On a balmy summer evening in Lisbon, Liberty this week hosted the first of a series of events we have called “Liberty Connected.” Designed to unite technology innovators in key geographies we took to a beautiful roof top bar in Lisbon to chat, network and learn more about the many tech success stories the country has to offer. We left PPT presentations and company pitches at the door. This was an event to make friends and build relationships.
What we knew and what the event confirmed is that Portugal’s start-up scene is dynamic and growing, with a supportive ecosystem allowing for a diverse range of start-ups and investors. The country’s strategic location and strong ties to Europe, Africa, and South America make it an attractive destination for global entrepreneurs and investors and what our discussions found was a passion for a country which is both proud of his heritage and also its potential for the future.
To take a closer look we analysed the Portuguese Start-up Scene Report 2022, created by Armilar Venture Partners, to give you an overview of the thriving and fascinating Portuguese venture investment ecosystem.
But first, let’s take a small step back. The tech industry has encountered significant challenges over the past year due to a high inflation environment and rapidly rising interest rates. This notably impacted the valuation of publicly-listed high-growth tech companies, which have been sensitive to these challenges. As a result, in the US, tech stocks fell by over 30% – ten percentage points worse than the overall market. Consequently, late-stage rounds in private markets were also affected, given their proximity to the IPO window. This, in turn, created a cooling effect on early-stage VC activity.
The effects of this trend were also observed in Portugal, where there was a decrease in overall investment activity, resulting in a 26% drop in the number of announced deals and a 41% decrease in invested amounts. However, despite this market contraction, there was a rise in both the number and investment amount of Seed and Series A rounds. This was driven by a diverse ecosystem of local and international investors who extended their support to early-stage start-ups.
Compared to other European ecosystems, it is no surprise that Portugal is punching above its weight in nurturing high-potential start-ups, with 7.2 unicorns per $1 billion invested in the last three years. For any start-up looking to start and grow in Portugal, the thriving ecosystem and supportive environment offer several advantages and opportunities:
- Government support: Public entities such as Start Up Portugal works with the Portuguese Government to support and promote entrepreneurship within Portugal. It is funded by private and public funds and does a huge amount to fuel innovation within the country.
- Access to funding: The record-breaking investment figures for 2021 indicate significant capital available for Portuguese start-ups, which means founders can tap into a growing pool of local and international investors.
- Strong investor network: Portuguese investors such as Portugal Ventures along with international investors such as Demium have proved to be valuable resources for start-ups looking for funding and mentorship.
- Access to talent: Portugal’s highly-educated and multilingual workforce, as well as its STEM graduates, can provide start-ups with access to top talent. Additionally, Portugal’s Start-up Visa and Non-Habitual Resident tax regime provide incentives for foreign entrepreneurs and investors, which can help attract talent from around the world.
- Emerging hubs outside of Lisbon and Porto: While Lisbon and Porto remain the main hubs of the Portuguese start-up scene, other cities such as Coimbra, Braga, and Faro are also emerging as important centres with fantastic quality of life.
Interestingly, despite 2022 featuring twice more B2C series A+ rounds versus 2021, the Portuguese start-up scene continues to be a B2B market, with over 80% of investment accounting for the market in 2022. Despite the market contraction last year, the Portuguese start-up scene continues offering start-ups a supportive ecosystem, access to funding and talent, and connections to diverse markets. This can be a significant advantage for founders looking to start and grow their companies in Portugal.
If you are interested in learning more about our work with Portuguese innovators and / or our Liberty Connected series please do drop us a line – we’d love to share our thoughts: info@libertycomms.com
