Spain’s Sovereign Venture Capital Fund SETT Spotlights Audiovisual Growth and Future Strategy at San Sebastián Festival

One of the major industry narratives taking center stage at this year’s prestigious San Sebastián Festival, running from September 18 to 26, is the high-profile presentation of SETT, the venture capital fund operated by Spain’s Ministry for Digital Transformation. As the European film and television landscape undergoes rapid modernization and digital evolution, the state-backed initiative is using the Basque Country festival as a primary platform to showcase its transformative impact on the domestic creative economy.

SETT director general Javier Ponce and its audiovisual director María Coronado are leading a comprehensive, practical look at how Spain’s governmental investment drive is actively empowering local and international enterprises. Through a series of presentations, panel discussions, and targeted roundtables, the leadership team is outlining what the fund has accomplished, the strategic rationale behind its operations, and where state-supported venture capital is heading in the future. The dynamic companies currently receiving financial backing from the initiative represent some of the most innovative and forward-thinking businesses operating within the Spanish market today, with several more high-impact investments slated for revelation during the festival.

What, Explained Very Briefly, Are the Objectives of SETT’s Spain Audiovisual Hub Strategy?

To understand the broader economic scope of the initiative, it is helpful to examine its foundational framework. According to Javier Ponce, SETT operates as a public investment entity that manages capital allocations across highly strategic, transformative sectors, with the audiovisual industry serving as a cornerstone of its portfolio. The fund functions essentially as a public catalyst designed to stimulate growth, generate sustainable employment, foster continuous innovation, and nurture domestic talent—all of which are core elements required to sustain a competitive modern audiovisual sector.

SETT has been entrusted with managing the Spain Audiovisual Hub Fund, an ambitious financial instrument originally established under Spain’s broader Recovery Plan and financed substantially through the European Union’s NextGenerationEU funds. Through this mechanism, SETT provides vital financing, equity, or quasi-equity investments, channeling resources either directly to qualifying companies within the sector or indirectly through active financial intermediaries specializing in the media and entertainment industries.

The primary objective from the outset has been to aggressively attract private investment while significantly improving access to capital for projects spanning feature films, television series, animation, multimedia developments, and interactive content. In distributing these resources, priority has consistently been given to high-impact projects that focus heavily on the creation of original audiovisual content and the retention of valuable intellectual property rights firmly within the hands of domestic production companies.

And the Rationale of a Sovereign Venture Capital Fund’s Co-Investment Model?

The decision by a sovereign entity to deploy a venture capital co-investment model is rooted in the necessity of public-private collaboration. Ponce explains that this model is specifically engineered to launch transformative industrial initiatives that, due to their inherently innovative nature, carry elevated risks capable of deterring purely private funding sources. In international markets, only highly liquid, large-scale economies with mature, long-established audiovisual industries are typically able to independently mobilize the massive capital required to finance major new productions or complex industry-wide structural overhauls. By stepping in as a public co-investor, SETT helps bridge this critical funding gap.

SETT’s Spain AVS Hub fund was initially positioned to draw down up to €1.5 billion ($1.75 billion) from European Union NextGenerationEU allocations. However, recent figures provided by senior officials like María Gonzalez Veracruz indicate that the actual investments made to date stand at just under €250 million, with the shortfall largely attributed to strict operational time constraints. Addressing this reality, Ponce notes that while European funds have been fundamental in driving major structural reforms and stimulating overall economic growth in Spain, they arrived accompanied by rigid requirements and demanding implementation deadlines that complicated optimal execution.

For Spain’s audiovisual sector, the very concept of co-investing alongside a public entity represented an unprecedented systemic innovation. Consequently, time emerged as a critical limiting factor. Market participants required a vital adaptation period to fully understand the unique role and practical implications of partnering with a state-backed investor that actively shared both operational risks and financial returns. The primary challenge moving forward, Ponce emphasizes, is to ensure these initial investments continue to thrive, identify fresh opportunities, and maintain strong market confidence in the undeniable talent and ambition of Spanish audiovisual enterprises that now benefit from SETT’s institutional backing.

The Transition to New Horizons Under ‘España Crece’

Despite the operational hurdles tied to European recovery timelines, SETT’s mission is far from concluding. The entity must maintain ongoing governance over the active investment agreements it has already struck across the industry. Furthermore, strategic plans are already well underway to launch a subsequent national funding program titled “España Crece.” Backed by a substantial budget of €13.3 billion ($15.6 billion) and held primarily by the Official Credit Institute (ICO), the deployment of investments under this new framework will be handled in part by SETT, ensuring operational continuity.

Ponce confirms that the audiovisual sector will firmly remain one of SETT’s primary strategic areas of activity under the forthcoming “España Crece” umbrella. Discussions have already commenced between SETT and ICO to meticulously define the operational procedures and collaborative frameworks between the two institutions, guaranteeing the seamless continuation of co-investing in strategic technologies and future-facing sectors.

SETT has fundamentally redefined how public investment in Spain’s strategic industries is conceived. By acting as a proactive catalyst and equal partner in the economy’s most innovative domains, the State has successfully positioned Spain at the forefront of transformative industrial sectors. The ongoing support for the audiovisual ecosystem is justified not only by its capacity to generate robust industrial activity and high-quality employment, but also by its profound broader economic impact.

Illustrating the Co-Investment Model in Practice

To fully grasp how SETT’s co-investment model operates on the ground, María Coronado points to three foundational pillars that govern the fund’s architecture. First, SETT deliberately adopts an industry-wide approach rather than narrowing its focus to isolated projects, thereby addressing the health of the entire audiovisual business ecosystem. Second, its investment facilities are directed specifically toward the equity capital of operating companies or regulated investment vehicles. Third, the fund actively promotes medium-to-long-term public-private partnership instruments.

Under this disciplined model, company promoters must first successfully convince a genuine private investor that their enterprise represents a sound and worthwhile commercial opportunity. SETT then steps in to co-invest alongside that private backer on a strictly pari passu basis, ensuring that public funds are deployed under the exact same terms, conditions, and risk profiles as private capital.

This rigorous approach has significantly strengthened both domestic and international private investment in Spanish enterprises, while simultaneously serving as a powerful magnet for foreign businesses looking to establish operations within Spain. Coronado highlights clear, real-world examples of this success, including the South African transactions involving production service heavyweights The Refinery and Moonlighting, which involved a combined investment of €25 million. Domestically, leading animation companies Amuse Labs and Milo stand out as premier examples of the model’s efficacy, having successfully mobilized €13 million and €19 million respectively with the fund’s assistance.

Building Infrastructure, Scale, and a New Mindset

As SETT-backed companies look toward the future, the central challenge shifts from initial capitalization to long-term consolidation. Coronado points out that continued strengthening and diversification of support policies are essential if Spain is to permanently cement its status as a leading global hub for the audiovisual industry. This requires targeted support tailored to the specific needs of every individual segment of the production pipeline.

Achieving greater commercial scale is an undeniable part of this ongoing challenge, alongside guaranteeing the physical infrastructure necessary to accommodate medium- and large-scale productions. Furthermore, the industry must continue to reinforce technical training programs, foster creative talent, refine national tax frameworks, enhance the legal and regulatory environment, and develop more sophisticated public-private investment instruments. Addressing comprehensive cash-flow financing needs and maintaining corporate agility in the face of shifting technological, creative, and business models will remain critical for long-term survival.

Importantly, the introduction of sovereign venture capital into the traditionally volatile Spanish film and television landscape has catalyzed a profound psychological shift. Coronado observes that the initiative encourages companies to move away from myopic, project-to-project survival tactics and adopt medium- and long-term business strategies. By strengthening their foundational capital bases, local companies are becoming markedly more ambitious, better equipped to protect and monetize their intellectual property, more capable of corporate diversification, and stronger contenders on the international stage.

Lessons Learned and Festival Presence at San Sebastián

Reflecting on the lessons gleaned from two years of managing Phase II of the Spain Audiovisual Hub, Coronado notes the clear confirmation that SETT fulfills a vital, necessary function for the domestic market. It has proven exceptionally effective at drawing in private capital, attracting foreign enterprises, and creating tangible opportunities for local operators. Nevertheless, a key operational takeaway for future iterations under “España Crece” is the necessity of building in more generous time horizons to allow business plans to mature organically and enable companies to adequately secure private backing.

To communicate these developments directly to the industry, SETT has established a robust, highly visible presence at the San Sebastián Festival. On September 20, the Secretary of State for Digitalisation and Artificial Intelligence—operating under the auspices of the Ministry for Digital Transformation and the Civil Service, which leads the Government’s Spain Audiovisual Hub Plan—is hosting a major official event where SETT will present its extensive financing progress and detail upcoming projects.

Additionally, on September 22, Coronado is scheduled to participate in a high-level panel discussion organized by the Creative Artists Agency (CAA) as part of the Spanish Screenings Investment & Tech conference. That same afternoon, SETT will host an exclusive roundtable uniting specialized investment funds and commercial banks from both Spain and abroad. With a few additional announcements and surprises promised as the festival unfolds, SETT continues to position itself at the beating heart of Spain’s cinematic and digital future.