Portugal’s Startup Ecosystem is now a force to be reckoned with!

SEP releases first research into the Portuguese ICT Scaleups and Exits ecosystem, published with the support of Microsoft Portugal and Ativar Portugal Startups.

 • Despite its relatively recent history, 40 scaleups (startups with >$1M funding raised since foundation and at least one funding round in the last 5-year period) have been identified by SEP in Portugal. They have cumulatively raised over $166M from venture capital since inception, with an average of $4.2M each. 24 other companies have been able to secure funding in the range of $0.5-$1M.

• The greatest number of Portuguese scaleups (42% of the total) are located in Lisbon and account for about 60% of the total money made available to Portuguese scaleups. 28% are based in Porto. The remaining are scattered all over Portugal.

• From the “exits” side, 9 M&As have been reported in the last five years, about ten times less than the average of the other five countries previously analyzed by SEP (UK, Germany, France, Italy and Spain). They all exited internationally. In the same period, no Portuguese ICT company went public (IPO).

• The vast majority (90%) of Portuguese scaleups are small scaleups and fall into the $1M-$10M category of capital raised (they collected 44% of the total amount of capital raised). Over half of the total capital made available to Portuguese scaleups has been raised by the mid-scaleup segment ($10-$50M). 4 companies secured 56% of the overall capital raised. No scalers (i.e., scaleups able to raise over $100M raised) nor Unicorns (companies valued over $1B) have yet been spotted in Portugal. However it’s worth noting that one European unicorn has Portuguese blood in its veins: Farfetch, is a UK company founded in 2008 by the Portuguese entrepreneur Josè Neves.

• Several Dual Companies (headquartered abroad but maintaining a strong operational presence in Portugal) have been detected and continue to invest a large part of the capital raised in their home country. The most notable are Feedzai, Talkdesk, Veniam, Unbabel and Musikki.

• Rising from the late-2000s financial crisis, Portugal is rapidly emerging on the European startup map. Although it can’t yet be compared with other leading countries previously analyzed by SEP (UK, Germany, France), it does however share some of the same similarities. – download the comprehensive Report

Lisboa, November 27th 2015. — Startup Europe Partnership (SEP), in collaboration with CrESIT, today published its new Monitor focused on the Portuguese ICT scaleup ecosystem. This Monitor has been produced with the support of Microsoft Portugal and Ativar Portugal Startups and will be showcased later in the day at the UP Awards, an event that will bring together the entire entrepreneurial ecosystem in the country.

The study shows that Portugal is rising from the late-2000s financial crisis and rapidly emerging on the European startup map, with a very vibrant entrepreneurial community able to produce tangible results, despite its relatively young history. Although it can’t yet be compared with the leading countries previously analyzed by SEP (UK, Germany, France), Portugal does share many of the same similarities – and a smaller gap – with Spain and, particularly, Italy.

“We were in Lisbon in June for our SEP Matching Event and we found a very vibrant entrepreneurial community, and it’s therefore no surprise that the Web Summit will be held there from 2016 – commented Alberto Onetti, Coordinator of SEP – The good news is that this young ecosystem has already been able to produce tangible results. It’s growing fast and if the numbers are weighted to factor in GDP, the ability of Portugal to create scaleups is really quite remarkable.”

SEP identified and analyzed 40 scaleups (startups that raised over $1 million) that broke the early-stage level and cumulatively raised over $166M from Venture Capital, with an average of $4.2M each.

“Supporting today’s startups is investing in the Portugal of tomorrow – Caroline Phillips, Director of Developer Experience & Entrepreneurship at Microsoft Portugal commented – and this research confirms what we have known for some time, namely that Portuguese Scaleups are transforming into truly world class companies and stimulating new economic growth and innovation.”

To properly assess the Portuguese data, we need to factor in the relative newness of the Portuguese startup ecosystem: 65% of the Portuguese scaleups had a funding round in the last two years (the majority of which was raised this year) and 75% were founded after 2010 (and 48% after 2012). In addition, Portugal is a relatively small sized economy compared to the other countries analyzed (Portuguese GDP is $230B, 16 times lower than Germany, about 12 times lower than the UK and France, 9 times lower than Italy and 6 lower than Spain).

Other Key Findings

In addition, 24 other startups were able to secure funding in the range of $0.5-$1M and are scaleup candidates for the immediate future. A comparison with other countries shows to be appropriate at this stage:

> Raising capitals: mid-scaleups leading, 4 scaleups secured 56% of total, no Scalers
In this respect the Portuguese scaleup landscape looks very similar to that of Italy – and to a lesser extent to Spain – with a large dominance of small scaleups. The vast majority of Portuguese companies (90%) that have actively raised funds in the recent years fall into the $1M-$10M category of capital raised and account for 44% of the total amount. 8% fall into the $20-50M range and collected 48%, 2% fall into the $10-20M range and raised 8% of the total capital. As a consequence, over 50% of the total capital made available to Portuguese scaleups has been raised by the mid-scaleup segment ($10-$50M). No scalers (i.e. $100M raised) have yet been spotted in Portugal.

> Exits: 9 M&A, no IPOs
It is not unexpected that Portugal currently lags behind in terms of exits. The SEP Monitor identified 9 M&As, with an average of two transactions per year in the last four years (3, 1, 2 and 3 acquisitions respectively in 2012, 2013, 2014 and 2015). This number is about ten times smaller than the five-country EU average (75), and still far from the other two Mediterranean countries (Italy has 30 exits, while Spain recorded 39 exits). No Portuguese ICT company has gone public in the last five-year period.

> Exits: all abroad
All Portuguese scaleups exited internationally. The large majority of the deals (66%) were completed by U.S. buyers, while 22% of the acquisitions were by companies from other EU countries (Spain and UK), and none by a Portuguese company. One acquisition was from a South African company (Naspers). This data suggests that the Portuguese startup ecosystem is internationally well connected, while the domestic corporate market is not yet exploiting the opportunity of investing into startups.

> Hubs: Lisbon and Porto are leading
The greatest number of Portuguese scaleups (17, 42% of the total) are located in Lisbon. And in Lisbon it looks easier to get access to venture capital: the companies based in the capital city raised about 60% of the total money made available to Portuguese scaleups. 11 scaleups (28%) are based in Porto. This makes it the second scaleup hub in Portugal. The remaining scaleups (12) are scattered all over Portugal, with a larger concentration in the north and specifically in the area surrounding Porto and Braga.

> Areas: Software Solutions, Business Analytics and Health are leading the market
Software Solutions, Business Analytics and Health respectively account for 17% and 13% of all the scaleups mapped in Portugal. Education, Enterprise Services, Hospitality and Mobile equally attract 8% of the identified companies. Other areas such as Cleantech, Digital Media and Fashion are attracting more scaleups (5% each).

> Dual Model
As reported in other European countries such as France and Italy, the SEP Monitor detected a number of Dual Companies (domestic-born and grown-abroad), i.e. Portuguese startups that relocated their headquarters – and with that part of their value chain – abroad, while maintaining a strong operational and technological presence in the country of origin. Feedzai and Talkdesk, for instance, moved their headquarters to the US where they raised post-seed capital from US investors. Other interesting dual model examples include Veniam (initially founded in Porto in 2012, the company is now based in Mountain View with engineering labs in Portugal), Unbabel (founded in 2013 in Lisbon, Unbabel is now headquartered in San Francisco, while maintaining engineering in Portugal) and Musikki (launched in 2011, Aveiro-based, is now headquartered in London with operations in Porto).

> No Unicorns yet
No Unicorns have yet been spotted in Portugal, despite one European unicorn having Portuguese blood in its veins. Farfetch was founded in 2008 by the Portuguese entrepreneur Josè Neves. The company’s headquarters are in London, but most of its technology operations are in Porto where it has more than 1,000 employees. Farfetch raised $195M in five rounds.

 About Startup Europe Partnership

Established by the European Commission in January 2014 at the World Economic Forum in Davos, SEP is the first pan-European platform dedicated to transforming European startups into scaleups by linking them with global corporations. By participating in the SEP program, global companies can help this process via business partnerships and strategic and venture corporate investments, providing them with access to the best technologies and talents through procurement of services or products, corporate acquisition or “acquihiring”. SEP is led by Mind the Bridge Foundation, a global organization based in Europe and United States, with the support of Nesta (the UK’s innovation foundation), Factory (an acceleration program and campus for tech companies of any stage, originating from Berlin), and Bisite Accelerator (Madrid/Salamanca). SEP is a Startup Europe initiative. Partners include Telefónica, Orange, BBVA (Founding), and Telecom Italia, Unipol Group, Microsoft and Enel (SEP Corporate Member), with the institutional support of the European Investment Fund/ European Investment Bank Group, London Stock Exchange Group, Cambridge University, IE Business School and Alexander von Humboldt Institute for Internet and Society.

For more info: http://startupeuropepartnership.eu | @sep_eu

About SEP Monitor

The SEP Monitor is based on the Startup Europe Partnership (SEP) mapping & scouting database that focuses on scaleups. SEP categorizes ICT companies based on capital raised as follows:

Startup: <$1M funding raised (since foundation) and at least one funding event in the last five-year period.

Scaleup: >$1M funding raised (since foundation) and at least one funding event in the last five-year period.

Scaler: >$100M funding raised (since foundation) and at least one funding event in the last five-year period.

SEP considers Exits to be liquidity events that occurred in the last five-year period: For companies that exited via M&A, the valuation is the amount that the company got acquired for, while for companies that went public, the exit valuation is that on the day of the IPO.

SEP Sources of information include the SEP database, portfolios of VC companies, corporate venture units, business angels, accelerators and active seed and early stage funds, crowdfunding platforms, tech competitions, and other relevant channels. Research is ongoing and results reported in the SEP Monitor are preliminary and cannot be considered as final. SEP welcomes research from everyone in the European startup ecosystem by providing data and indicating cases of scaleup companies and exits to be monitored. SEP Monitor is published by SEP in collaboration with CrESIT. Other SEP Monitors are available for download at: http://startupeuropepartnership.eu/mapping

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more.

About Ativar Portugal Startups

Ativar Portugal Startups is a local initiative led by Microsoft designed to help Portuguese startups build successful, world class businesses in partnership with the best of the best from the startup ecosystem including accelerators, incubators, government agencies, venture capitalists and other national companies. For further information, visit https://startups.ativarportugal.pt/

For further information:

Startup Europe Partnership/Mind the Bridge Foundation
Serena Orizi – PR and Communications
(+39) 3204205558
sorizi@mindthebridge.org
http://startupeuropepartnership.eu

Microsoft Portugal
Margarida Henriques / Marta Pereira
v-mahenr@microsoft.com / marta.pereira@lift.com.pt or v-marp@microsoft.com
96 209 33 68 / 93 484 74 86

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