Investing

Investing in startups in Spain: rounds, business angels, crowdfunding and the income tax deduction

By Martín Díaz Cuadrado · 11 September 2026 · 9 min read

Investing in a company that is just starting out can be a way to back projects you believe in and, in some cases, to earn a high return. It is also one of the riskiest investments there is: many young companies never return the money invested in them. This guide explains how it works in Spain, what protection regulation offers and what tax advantage exists, so that you can decide with proper information.

What you buy when you invest in a startup

You normally subscribe for newly issued shares in a limited company (participaciones) or a public limited company (acciones) as part of a capital increase: the money goes into the company, not to the existing partners. That has several consequences worth understanding before you sign:

• Illiquidity. There is no market where you can sell tomorrow. As a rule, you only get your money back if the company is sold, goes public, buys back shares or you find a private buyer, and that can take many years or never happen.
• Dilution. Each new round issues new shares and your percentage falls. That is not bad if the company is worth more, but you need to factor it in.
• Risk of total loss. If the company closes, shareholders are paid after all creditors, and usually nothing is left to share out.
• Information asymmetry. The founders know far more than you about how the business is really doing, and your information rights depend on what you sign.

Funding rounds: the basic vocabulary

Round names are not regulated and each ecosystem uses them somewhat loosely, but they indicate the stage the company is at:

• Pre-seed. Team and idea, sometimes a prototype. Usually funded by the founders, their close circle and some business angels.
• Seed. Product on the market and first signs of traction. Business angels, investor networks, crowdfunding platforms and early-stage funds come in.
• Series A and beyond. A validated model that needs capital to grow. Mainly venture capital funds take part, with larger amounts and higher demands.

Besides a direct capital increase, a convertible loan is common at early stages: the investor lends money that will convert into shares in the next round, usually with an agreed discount or valuation cap. It postpones the discussion about what the company is worth, but you need to understand exactly how the conversion is calculated and what happens if the round never comes.

Shareholders' agreement clauses you should understand

• Liquidation preference: in a sale or liquidation, certain investors get their investment (or a multiple of it) back first before the rest is shared out.
• Anti-dilution: protects certain investors if a later round is priced lower per share.
• Drag along and tag along: require you to sell alongside a majority, or allow you to join a sale on the same terms.
• Founder vesting and lock-in: founders earn their shares over time, which protects everyone if someone leaves early.
• Information rights: which reports you will receive and how often.

If you invest small amounts, you often will not be able to negotiate these clauses, but you should read them: they determine how much you would receive in each scenario.

Ways to invest

Directly, as a business angel

A business angel is a person who invests their own money in early-stage companies and often contributes experience or contacts as well. Investing directly lets you get to know the team and negotiate terms, but it takes time to analyse deals, minimum amounts are usually higher and you handle all the paperwork yourself. Many people start in business angel networks or clubs, which screen projects, organise pitches and sometimes allow co-investment through a shared vehicle. Always ask how the network is paid (fees, success fees) and what conflicts of interest it may have.

Through regulated crowdfunding platforms

Since Regulation (EU) 2020/1503 began to apply, platforms offering company shares or loans to the public must be authorised as crowdfunding service providers. In Spain the competent authority is the CNMV (the securities regulator), which publishes the list of authorised providers and the list of providers from other EU countries operating in Spain. Check that the platform appears on that register before sending a single euro.

The Regulation sets out specific protections for non-sophisticated investors:

• the platform must assess your knowledge with an entry test and ask you to simulate your ability to bear losses;
• if you want to invest more than 1,000 euros or more than 5% of your net worth in a project (whichever is higher), the platform must warn you of the risk and you must give your explicit consent;
• you have a four-calendar-day pre-contractual reflection period to revoke your investment offer without penalty and without giving reasons;
• each project must provide a key investment information sheet.

Two important caveats. First, no authority approves that sheet, and the Regulation itself requires a warning that these investments are covered neither by deposit guarantee schemes nor by investor compensation schemes. A platform being authorised does not mean the CNMV has reviewed or endorsed each project. Second, the Regulation applies to offers of up to 5 million euros per project owner over a 12-month period.

Through funds or investment vehicles

Venture capital funds spread money across many companies and are run by professionals, but they usually have high minimum amounts, management and performance fees and long lock-up periods. If you are offered a stake in a fund or in a vehicle set up for a particular deal, check on the CNMV website whether the entity is registered and whether it appears in its warnings about unauthorised entities.

The income tax deduction for investing in new or recently created companies

For Spanish tax residents, the Personal Income Tax Act (article 68.1) allows part of the amount invested in young companies to be deducted from the state portion of the tax liability. According to the Tax Agency's practical manual, since 1 January 2023:

• you can deduct 50% of the amounts paid to subscribe for shares;
• the maximum base is 100,000 euros a year, and it includes both the capital and the share premium;
• if you apply a regional deduction for the same investment, those amounts do not form part of the base for the state deduction.

The main requirements are:

For the company

• being a public limited company, limited company, or employee-owned version of either (SA, SL, SAL or SLL), and not being admitted to trading on any organised market;
• carrying on a business activity with its own staff and resources, and not managing movable or real estate assets;
• having equity of no more than 400,000 euros at the start of the tax period in which you invest;
• the shares being acquired on incorporation or in a capital increase within five years of incorporation, or seven in the case of certain certified startups.

For you and your investment

• holding the shares for more than three years and less than twelve;
• your stake, together with that of your spouse and relatives up to the second degree, not exceeding 40% of the capital or voting rights on any day; this limit does not apply to founding partners of a certified startup;
• the company not being one through which you were already carrying on the same activity under a different ownership;
• obtaining the relevant certificate from the company; the company also reports to the Tax Agency on form 165.

Several autonomous communities have their own deductions for investing in new companies, with different requirements and amounts; check your region's rules and how they combine with the state deduction.

A practical warning: a 50% deduction does not turn a bad investment into a good one. If the company fails, the other half is lost anyway, and if you sell too early or the requirements stop being met, you may have to pay back the deduction you applied.

Risks that rarely appear in the pitch

• Total loss of capital, which is a frequent outcome at early stages.
• Prolonged illiquidity: your money can be tied up for many years with no way to sell.
• Dilution and preferences from later rounds that reduce what you would receive in a sale.
• Scarce or late information once you have invested.
• Concentration: putting too much into a single company or sector.
• Fraud: offers from unauthorised entities, promises of guaranteed returns or pressure to decide quickly. No startup investment can guarantee a return.

Diversification: the rule that matters most

In early-stage investing it is common for a few companies to account for most of a portfolio's result and for many not to return their capital. As nobody knows in advance which will do well, concentrating everything in a single bet means risking losing everything. Some prudent principles:

• only put money into this asset class if losing it would not affect your life or your goals, and decide beforehand what share of your wealth you will allocate to it;
• spread it across several companies, sectors and entry dates, rather than investing everything at once;
• keep part of the capital in reserve to follow on in later rounds of the companies that do well;
• do not confuse diversification with investing in many companies you do not understand;
• treat startups as a complement within a broader portfolio, not its foundation.

Checklist before investing

1. Is the platform or entity authorised by or registered with the CNMV?
2. Do you understand the problem, the customer and the business model? This guide to validation covers the signals worth looking for.
3. What verifiable traction is there: revenue, paying customers, retention?
4. Who is on the team, how much time do they commit and how much do they have at stake?
5. How much is being raised, at what valuation, what will the money be used for and how many months does it cover?
6. What does the cap table look like and which clauses does the shareholders' agreement include?
7. What information will you receive and how often?
8. Does the company meet the deduction requirements and will it issue the certificate?
9. Can you afford to lose everything you are going to invest?

Where to start

Before investing, spend some time learning: follow several rounds without taking part, read key information sheets and shareholders' agreements, and compare how different projects present themselves. If you decide to go ahead, start with small amounts spread over time, keep all the paperwork for your tax return and regularly review the information you receive. If you are on the other side and looking for investment, the guide to starting a business in Spain explains startup certification, which makes your round more attractive from a tax point of view.

Official sources

• Regulation (EU) 2020/1503 on European crowdfunding service providers for business (EUR-Lex)
• List of crowdfunding service providers (CNMV)
• European providers operating in Spain (CNMV)
• Law 35/2006 on Personal Income Tax, article 68 (BOE, in Spanish)
• Deduction for investing in new or recently created companies: scope, base and rate (Tax Agency, in Spanish)
• Deduction for investing in new or recently created companies: requirements (Tax Agency, in Spanish)
• Law 28/2022 on promoting the startup ecosystem (BOE, in Spanish)

Figures reviewed in September 2026.