It is no secret that for many years Portugal has been at the top of the rankings of countries with the most developed business ecosystem in the world. And this can be seen not only on paper: every year the country hosts a powerful aggregation of young startups WebSummit, the government promotes the development of small and medium-sized businesses, and modern technology reaches the most remote corners of Portugal. Naturally, this level of development has not passed by foreign investors, making Portugal’s Golden Visa one of the most successful immigration programs in Europe.
But how did we get here? Which led to the birth of three Portuguese giants in 2018: Farfetch, OutSystems and Talkdesk? What causes hundreds of startups created by Portuguese entrepreneurs to be born every year and become international icons like Seedrs, Unbabel, Uniplaces, Aptoide, Feedzai? What is the secret? Let’s try to figure it out.
Those who changed Portugal
In the late ’90s and early 2000s in Portugal, a younger generation began a cultural change. The spirit of change was born in the Aveiro-Porto region under the influence of the young guys who created the National Association of Young Entrepreneurs (ANJE). They left the old approach of looking for a job in the public sector or large corporations for a much more attractive proposition: to become an entrepreneur and change the world.
It is worth noting the role of ANJE leaders and, in particular, Diogo Vasconcelos, for his courage and activism in proposing a cultural paradigm shift in Portuguese society. The entrepreneurship magazine “Despeça-se Já” (“Throw Work Now”) by Grupo Forum, proposed by Diogo and led by Daniel Diosdado, had a huge impact in high schools and universities across the country for almost a decade.
Another reformer of entrepreneurial culture in Portugal was Antonio Camara. Thanks to him, the Portuguese finally learned that they could change the world around them. In 2000 Antonio was a professor at Lisbon’s FCT-Universidade Nova, transferring from MIT. He created Ydreams, inspired by ideas from the MIT-Media Lab and made everyone believe in the power of technology to create a better world, spreading new ideas about creativity, science and new ways to interact with computers across the country. Some of the projects, unfortunately, were too advanced for the time, but his impact on Portuguese culture is undeniable.
In June 2010, Beta-i, a non-profit association for the promotion and support of entrepreneurship in Portugal, was born, led by Pedro Rocha Vieira and Ricardo Marvao. Like most startups, they started in bootstrapping mode, in old industrial premises leased to a socially responsible corporation. There was virtually no money – but enough energy and desire to change the world! After ten years, the Lisbon Challenge, organized by Beta-i, has become considered one of the best acceleration programs in Europe, attracting startups and entrepreneurs from all over the world to Portugal. In 2010, Gonçalo Amorim led the ISCTE initiative in partnership with FCT and MIT, resulting in the BGI (Building Global Innovators) acceleration program.
First Portuguese Startups
As in other countries, in Portugal in the early 2000s, everyone was talking about the business opportunities that the Internet offered. At the same time, the struggle for media leadership opened up opportunities for new startups. But the real proof of the potential of Portuguese technology came from outside. In August 2007 comes the exit of Chipidip, founded by Professor Epifanio da Franca, acquired by the U.S. company MIPS for 147 million euros. This episode, considered EXIT’s first significant startup, was an incredible boost to the entrepreneurial mindset of the Portuguese.
The second significant example occurred in 2008. It was Microsoft’s acquisition of Mobicomp, founded by Carlos Oliveira. The purchase was talked about by everyone from local newspapers to the international press. Thanks to such examples, Portuguese entrepreneurs have understood that they can create successful startups.
What did it lead to? Examples abound. Veniam Networks, founded in 2012 by João Barros and Susana, raised $26.9 million from leading international venture capital funds such as Cisco, Libert Global, Yamaha Motors and Orange. Not to mention Caixa Magica, founded by Paulo Trezentos, and its Aptoide (an alternative to Google Play) with more than 200 million users worldwide, which in December 2017 became known as the first Portuguese successful ICO for $18 million.
The role of the Portuguese government
All along the way, the Portuguese government has not stood by either. In 1998, the Digital Cities project was initiated by the Minister of Science and Technology, Mariano Gago. It created twenty-eight digital cities across the country, including less developed peripheries and rural areas. Portugal invested a total of 877 million euros.
In 2005, technology and business development became the top priority of the Portuguese government. In October 2006, the MIT-Portugal project was launched, aimed at cooperation between the Massachusetts Institute of Technology, Portuguese universities, the Portuguese state and national industry. The program was renewed in 2013, continues to this day, and has produced invaluable results.
In 2007, the agency for administrative modernization began to shape the vision that the state itself should lead and set an example of modernization and debureaucratization. Several popular initiatives were created, including bills to simplify the interaction between the state and citizens – a program called SIMPLEX.
In 2007, the agency began to create a vision of the state itself as a model of modernization and debureaucratization.
Business Angel Awakening in Portugal
Parallel to the supply of young entrepreneurs in the early 2000s, the business angel movement began to take its first steps thanks to Francisco Bahia, who created the first club associated with EBAN in 1999. For several years, Francisco and his team single-handedly tried to attract traditional Portuguese financial players to invest in startups. In 2006, FNABA, the Portuguese Federation of Business Angels, which inspired associations and clubs around the country, and APBA, the Portuguese Business Angels Association, promoted by João Trigo da Rosa, emerged.
The 2009-2010 period could be called a period of “awakening.” Groups of investors were popping up all over the country, not least because of the co-investment program. The first results of this initiative were amazing: hundreds of new investors entered the market, creating a dynamic of investment in startups like never seen in Portugal.
Unfortunately, Portugal experienced a financial crisis between 2010 and 2016. The opportunistic investor’s perspective – easy money and a quick exit – lost its appeal. It became clear that supporting government co-financing initiatives was important, but not enough to succeed.
In October 2014, Pedro Bandeira and Rui Falcao created REDangels as a company with a new type of investment model that combines group solutions and portfolio investments. And the new approach has paid off! In addition, thanks to the new government push, dozens of new players entered the market in 2016. All learned from past experiences and created new, robust structures.
Why is Portugal popular today?Today there is a perception that Portugal is a great place to live for a number of reasons: security, hospitality, climate, gastronomy, reasonable real estate and labor costs-it could go on and on. Add to that a great business environment with support from the government and it’s clear why Portugal is now one of the best places in the world to develop a startup.
But the most striking thing about the Portuguese is their ability to integrate people and cultural diversity. After living in this country for just six months you will feel at home. Need proof? Listen to the story of Alexei, a young entrepreneur who was kind enough to give us a short interview for this story.
How to move to another country in a year, start a successful business and find a new home in Portugal– M: Hello Alexei, tell us about yourself. Why did you decide to move?
– A: Actually the idea was quite spontaneous. I had been stuck in one place for several years, my business was dying out, and I had no idea what to do with it. In the end, the decision to move came by itself; I knew that there was no future for me in Russia. Of course, at first I only thought about opening a branch in Europe, but I quickly realized that I was tired of Moscow myself.
– M: Did you know right away that it would be Portugal or did you have doubts?
– A: I was lucky enough to be at WebSummit in 2017, so Portugal was the first option that came to mind. By the way, if your goal is to start your own startup or business, you won’t find better conditions in Europe.
— M: How was the move? How long did it take you to get settled in?
— A: The move went pretty smoothly. The first step was, of course, the business visa. The list of requirements was standard: make sure you have an NIF, rent a place to live, prepare a detailed business plan, and do a short interview. Then was the application for a residence permit – the list of documents was the same. The main thing is not to lose time and to apply for a 4-month visa.
There were also no problems with adaptation. People here are open, the rhythm of life is measured, and average English is enough to communicate comfortably. Of course the first month needed some getting used to, especially after Moscow, but now I feel at home.
— M: That’s great! We are glad it worked out for you. There’s still one important question that our clients are asking: How are things in Portugal in 2021? Does it make sense to try to move now?
— A: Absolutely. I’ll say more, it’s the perfect time to realize yourself here. In ’20, for reasons everyone knows, the world economy took a turn for the worse, and today everyone is trying to get out of it. There are a lot of investors looking for interesting projects all over the country, and the government is even more active than before in supporting small and medium-sized businesses. In addition, if you fly with a business visa, you certainly have no problems entering the country.
— M: Thank you for sharing this invaluable experience!
How to relocate and start a business in Portugal in 2021?There is one last, most important question left. How can you move to Portugal in 2021 and open a business here? Is it really that easy? You’d be surprised, but it is! In addition, there is a way to make the whole process easier and simpler, with our special Turnkey Resident Program. Click on the link below to learn more.
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That brings today’s material to an end. The conclusion that we can draw is quite transparent: if the state, together with representatives of the market, works together, the result will be one – development. This is what Portugal has shown us for the last 20 years with its confident growth and incredible popularity among foreign investors and businessmen. We hope this material has been useful to you. See you next week!