Why does Spain innovate so little?

Spain's innovation ecosystem does not fail for lack of talent or public money, but because it is built to protect the usual suspects: relational networks, large companies that neutralise anyone who outshines them, and entrepreneurs who recycle subsidised capital without taking on any real risk.

The question of why so little innovation happens in Spain has an uncomfortable answer: the system is not broken, it is working exactly as designed. And what it produces is not startups that scale, but structures that perpetuate entrenched positions.

## The criterion is: does this benefit me or my circle?

In many Spanish business environments, the question that decides whether a project gets support is not whether it works, but who is behind it. If the promoter does not belong to the circle —a relative, a colleague, a friend, a crony network or the party in power— the project is not backed, not bought, not invested in, or simply obstructed. The practical result is a market fragmented into fiefdoms where relational loyalty replaces competition. This is not a sarracena anomaly: it is a measurable economic cost in projects that die not from lack of market, but from lack of a patron.

## The IBEX protects its market share rather than competing

Established companies —and practically the entire **IBEX 35** operates on this logic— respond to outside innovation by protecting the existing business model. We are not just talking about legitimate competition: there is regulatory pressure, exclusion from suppliers, blocking of distribution channels or a simple refusal to buy from anyone who might question the status quo. Innovation is tolerated as long as it does not alter the established balance of power. When it does, it gets neutralised. That explains why many technological solutions born here end up being sold abroad or dying in the attempt.

## ENISA loans and the risk paid by the taxpayer

There is a recurring pattern: serial entrepreneurs who recycle the same capital through successive projects financed with participatory loans from **ENISA** (a Spanish public company offering subsidised loans to startups), often at **50 %**. When the project fails, they have already recovered their investment and more through salaries, fees and the very structure of the unsecured loan. The next project is ready before the previous one has even closed. The real risk is borne by the taxpayer and suppliers; the entrepreneur operates with limited risk and guaranteed profit. It is not a system failure: it is the incentive the system creates.

## Nice coworking spaces, projects that never scale

Public administrations have replicated the aesthetics of innovation —industrial spaces, designer furniture, specialty coffee shops, English names— assuming that the outward signs alone generate successful startups. The same logic applies to technology parks, research centres and institutes "of excellence". The container is copied and the content ignored: dense talent, real venture capital, tolerance for failure and open markets. The usual result is subsidised spaces empty of projects that scale. The talent and the public money exist; what is missing is an institutional design that does not reward belonging to the circle.