.

Inditex SA, owner of Spanish retail giant Zara, and Mango are in discussion with Hurtado to allow the 29-year-old to do just that, he says. Coquetame, the company he co-founded last year, makes a website that helps customers visually mix and match attire online. It's one of the 80 start-ups in Madrid-based operator Telefonica SA's Wayra programme, which is nurturing companies in Europe and Latin America.

Spain may sound like an unlikely place to incubate tomorrow's tech success stories. Mired in its worst economic crisis in decades and with the highest unemployment rate in the European Union, the country ranks 30th out of 71 in the Global Entrepreneurship and Development Index. The index, which measures entrepreneurial attitudes, action and aspirations, is led by Denmark, while the US was rated No 3.

Still, Spain is home to some successful standouts, including outdoor Wi-Fi services provider Grupo Gowex, founded by Jenaro Garcia, airline Volotea and social networking site Tuenti, now owned by Tele-fonica. Now Bravo hopes his Coquetame will be the next success story.

Mentoring

"I always wanted to set up my own business and have been thrilled about creating something new that adds value to what's out there," said Hurtado, an engineer who quit his job as a business consultant last year.

Under Wayra, which means "wind" in the Andean Quechua language, entrepreneurs get an average of about $50,000 (Dh183,660), space and six months of mentoring. Tele-fonica receives a ten per cent stake in each business and a preference right to buy a successful product.

Telefonica is looking for start-ups that "are developing products and services that probably we are going to sell to our clients in a couple of years," Wayra Global Director Gonzalo Martin-Villa said. "This is very important for us. It's also a matter of developing talent, which we are sure exists in Europe and in Latin America."

For the last year, Spain has developed "a more appropriate environment for entrepreneurs thanks to institutional support and accelerator programmes for start-ups," said Eduardo Berastegui, an investor and founder of Comunicare, a Madrid-based marketing consultancy firm.

"Those initiatives are very keen in funding innovative ideas in technology and with an international potential, two features that didn't very much exist in Spain before and that now, due to the crisis, have become crucial," he said.

Other European phone companies have had varying degrees of success in supporting innovation. Deutsche Telekom AG's T-Venture arm invested in Swoodoo, which became one of Germany's biggest flight and hotel search sites, and was sold in 2010.

Funding issue

Inigo Serrano, co-founder and chief executive officer of Emtrics, a mobile-phone based customer review app, says he didn't need much money in the early days. As soon as the initial idea turns into a real one, money becomes an issue, the former Telefonica manager said.

After quitting his job at Telefonica, Serrano set up his first start-up, which failed. That didn't stop him from finding a partner and getting into Wayra. Emtrics is testing the application, which lets users rate their customer experience.

Prime Minister Mariano Rajoy has pledged to pass a law for entrepreneurs and offer "red carpet" treatment for those who create jobs, while cutting levies for small companies.