Spain May Be an Emerging AI Hotspot, Leading the Way for a Spike in Cross-Border M&A

In a twist of fate, the absence of full access to prominent AI tools, such as OpenAI, has stimulated a surge of AI entrepreneurship within Spain. This has resulted in the growth of local AI startups, particularly with potential in Spanish-speaking nations. The article underscores that Spain’s nascent AI ecosystem might possess long-term potential, outshining even OpenAI in terms of longevity and influence in the European Union and Spanish-speaking regions. This potential is attributed to Spain’s alignment with the EU’s privacy regulations and a wealth of Spanish language data available for training AI models.

The allure of Spain’s burgeoning AI sector is not lost on U.S. tech companies eager to expand internationally. There is a growing interest in acquiring Spanish AI firms, fueled in part by Spain’s ability to attract top-tier AI talent. The combination of skilled Spanish engineers and competitive salaries, coupled with the trend of remote work, has made Spain’s AI sector a desirable destination.

What’s more, Spain’s AI market is not yet as saturated as many of its European compatriots, and boasts of unique benefits like Spanish-speakers which can be used to train new large language models, Handal said.

AI solutions trained in Spanish are beneficial not only to the U.S., but also for U.S.-based companies looking to expand into Latin American markets like Mexico, Peru and Argentina, he added.

However, Handal believes that Spain, like many countries in the EU, has had a cultural resistance to AI use in general, even before generative AI. A part of the reason is because legal services are more affordable in the country as opposed to the U.S., reducing the immediate need for automation.

So while the Spanish market is primed for a boom in AI startups, and while the U.S. tech sector may have good reason to be interested in it, Handal said that it is likely slower to grow because of such inertia.

Of course, how the M&A activity between the two countries will change as a result of AI, and how soon, is yet to be seen.

The article also highlights Spain’s readiness to comply with European regulations, which presents an advantage for U.S. tech companies aiming to establish a presence in Europe. Acquiring Spanish companies with established compliance solutions streamlines the process of adhering to intricate rules and regulations. Spain’s AI market, distinctively less saturated than some of its European counterparts, stands out as an attractive landscape. Furthermore, the presence of Spanish-speaking individuals provides a valuable resource for training AI models targeting Spanish and Latin American markets.

Acquiring Spanish AI companies is viewed as a strategic move, offering distinct advantages in navigating the complex regulatory landscape while tapping into Spain’s emerging AI market.