When it comes to Portugal’s tech scene, growing companies across borders to Portugal and investing in established or growing Portuguese tech innovators is becoming more commonplace.
IPBN member Göran Engberg of Growise Lda. reminds us that, “Business is much more than just a tech solution.” He goes on to say that that the landscape is truly different since COVID rules threw everything into a new reality and we should be ready for what lies ahead. “Before the pandemic, there was a digital storm, and now, I believe we will see that there’s no turning back. Globalization is here to stay. Now you have to go in 100% but you must be careful not to change the company DNA…Innovation and creativity are key.”
Nalin Patel, Analyst with EMEA Private Capital said in PitchBook’s recent Annual European VC Valuations Report that, “despite business disruption stemming from COVID-19…Startups linked to technological disruption have been able to build valuations and maintain growth. New angel & seed startups tackling rapidly evolving challenges have secured capital from investors seeking the next big opportunity. Early-stage startup valuations came in strongly as confidence stayed high regarding the long-term growth prospects of young businesses. COVID-19 showed few signs of decreasing upward pressure on soaring late-stage valuations in Europe.”
MadeIn Portugal’s February/March report via FDI intelligence supports the idea of future investment growth in tech, but goes on to include more traditional industries, such as textiles and machinery as they are reportedly “reinventing themselves — blending old knowhow with the latest techniques.” The magazine cites two tech success stories of note: The Portuguese tech firm Readiness IT, which helps businesses digitally transform their operations and improve customer experience, and the Seattle-based DefinedCrowd, a one-stop-shop for training data for AI systems led by Portuguese-born Daniela Braga.
The majority employee-owned company Global Shares, an equity compensation management company and winner of the IPBN's Business Success Award in 2020, has branched out its IT operations to Portugal and has been thrilled with the results, so much so that they are heavily recruiting in Portugal again to expand IT operations here. Aisling Riordan of Global Shares said, “For us, it isn’t just about expansion, it’s about growing a team. Retaining employees is important, it’s the core value of what we do and why we do it.” So it’s no wonder that other future unicorns are following suit.
According to TechCrunch, successful endeavors like Global Shares, DefinedCrowd, Farfetch, Talkdesk, Outsystems, and others are bringing in substantial interest from international investors. The website writes that, “According to investor Pedro Almeida in 2020, less than 40% of overall venture rounds had the participation of an international investor…accounting for over 30% of seed and pre-seed rounds. This indicates that international investors will increasingly participate higher up the funding stack as the startups grow. Corporate VC has also become more active and professional during the period.”
The previously mentioned PitchBook Report noted, “In 2020, software pre-money valuations across all stages reached new peaks. Software-based sectors such as financial technology (fintech) and cybersecurity have thrived in Europe, and we anticipate valuations will continue to mature because software-based startups have shown astonishing growth. Opportunities in the work-from-home economy such as collaborative tools, network infrastructure, productivity, and well-being present new areas for substantial investment and ensuing valuation development.”
The case for a single European startup ecosystem, by BridgeIn’s own Elisa Tarzia reported that the Mayor of Porto, Mr. Araújo, is taking Portugal’s tech landscape and attempting to combine it with tech hubs within the rest of Europe in what he calls the Startup City Alliance Europe (SCALE network). The article states, “Combined, EU tech hubs would make up an ecosystem with over 130 unicorns, 30 thousand startups, and 2.7 million jobs.” In Portugal’s case, the report mentions that it is positioned to be a key player as it is “a logical choice to establish a dev-ops or customer support team [due to] its ex-pat friendliness, booming startup scene, access to top talent, relatively low wages, and high standard of living at an affordable cost.”
The IPBN will be looking into the investments in the world of Portuguese tech at our Hiring and Investing in Portugal virtual event starting on Wednesday, April 28 and continuing on Friday, April 30 during which time we will be speaking with three key players in the field and helping interested parties move forward with all the knowledge necessary to make sound investments in this hot market.