Portugal’s race to the top of the European Entrepreneurship Rankings

Over the past 10 years, Portugal has moved from the bottom end of most European entrepreneurship rankings to being near the top.

The European Central Bank now ranks Portugal as the second best country in Europe for business innovation. As Brad Smith, Chairman of Microsoft, recently said, “it’s remarkable to see how much in Portugal has changed, how vibrant the technology sector has become in Portugal.”

And these changes have borne tangible fruit. Portugal has created seven unicorns (start-ups valued at over a billion dollars): Outsystems, Farfetch, Talkdesk, Feedzai, Remote, Sword Health and Anchorage Digital. This compares to Spain with four unicorns and Italy with just two unicorns. In fact, Portugal is among the top 5 unicorn-creating countries in the world, measured by unicorns per capita or per GDP.

How did this happen so quickly in a country that most still associate with beaches and holidays, and not with technology and innovation? The answer is simple: people and the ease of doing business.

With entrepreneurship the three most important factors are “People, People, People”. Portugal has done a fantastic job of building internal skills and also attracting talent from around the world. As Brad Smith notes “”Portugal has great local talent in terms of people who were born here and is a welcoming home for talent from the rest of Europe and even beyond.”

The high standard and low cost of living have attracted qualified people from all over the world, while the excellent educational system (mainly in engineering) has resulted in an abundance of talent. As a result, the OECD (Organisation for Economic Cooperation and Development) states that Portugal has the 2nd highest rate of engineering graduates in Europe and is 12th in the world for finding new qualified employees.

This combined with the ease and low cost of running a business to attract international companies. According to the OECD, Portugal is now the cheapest country in Europe to run a business. Siemens, Volkswagen, IKEA, Nestlé, Microsoft, Unilever and Danone rank their Portuguese subsidiaries as the most effective globally. And all of these companies have helped develop a large base of skilled and experienced employees with the skills and experience to build their own businesses.

Meanwhile, those same advantages have attracted entrepreneurs from across Europe and supported local entrepreneurs, while the Portuguese government has created a strong support system to help them thrive. The government has provided tax incentives, a flexible visa program and free educational programs for tech workers. The Lisbon Web Summit is the world’s largest web summit and guarantees an annual influx of top software developers and entrepreneurs and companies, which creates an extremely vibrant and dynamic environment fertilised by global thought leaders. And Portugal has some of the best business accelerators and incubators in the world. The IPN in Coimbra, for example, was ranked among the top 5 worldwide in 2021.

The only factor missing in all this is access to capital. For many years Portugal Ventures was the only Portuguese Venture Capital firm investing in technology-based companies. However, Portugal Ventures’ successes have encouraged a boom of similar VC funds in recent years and there are now over 50 registered funds. Portugal Ventures remains the largest and the only one with a track record of more than a few years, but there are already 11 others with more than €100m in assets. With this recent influx of new capital, the boom should continue.

Source: Article published in Portugal News.