According to ASCRI, in Spain, some 3,530 companies are currently backed by Venture Capital, of which 91 % are SMEs. SMEs account for 99% of European businesses and provide 2 out of 3 jobs in the private sector.
At present, given the low growth expectations in local European markets, Spanish SMEs are orienting their growth actions towards foreign markets. Risk capital or the different non-bank financing alternatives should be an ally to facilitate this process.
Various international studies conclude and quantify the impact of Venture Capital on the internationalisation of SMEs:
- In the United Kingdom (BVCA2007), exports of the Private Equity portfolio grew by an average of around 10% per annum, compared to 4% for the economy as a whole.
- For Europe (EVCA, 2002), it was found that the internationalisation of the companies participated by Venture Capital in their early stages took place in two ways: On the one hand, the number of companies in seed and start-up phases with exports grew from 37% in the year of the entry of the Venture Capital investor to 60%, after 5 years. In the same period of study, the volume of exports also grew by 78%, from 17.2% to 30.6% of turnover. These good results also occurred in expansion companies, where 72% were exporting five years after the entry of the Venture Capital investor, compared to 55% at the time of the investor's entry, increasing the volume exported by 38%.
- In Canada (CVCAIn the Canadian economy, Venture Capital investees export 70% of their sales, 4 times more than the export ratio (17%) of the entire private sector of the Canadian economy.
Success stories: Axis supports two Spanish SMEs in their international growth: Avanza and Aterga.
AvanzaA Global BPO Company, is a Spanish multinational specialised in the outsourcing of services and processes, including the management of contact centres, administrative, logistical, data collection, auxiliary and commercial processes, always with the objective of obtaining an improvement in efficiency and costs for the client company.
Headquartered in Madrid, it has ten offices in Spain and a presence in Portugal, Argentina, Uruguay, Paraguay, Brazil, Colombia, Mexico, Peru and Miami. It is precisely in Latin America where the company's growth is focused, replicating the business model developed in Spain.
Aterga is a company whose competitive positioning is based on providing the main construction groups with highly innovative technical means that allow the construction of large concrete infrastructures applied to viaducts and tunnels with a significant reduction in time and costs. Its growth in the coming years is based on the continued implementation of these activities outside Spain, following its current customer base.
What does the SME need to do in order to partner with new sources of finance?
In conclusion, the SME must not miss the opportunity to seek alternative funding sources such as private equity.
Aside from traditional options, such as bank loans, SMEs must consider partnering with alternative sources, such as venture capital. Venture capital offers the possibility of obtaining funds in exchange for an equity stake in the company. To seize this opportunity, SMEs must prepare themselves adequately.
This involves developing a compelling international growth plan that demonstrates the company's potential. Furthermore, it is essential to have a skilled and professional team that can execute the plan effectively. By adopting these measures, SMEs can strengthen their financial position and open up new opportunities for business development.
_ Diego Gutiérrez Zarza (Linkedin)