The Valencian Community is the only region in Spain where companies invest more in innovation than in research and development. That is the headline finding of the third Observatorio LAB on R&D, technology and entrepreneurship, presented in Valencia on 15 September by Fundación LAB Mediterráneo and the Valencian Institute of Economic Research (Ivie), according to the foundation's release. The report tracks 50 indicators across four pillars: R&D, intangibles and business innovation, technology and digitalisation, and entrepreneurship and human capital.
Strong on innovation, short on research
In 2024, Valencian businesses invested 1,858 million euros in R&D and innovation, equal to 1.25% of regional GDP, compared with a Spanish average of 1.38% and 2.54% across the European Union. The region accounts for 8.4% of all business R&D and innovation spending in Spain.
The split is what sets it apart: 981 million euros went to innovation in products and processes, against 877 million to R&D. "The Valencian business fabric is at the head of Spain in innovative activity in products and processes, but it has a deficit in investment effort in R&D activities," say the report's authors, Javier Quesada and Juan Pérez (translated from Spanish). To match Spain's level of R&D effort, Valencian companies would need to invest an additional 370 million euros in R&D over one year.
The trend is moving in the right direction. Business R&D effort has doubled in 20 years, from 0.3% of GDP in 2004 to 0.59% in 2024. The report explains the preference for innovation by its faster economic return, but recommends raising R&D budgets too, because that is where knowledge and the most durable competitive advantages come from.
AI adoption lags, and the reason is skills
This year's edition puts the spotlight on artificial intelligence. Only 16.1% of Valencian industrial companies use AI, against 17.5% in Spain, and more than half of those that do rely on off-the-shelf commercial tools. Among industrial firms that do not use it, 94% point to a lack of technical knowledge.
Digitalisation shows the same gap. Valencian industry scores 5.32 out of 10 on digital intensity, below the national average of 5.59, and 30.3% of industrial companies still fall short of basic digitalisation, rising to 34.7% in traditional manufacturing. Services are the exception: Valencian service companies score 6.64, above the Spanish average of 6.49.
The talent numbers explain much of it. ICT specialists make up only 2.4% of people employed by Valencian companies, compared with 7.5% in Madrid and 4.5% in Catalonia, and women are 18.6% of those specialists, against 24% nationally. Technology-intensive sectors account for just 5.8% of regional employment, compared with more than 9% in Madrid, Catalonia and the Basque and Navarrese territories. The report recommends that companies grow in size to attract and keep technical talent, and that smaller firms outsource ICT services or lean on technology institutes and business associations.
Deep tech on stage
The presentation also looked at how to turn science into companies. Almudena Trigo, a doctor in molecular biology and founder and president of BeAble Capital, spoke about Science Equity, an investment model designed to fund technologies born from research from their earliest stages.
A round table on deep tech brought together three Valencian founders, Ángel Alberich-Bayarri of Quibim, Sergio Soler of Arkadia Space and Fran Villalba of Internxt, with Itziar Blasco, director of BCN Deep Tech Summit and executive director of Business and Entrepreneurship at Barcelona Activa, moderated by journalist Eugenio Mallol. The discussion focused on deep tech as a driver of competitiveness and on the need to invest in early-stage R&D.
"The data show that companies in the Valencian Community know how to turn innovation into new products and processes, but we need to strengthen investment in R&D to generate our own knowledge and lasting competitive advantages," said Héctor Dominguis, president of Fundación LAB Mediterráneo (translated from Spanish).
