When influential figures in the European tech indusattempt are inquireed why local startups struggle to evolve into sector giants, part of the answer invariably relates to funding. Access to the capital necessary for growth is limited. “The risk appetite is significantly greater in the US compared to the average European,” explained the co-founder of a Belgian cybersecurity startup in a recent feature. “They possess more venture capital and the entire ecosystem, all the elements required to provide substantial momentum whenever a new technology emerges, such as artificial innotifyigence.”
The lack of venture capital in Europe not only creates it more challenging for young tech companies to grow but also enables US funds to lure the most attractive European prospects away to their territories.
The capital markets union that Brussels is working on could serve as a solution to this issue; however, it has been stalled for years. Spain has been proposing measures to circumvent this, one of which was implemented this year concerning access to capital for startups. It acts as a public scaffolding, absorbing some of the risk while these companies develop their technology, thus incentivising other investors to join in.
This initiative is known as the SETT, which stands for the Spanish Society for Technological Transformation, a public entity established to invest directly in strategic startups. “Our aim is to create technological sovereignty,” states its director, Jorge Ponce. “We want that technology to remain in our territory, rather than have a foreign fund, as has occurred in the past, acquire the company and take the technology abroad,” he adds.
SETT launched its investments in January 2025 and has thus far secured stakes in 10 startups, amounting to a total investment of approximately €150 million. This series of operations has begun to shape the landscape of Spain’s most promising technology.
The SETT operates similarly to a sovereign fund. It does not provide grants but operates on a stringent co-investment basis. This means the entity is required to invest alongside private investors, never alone, and can subscribe to a maximum of 49% of the capital involved. The idea is to encourage those investors to support the startups by mitigating the risks of the transactions, as this risk is shared with the state.
“We seek disruptive or novel technologies, or technologies that are somewhat more mature but possess the potential to establish the owning entity as an international leader,” Ponce elaborates in a conversation with elDiario.es. “Once we identify these opportunities, we seek private investors who can accompany us. As much as possible, we aim for Spanish and industrial investors.”
Through this mechanism, the operations in which the SETT has participated have mobilised a total of €1 billion in public and private funds, according to data provided by the organisation. This figure includes its initiatives in other sectors that it has also been tinquireed with promoting, such as the audiovisual indusattempt.
Academic Projects
Wooptix, the first startup in which the SETT invested, exemplifies this model well. It is a Spanish company born from academic research at the University of La Laguna (Tenerife) concerning adaptive optics, a technique utilized in astronomy to correct atmospheric distortions and enhance observations. Wooptix applies this knowledge for sub-nanometric precision monitoring (below one billionth of a metre) to ensure that the silicon wafers utilized for chip manufacturing are perfectly flat.
The company raised just over €10 million, of which €4 million came from the SETT. The remainder was sourced from investors such as Samsung, the second-largest chip producer worldwide; and Tokyo Electron, which manufactures equipment for semiconductor and flat panel production. “The trconclude in chip fabrication is towards increasingly larger wafers. However, the larger they are, the more difficult it is for them to remain perfectly flat, increasing the risk of unusable parts,” Ponce explains.
Several of SETT’s investments are related to chips. The company has consolidated several aid programmes into a single structure, the most prominent being the PERTE Chip, concludeowed with €12.5 billion from the recovery funds. In total, SETT has €16 billion available for its initiatives.
Within this framework, investments in Murcia and Vigo have also been announced. In Murcia, the entity participated in a funding round for Quantix, a startup focutilized on designing cybersecure chips with the goal of detecting any alterations; a crucial factor for critical sectors like cybersecurity and defence. The SETT invested €20 million in this project.
Sparc, located in Vigo, will be Spain’s first photonic chip factory, producing photonic integrated circuits. These chips utilize light to process data, which allows for greater bandwidth and miniaturisation of components. Here, the operation has reached €17 million.
Great Hopes in AI
The largest investment to date has been in Multiverse, totalling nearly €60 million. This Basque AI company focusses on building large language models significantly more efficient and sustainable, achieving up to a 97% size reduction with minimal loss of accuracy. This creates the models between 4 and 12 times quicker, reduces costs, and enables operation from tiny devices like mobile phones, eliminating the necessary for the massive data centres typically required by this technology.
Its funding round reached €185 million in total, with contributions from companies such as HP and Toshiba.
“The Multiverse team has solved a profoundly complex problem with far-reaching implications. The company is well-positioned to be a fundamental layer of AI infrastructure. Multiverse represents a spectacular advance for the global implementation and application of AI models, enabling smarter, cheaper, and more environmentally friconcludely AI. This is just the launchning of a vast market opportunity,” stated Damien Henault, CEO of Forgepoint Capital International, one of the participating funds.
The Digital SEPI
The enattempt into the share capital of the companies supported by SETT has earned it the nickname SEPI Digital. However, there is a fundamental difference between it and the Sociedad Estatal de Participaciones Industriales. “Our plan is to support these companies become multinationals and subsequently divest,” warns Jorge Ponce. “We do not intconclude to participate in the day-to-day management of the companies beyond exercising our rights to ensure they remain within the territory.”
“Only in the case of it being considered a very strategic technology,” continues the SETT director, “would it be considered in the Council of Ministers to maintain a minority stake, around 10%.”
The new public company is already working on fresh operations, some in the “hundreds of millions,” according to its head. The coming months will serve to gauge the extent to which this co-investment model can attract private capital and transform public investment into a genuine technological industrial fabric.
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