The Rise of Lisbon's Startup Ecosystem
Everything began on a hopeful note - as all new years do. Very soon, however, it transformed into the year that introduced a "new normal" to the world and gave a whole new meaning to the phrase "unprecedented times". A lot of bizarre things have already happened in 2020:
The first prize goes to the coronavirus pandemic
Australia's devastating bushfires
Death of basketball legend Kobe Bryant in a helicopter crash
The massive explosion in Beirut
American rapper Kanye West announced his presidential bid
The shocking killing of George Floyd
Prince Harry and Meghan stepped down as senior royals and moved to North America, while Brexit is still looming
The Olympics were postponed
And, last but not least, Elon Musk named his baby boy X AE A-12.
As a silver lining, it has been an incredible year for the European startup ecosystem: despite COVID-19, European VC deal value is on pace to set a new annual record. Remarkably, in 2019-2020, 38% of all global seed-stage capital is raised by European startups.
Source: Dealroom
The European tech ecosystem is growing at a steady pace and investors are pouring in from outside Europe: Silicon Valley Google-backer Sequoia Capital recently opened an office in London, with firm leader Doug Leone saying that “The interest is to find important market leaders. And more and more, we’re starting to see them come out of Europe.” A not so surprising move considering Europe has created 205 unicorns in the last ten years.
Source: Dealroom
Startups are also becoming increasingly important for the European economy, being today the fastest and most resilient job engine.
Last week, at the virtual event we organized with Invest Lisboa and the British-Portuguese Chamber of Commerce, we went through many of these topics with John Graham-Cumming, CTO at Cloudflare, a company that is betting heavily on European talent with a specific focus on their Portuguese technical hub.
Brexit, US Election and The Rise of Lisbon’s Startup Ecosystem
Who better than a European journalist living in the US and a British tech leader that moved to Portugal to discuss these topics? Rosa Jiménez Cano, Chief Ecosystem Relations at the Venture City and Silicon Valley correspondent for El Pais, interviewed John Graham-Cumming, CTO at Cloudflare - you can watch the full interview here.
US ELECTION
It is now safe to say that Joe Biden will become the 46th president of the United States. It may be too early to know what the European tech world can expect from the changing of the guard across the Atlantic, but John and Rosa shared some very good insights on how this may affect immigration, diversity and data protection.
Rosa - “After four years of this President, the US looks pretty different from what it used to be. The situation is different for everybody: not only citizens, but also for tech executives, and anybody that has a company based in the US. So what is your take on the Election’s results? What do you expect - not from a political side, but in terms of consequences for businesses?”
John - “I think from the practical side, there's just a general acceptance around the world - apart from for a few people - that Biden has been elected and Kamala Harris is his vice president. What's happening from a business perspective, is companies are thinking about what a Biden presidency will look like, and then trying to plan from there.”
Rosa - “Kamala Harris, is definitely an interesting element of the equation: she's a very well known person in Silicon Valley as the ex-Attorney General for California, where she supported a law that is very similar to what we call GDPR in Europe. Do you think she will have an interesting role for tech?”.
John - “I think it's interesting you bring up GDPR as an important piece of legislation. In my opinion, what's going to happen in 2021, regardless of what happens in the US presidency, is that consumer and individual privacy and data sovereignty in different countries are going to really come to the fore. So if Kamala Harris becomes the Vice President, then definitely something like GDPR could be introduced across the US. GDPR is just a reality. And many firms like Cloudflare, just decided the easiest thing was to apply it globally. This really shows the power of Europe to change how people think about their rights. So regardless of what happens, I think, the story of the internet in 2021 is going to be about individual privacy, and about states and regions, making laws about where their citizens' data can be processed and where it ends up”.
BREXIT
On this side of the Atlantic, Brexit's clock is ticking and we still don't know whether an agreement will be reached with the EU. "Uncertainties create difficulties for businesses", said John during the event. That is how Brexit influenced Cloudflare's decision of opening an office in Lisbon.
Rosa - “This talk about the US takes me to something that Mr. Trump has been very close to, which is Brexit. There is definitely uncertainty around it, and some clear impacts on the import/export and finance sector. So, as a tech executive, what would you do? Would you stay in London or move to continental Europe?”
John - “The effects of Brexit have been felt for a long time. Why am I speaking to you from Lisbon and not London? I was the first employee of Cloudflare outside of the US, in London, and helped build that office up to about 300 people. And because of Brexit, and also partly because of Cloudflare’s very rapid growth, we needed to have another location in continental Europe somewhere, and we ended up being in Lisbon. Those effects have been real forever. In fact, very quickly after the referendum before any laws were changed, we saw a change in people's attitudes towards working in London, with many Europeans saying I'd love to work for Cloudflare, but not in the UK. (...) Will there be an agreement with the EU? What will it look like? And is that uncertainty again, just like in 2016, which creates difficulties for businesses. So when you think about the connection with the US election, as well, it's all just about uncertainty: businesses love certainty. They love to know the rules and where things are going.
So if you are a startup, you should build the startup where you have a team of people who are going to work on it. So I would start with knowing where your core team is. Now, the question of whether you would uproot your core team or move it to another country, it is much harder. You need to start thinking about what's the availability of talent in that location? Is the Country open from an immigration perspective? Is it easy to bring people in? And lastly, what access do you have to money? In terms of fundraising London has been a big center, as well as Berlin and Paris, and, to a certain extent, Lisbon too. But I think that the core reasoning is: where is your ideal team that is going to bootstrap this business?”.
THE RISE OF LISBON’S STARTUP ECOSYSTEM
Portugal is a case in point for the European startup ecosystem: a well-succeeded mixture of technical skills, lifestyle, political stability and culture. Lisbon, the capital, has been celebrated as a rising star in the innovation area, making it recently to the 3rd position of the most innovative cities in the world.
Rosa - “Why Lisbon”?
John - “First of all, it's actually a beautiful place to live. I came from London, where every day is pretty much grey. It seems a bit silly to say that, but I lived in Silicon Valley, and experienced a very important thing which is optimism. You get optimism in part from the weather. And so that was a little taster for me of what Lisbon would be like. There are a couple of things that made Lisbon really work for Cloudflare. We did a big search process, we looked at countries from Estonia to Iceland, looking at 45 cities where we could possibly put our engineering office - an engineering technical security operations office. We were considering many things:
Local, talented people
Good universities
An ecosystem of good companies where this talent can be trained
A place where people would be excited to move to
Low cost, but with a high standard of living
There were other characteristics that made Lisbon win from a political perspective too: the country is very welcoming to immigrants and you can see it every day on the street, you're inevitably going to end up with a mixture of people. Cloudflare has gone from 12 employees when we started it just over a year ago to 63 people as we speak, and it’s a real melting pot of locals and people brought into the country.
Another thing that may seem silly is timezone, which in Lisbon is the same as in the UK and Ireland, and eight hours from San Francisco. That's actually turned out to be a really big deal. People often say, Why didn't you go to Barcelona? Well, let's think about that. Politically, there was some instability when we were making a choice about the location. Also, a different time zone makes the difference when you're trying to overlap workdays, especially with SF. So the standard of living, policies around immigration and public feeling towards immigrants in the country, and the fact that it was in a good location at a low cost with great weather - all these things came together to say, you know, what, Lisbon is where we should have the office!”.
At BRIDGE IN, we’re on a mission to promote the local startup ecosystem, helping companies hiring and opening a company in Portugal. Contact us to know more about how you can start doing business in Europe with no risks. Contact us today to know how to build your team in Lisbon!
