Portugal's startup scene, backed by government support and an expanding tech sector, draws investment and offers promising opportunities for entrepreneurs in a growth-oriented, innovative environment.
First, you need to know that it's not that big and complex! Although we're sometimes referred to as the California of Europe, Lisbon is no Silicon Valley (yet). We'll break it down for you!
Portugal's startup ecosystem experienced significant growth and development in the last decade, making it an attractive destination for entrepreneurs and investors. With a thriving tech sector and a supportive government and business community, Portugal is well-positioned to continue fostering the growth of incoming startups. In this article, we will explore the history and current state of the startup ecosystem in Portugal, as well as the challenges and opportunities it poses.
The first wave of tech startups in Portugal began to emerge in the late 90s. However, it has undergone rapid development in the past decade, thanks in part to the government's efforts to support entrepreneurship and innovation. One key milestone was the establishment of Startup Portugal in 2016, a government initiative aimed at promoting the development of the startup ecosystem. The program has provided funding, resources, and support to entrepreneurs, helping to spur the growth of new businesses.
Lisbon is Portugal's startup cornerstone, apart from being its capital and one of EU's 10 largest metropolitan areas. Right in the middle of the European sovereign debt crisis Lisbon decided it was time to take off, founding AIEL - Lisbon Association for Innovation and Entrepreneurship in 2011. One year later the Municipality of Lisbon promoted the establishment of Startup Lisboa, a private non-profit association and business incubator. In 2022, Unicorn Factory is launched as an umbrella brand that aggregates and expands Startup Lisboa's entire value chain to have a strong economic impact, namely with a Scaling Up Program, a Soft Landing Program and through innovation-focused hubs. In 2023 Lisbon is named European Capital of Innovation by the European Commission. In 2024, Unicorn Factory partnered with Microsoft and Accenture and announced the launch of an AI Innovation Factory, which is estimated to open until the end of the same year.
Other startup hubs were established over the years and throughout the country, such as Startup Braga, Building Global Innovators, IPN - Instituto Pedro Nunes, Casa do Impacto, Beta-i or UPTEC.
Plus, don’t discard the role of universities, as Portugal is featured on Redstone University Startup Index 2024 as a top performing European country when it comes to its universities’ efficiency in startup creation.
Access to funding and investment is crucial for the growth and development of any ecosystem, and Portugal is no exception. While the country has a relatively small venture capital market compared to other European countries, there are still a number of organizations and funds that support the financing of startups. Some notable players include Indico Capital Partners, Armilar Venture Partners, Portugal Ventures, and the European Investment Fund. Moreover, there are a number of angel investors, associations and business accelerators that provide funding and support to early-stage startups. Check 351 Portuguese Startup Association, for instance. In addition to funding, there are a number of incubators, accelerators, and coworking spaces available in Portugal, providing access to workspace, mentorship, and networking opportunities. Take a look and LACS and their premium locations in Lisbon, Porto and Cascais.
Some notable Portuguese startups include SWORD Health, DefinedCrowd, Anchorage Digital and CASAFARI, and powerful scaleups include Farfetch, Outsystems, Talkdesk, Remote or Feedzai. Not all of them are based in Portugal but they all have Portuguese DNA and are a big part of the national ecosystem. And they are not alone, as a whopping number of nearly 8.000 startups are registered in the country, +1,500 are funded and around 100 reached Series A (source: Tracxn).
Despite the outstanding progress, talent recruitment can also be a challenge, as the country has a limited pool of skilled workers in certain sectors. Startups may struggle to find the specialized talent they need to build and grow their businesses.
Startups in Portugal may also face regulatory challenges and bureaucracy, as is the case in many countries. The process of starting and operating a business can be complex and time-consuming, and navigating the legal and regulatory landscape can be a significant hurdle for entrepreneurs.
Finally, while the affordability of living in the country has been a noteworthy characteristic, the influx of tourism and skilled, affluent immigrants in recent years has diminished this appeal.
Overall, and despite of the challenges facing the startup ecosystem, Portugal came a long way in a relatively short period of time and the future looks bright, with many exciting opportunities for entrepreneurs and investors to create and grow innovative businesses.
