Portugal's Startup Ecosystem: Top 5 Reasons Why Portugal is the Next Destination for your Business
Trust the numbers: Portugal has the perfect environment for your next business move. Whether you want to hire a team, or open your subsidiary or branch, BRIDGE IN can assist you with its Employer of Record and Company Registration services in Portugal.
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Expanding globally has become imperative for startups and established companies willing to tap into new, key markets such as the EU.
2022 was undoubtedly an exciting year across Europe, and Portugal was no exception – reaching the milestone of having 7 unicorns and becoming a worldwide famous hub of tech. In fact, in the past years, Portugal has turned into one of the top destinations for both businesses and individuals, due to its quality of life, safety, climate, culture, talent and business-friendly environment.
The national innovation agenda for 2030 is focused on creating a more favourable business environment, fostering foreign investments and new business ventures and - in line with the EU Listing Act - generating a high-potential tech-based startup ecosystem.
The innovation and tech community continues to thrive, attracting and retaining both local and international talent while forging partnerships with big corporations, making it easier than ever for startups to access markets throughout Europe and beyond. In fact, attracting highly skilled global talent and raising professional venture capital investments from the world's most experienced investors is allowing the country to create impressive amounts of value, despite the fact that the Portuguese market is young but growing well and quickly, given the nation's modest GDP.
Trust the numbers: hiring talent and setting up a subsidiary or branch in Portugal is a good idea
The local ecosystem dates back to the early 2000s. Since then, the availability of top-quality talent backed by highly ranked universities, a dynamic ecosystem of early-stage companies that think internationally from day 1, and a world-class digital infrastructure are only a few of the reasons why Portugal is now a destination for startups from around the world. Startup Portugal, an organisation born in 2016 by a government initiative, plays a fundamental role in the national strategy to foster entrepreneurship through increased structural support, funding, and internationalisation efforts. In addition to government initiatives, the country is also home to grass-root entrepreneurial organisations such as 351, currently the largest, informal community of startup founders in Portugal.
According to official data released by Startup Portugal earlier this year, Portugal is home to 2,159 young companies that have already raised 434.5 million in investment, venture capital and other sources of financing.
Overall, Portugal ranks 12th among EU member states and 39th globally for ease of doing business, according to World Bank data. For its strategic position, high English proficiency and skilled workforce, Portugal is the natural gateway for any company that wants to do business in Europe.
Portugal is also definitely a startup nation: the country ranks among the top 20+ countries in Europe for the number of startups per capita, significantly higher than other southern and eastern European countries.
Still not convinced? Then check out these 5 key facts about Portugal’s Startup Ecosystem every VC, entrepreneur and CEO should know about.
AI, IOT, ENERGY & ENVIRONMENT AND FOODTECH START-UPS: PORTUGAL IS THE PLACE TO BE
The latest StartupBlink report places Portugal as the top spot to locate for Hardware & IoT, Energy & Environment and Foodtech start-ups. The Global Startup Ecosystem map is a crowdsourced community resource with tens of thousands of registered startups, coworking spaces, and accelerators.
By browsing through Dealroom’s list of startups in this field based in Portugal, it is easy to see why. Veniam, for example, is already a world-class protagonist in the IoT scene– the tech startup has been accelerating the Internet of Moving Things for years now.
Sensefinity, on the other hand, is reducing food waste by implementing sensors in shipping containers to maximize the preservation of transported food. Ever heard of Annea? It is a 3-year-old company providing the next generation of condition-based predictive maintenance and underperformance detection for renewable energy assets.
These are just a few examples of the 200-plus startups in this space. So, if you run, own or are contemplating building a company in the sector, Portugal might just be the right place for you.
2. LISBON HAS ONE OF THE MOST UNICORN-DENSE EUROPEAN CITIES
Among cities with a population greater than 1 million inhabitants, Lisbon stands out as having one of the highest densities of unicorns. The Portuguese capital raked 1.1 unicorns per million inhabitants–striking, for a relatively young startup ecosystem with a lot of room to grow. And that leaves out one of just six European decacorns ($B 10+ valuation), Talkdesk.
Source: dealroom
3. PORTUGAL IS A TOP TAX CHOICE
There is another reason developers and entrepreneurs are coming from all over the world to nurture their careers in Portugal: the Portuguese government’s tax breaks. For the first 10 years, foreigners working in strategic industries (such as tech) are eligible to benefit from the Non-Habitual Resident (NHR) Status. With the NHR status, income is taxed at a 20% flat rate – including earnings outside of Portugal.
Additionally, there is still 0% on wealth and 0% capital gains on Crypto (although this may change in the near future), making the country a haven for crypto companies. As a result, large companies such as Binance are setting up in Portugal and hiring.
The low effective tax burden, further enhanced by the regime for non-habitual residents and the free remittance of funds, make Portugal a very attractive location. No wonder PWC dubbed Portugal “Europe’s best-kept tax secret”.
4. VISA SCHEMES GALORE
Tax breaks are not the only incentives. Active since 2019, Tech Visa is a fast-track program that allows companies based in Portugal to access a highly qualified pool of workers from outside the European Union. Any tech company can partake, as long as they are inserted into the global market, with headquarters or permanent establishment in Portugal.
Alternatively, the Start-up Visa, offers a residence permit to foreign entrepreneurs who set up a technology-based company in Portugal, with new ideas and business models. Another Visa Scheme, the D7 Visa, allows foreign nationals to secure a Portuguese bank account and rent a home provided that they can prove to have sufficient income.
Visa incentives make moving to Portugal a lot easier. But moving about is also pretty simple: Portugal is part of the European Union, the Euro Zone and the Schengen area. Also, Portugal maintains very close links with the rest of the world, including Africa, Asia and South America.
5. PORTUGAL IS A LEADER IN THE “STARTUPS PER CAPITA” ARENA
Portugal has over two thousand verified startups which comprise over 27 thousand employees - that's 13% above the average number per capita in Europe. The startup ecosystem is essentially made up of 33% technology-based startups and 17% B2B, while FinTech represents 10% of the ecosystem and health-based startups represent 8%.
There are a few good reasons for such a stellar performance. According to Ernest Young’s Attractiveness Survey for 2021, Portugal has entered the top 10 Foreign Direct Investment destinations in Europe.
Portuguese startups raised more than €311 million between 2015 and 2020, and domestic VCs and accelerators play an important role as early investors. Overall, Portugal ranks 12th among EU member states and 39th globally for ease of doing business, according to World Bank data.
With a stable political and social environment, a secure society, a highly skilled and English-fluent labour force and an excellent quality of life, Portugal offers a favourable investment climate.
BRIDGE IN can help your business get started in Portugal in several ways:
Our Employer of Record services allow you to have a team in Portugal without the need to establish a local legal entity. You can hire your employees while we employ them compliantly in Portugal
Company Formation in Portugal has never been easier. Thanks to our local experts, you can now land your business hassle-free: whether you are setting up a subsidiary or opening a branch in Portugal, we will take care of company registration on your behalf, including tax and legal. We will also help you ramp up HR operations, run payroll, and manage benefits and expenses reimbursements so that you can employ your team compliantly
Our team has extensive knowledge of Portuguese regulations and will help you navigate the complexity of local bureaucracy so you can get started in Portugal in no time, with no risks and no hassle.
Schedule your free consultation here.
