25 Oct Portugal: Startup and Tech Hub of Europe?
“Lisbon remains the spiritual capital of the tech scene.” European Commission Press
Portugal has been consistently ranked as a top tourist destination for many years, and it’s very clear why this would be so! The country’s vibrant culture, beautiful beaches, ideal climate, simple and traditional food, and excellent quality of life (at a reasonable cost) make it not just a tourist destination, but also a desirable permanent residence.
Besides all these compelling reasons, the Portuguese government deserves credit for promoting foreign investment via the implementation of measures such as internship and graduate employment incentives.
Further, the Portuguese government provides significant assistance and incentives for startups and entrepreneurs to grow their operations, which in turn helps spur economic growth.
These incentives enable startups and entrepreneurs to flourish, which is why we will see many large firms established in Portugal in the years to come. To this aim, more business tycoons and entrepreneurs are increasingly spending more time in Portugal’s ecosystem in order to interact.
In towns and cities like Porto, Braga, and Lisbon, shared workplaces are home to both startups and major corporations such as Ericsson, Nokia, and Bosch. But several other factors have also played their part in Portugal’s tech-based rebirth – this article will discuss these factors and explore why the country is quickly emerging as a hotbed of innovation.
Quality of life
Portugal’s two biggest cities both offer a great quality of life. Porto and Lisbon are secure, clean, and aesthetically striking cities with a thriving and vibrant cultural scene.
New pubs, cafés, hotels, and restaurants open on a regular basis in both cities, indicating that the hospitality sector is flourishing in both areas. Lisbon, in particular, is unquestionably a ‘cool’ city.
Working in such an exciting and vibrant environment naturally attracts people from all walks of life. Most significantly, it helps to keep the talent that is coming from Portuguese tertiary institutions; just a few years ago, this same cohort would have looked at moving overseas to meet both their financial and lifestyle needs.
Compared to the rest of Europe, the cost of living in Portugal’s major cities continues to be quite reasonable, especially for young professionals just starting out. Despite the apparent increase in demand for both commercial and residential real estate, rents on both have failed to rise to a significant degree.
This creates a win-win situation in which businesses are attracted to the city because of its cheap rentals and workers are delighted to fill the skills gap created by the city’s attractions and affordability.
Highly skilled workforce
About 90,000 graduates from the country’s top ten universities graduate each year. While not all these students will be studying technology, there are more than forty courses at these top ten institutions that would be useful to a career in software development or technology in general, regardless of their field of study.
Técnico Lisboa and the Nova School of Science and Technology churn out hundreds of excellent developers every year. Almost 53% of individuals in Lisbon between the ages of 20 and 30 have a STEM degree.
This contributes significantly to meeting the enormous demand for developers among Lisbon’s startups and technology companies. Partnerships between universities and other institutions of higher learning are also becoming more common among forward-thinking companies and organizations.
Another factor to consider is the influx of skilled workers entering the country, which has occurred due to the type of lifestyle mentioned above.
While it is true that the workforce is reportedly somewhat stagnant, with tech professionals requiring much convincing before changing jobs; this, however, only serves to highlight the high levels of job satisfaction and provides new employers with a reliable template for creating the ideal employee proposition.
Also at play is a positive feedback loop: new businesses relocate to Portugal because of the abundant supply of technical talent; this, in turn, helps to increase the workforce’s diversity and populace, resulting in a more appealing pool of candidates for the next company to recruit from.
Developing in Lisbon is much less expensive than in London, Paris, Berlin, or Zurich. Portuguese developers are among the best, but their services often cost less than a third of what they would in major US cities and about half what they would in most European countries.
The Portuguese government learned to open to the world during and after the economic crisis of 2007, generating new possibilities and embracing entrepreneurship to rehabilitate the capital and the nation.
Although the startup ecosystem is still in its infancy, it is thriving and is driven by enthusiasm, ambition, and commitment. While still a long way from being a European heavyweight like London, Paris, or Berlin, everything is in place for it to become Southern Europe’s startup and tech powerhouse.
Some of the most well-known Lisbon-born and based startups are Talkdesk, Landing. jobs, and Unbabel, to name a few.
The Iberian nation is on the radar of many large companies seeking to establish offices overseas and entrepreneurs looking to launch various projects. The Portuguese government provides a helping hand to settle, start, or maintain a project or company in the country.
Moreover, the Government established a €200 million venture capital fund in 2018 to encourage international investment in companies. By offering tax incentives and financial support, the Portuguese government also encourages foreign entrepreneurs to establish themselves in the country.
The tax advantages include the Non-Habitual Resident regime (NHR), which allows the applicant to pay a 20% flat rate on taxes for the first ten years. Another advantage of the NHR is that applicants are not required to pay taxes on any income generated outside of Portugal. For non-EU citizens, starting a company in Lisbon and Portugal provides several advantages, including the possibility of receiving a Golden, D2 or Startup visa for entrepreneurs.
The startup environment and entrepreneur community in Lisbon are expanding daily. Since 2014, more than €200 million has been raised by startups headquartered in Lisbon. As of 2018, 7264 firms have been established in Lisbon, with 743 of them being in the high-tech sector.
Like its neighbouring country, Spain, the COVID-19 pandemic has wreaked havoc in Portugal, although not to the same degree as in that country. The government reacted swiftly and declared a state of emergency in the middle of March, closing its borders and placing its people under lockdown across the country, especially in the northern region.
Remote work and working from home are not new concepts in most Portuguese businesses, which has made it easier for workers to maintain the same level of performance as if they were in the office. Furthermore, during Phase 1 of COVID-19, the Portuguese government announced a 25 million Euro package to guarantee that the startup environment survived the pandemic.
Evident throughout the country, the Portuguese tech and startup industry is characterized by a strong culture of networking and cooperation. Obviously, companies compete with one another, but the most successful firms understand the importance and value of sharing knowledge.
There are frequent tech conferences and networking events held in Portugal, where the same tight-knit group of professionals gathers to discuss common challenges and opportunities.
One of these events is the Web Summit (the biggest tech event in the world) which recently announced that it will remain in Lisbon for the next decade as part of an arrangement in which the Portuguese government agreed to contribute €11 million toward the construction of an expanded venue that will be able to accommodate up to 100,000 people. In order to build their networks and ultimately gain access to the best available talent, forward-thinking companies will take advantage of Portugal’s cooperative working culture.
Portugal continues to draw investment and innovation, owing to the city’s international outlook and propensity to attract talent. The country is rich in diversity and public investments made in education, infrastructure, and technology over the last decade have paved the way for individuals looking to establish or invest in a new business. Web Summit will remain in Lisbon until 2028, bringing together some of the world’s most successful entrepreneurs, experts, and investors.
The construction of the Hub Criativo do Beato on the site of the Manutenço Military factory in Lisbon’s Beato neighbourhood is particularly significant. Once completed, the collaboration between Lisbon City Hall and Startups Lisboa will be one of Europe’s biggest creative and entrepreneurial hotspots.
Not only does Lisbon have a vibrant startup environment, but it is also a lovely location to live. It offers opportunities both within and outside the workplace, wonderful nightlife, great vacation locations, fantastic food and amazing people.
On the whole, Portugal is one of Europe’s most dynamic entrepreneurial ecosystems and a great place for startup founders, entrepreneurs, investors, and employees to establish their roots and thrive.