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Europe in focus: Portugal progress toward startup success

Posted by Chad O'Connor  August 30, 2013 11:00 AM

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[Editor's Note: This is the final installment in a continuing series of comparative insights from the editor's summer travels in Europe. Previously featured were Dublin and London.]

Portugal has a bright outlook, and it's not just because of the beautiful weather. In meeting with the business and government community here there was a decided tone of optimism in spite of the bad economic news that is frequently reported. Yes, unemployment here is high (even higher for the young) but that doesn't deter the Portuguese from talking about the startup focused sea change they see coming in the next few years. Here's a snapshot of what's going on at just 3 exciting startup centers:

1. Lisbon Challenge, inspired by MassChallenge
The August 28th launch event for Lisbon Challenge, a competition drawing parallels with MassChallenge, had an impressive turnout of important figures from Caixa Bank (a premier sponsor with €750M for co-investing), Portugal Ventures (the €650M government-backed venture fund), the Luso-American Foundation, the Economic & Business Group of the President of the Republic of Portugal, and Lisbon Mayor Antonio Costa. Aside from mentoring with a focus on international growth, the winners amongst the nearly 75 startups in the competition housed in the former postal headquarters building will receive great perks including:

  • €150K in prize money

  • fully paid trips for the top 10 performers for international investor meetings in NY, Sao Paolo and London, with the top company additionally pitching at the European Venture Summit in Dusseldorf

  • space for 30 years in Lisbon (now that's stability!)

Lisboa Mayor Antonio Costa at the launch of Lisbon Challenge

While Lisbon Challenge is not an official partner of MassChallenge (Amir Eldad, Lead Partner for International Expansion at MassChallenge, noted that MC is glad to "maintain a friendly relationship" with LC but noted that MC has been engaged in "multiple conversations in a few target countries") it is important to note here that these connections were forged in large part through the work of World Class Cities Partnership at Northeastern University (a.k.a. the newly independent Leading Cities effective September 1st, headed by candidate for Massachusetts Lieutenant Governor Mike Lake) who first met with Lisbon Challenge parent organization Beta-i's President, Pedro Rocha Viera, in October 2012, followed by delegation meetings in Boston in January 2013 which led to continued talks between MassChallenge and civic and business leaders in Lisboa. (It probably also didn't hurt that Beta-i co-founder Ricardo Marvão lived in Boston in 2009 and first met John Harthorne then - a small world indeed!)

2. Startup Lisboa
The city-funded Startup Lisboa (which got its initial funding through a citizen-voted participatory budget and now charges startups a nominal offsetting fee in exchange for services) has helped over 100 startups in the year and a half since it has opened its doors. With a range of co-working space and small offices, startups across a broad spectrum of business lines are free to do all the things startups do - pivot, merge, swap members, barter, etc - as they grow into stable companies. The results in a short time have been impressive, noting that only 3% of companies involved have been total busts, the rest having lived on in some new form. And it's not all just high tech. Take Nata, named for the insanely addictive pastry of the region, who having been housed at Startup Lisboa and opening a storefront on the ground floor are now looking to expand internationally, because as their slogan says "The World Needs Nata" (hint: please come to Boston!).

Perhaps most impressive is the rate of expansion of Startup Lisboa. Having started in a building donated and renovated by Montepio, the small team at Startup Lisboa are about to take on a third building in Lisbon to accommodate the growing demand for their space.

3. ISCTE-IUL Building Global Innovators program with MIT Portugal

Begun almost 7 years ago when the Portuguese government opened to international partnerships (Harvard on medical research, MIT on engineering, etc.), Building Global Innovators (BGI) Program Director Goncalo Amorim was confident that while there is still much work to be done at building a truly prosperous startup culture here that the groundwork is definitely in place, noting that the international partnerships were recently renewed for another 5 years. The MIT Portugal Building Global Innovators program awards up to €1M per year to 4 tech-based startups in areas including Heatlh, Smart Cities, IT Web & Mobile, and Consumer Product/Service. The 20 semi-finalist participants gain privileged venture financing access and work with MIT vetted catalysts. Beyond the accelerator, BGI runs 3 bootcamps a year to turbocharge startups with its expert network.

While the previously mentioned programs do not take equity in the participating companies, BGI expects up to 5% equity for the finalists in its accelerator. It sees its key differentiating quality in the rigorous sets of benchmarks it helps to establish for its startups, done in a week-long series of intensive meetings every few months. Amorim especially noted that in order to attract international investment "we have to be very selective to build trust" beyond just the association with the MIT name.

Note that the programs I have just mentioned are all based in Lisboa, thought of as the international destination city here. But to only look here would not give the whole picture, as the northern part of the country also has growing startup scenes in Porto (where the university incubator system has contributed a steady stream to the almost 500 startups in the region) and in Braga.

I was frequently told by those I talked to here that Portugal has not done a very good job of getting its story out there, that its people are humble and need to do a better job of pitching all that the country has to offer, especially when it comes to a vibrant international and welcoming culture with a strong quality of life (low costs, low crime, etc.). Compared to Ireland's low corporate tax structure it did not seem as though the Portuguese government leaders felt that would be a prudent strategy for attracting business; however they did seem to feel that the consensus would be towards a long-term agreement on taxes that will make them predictable for years to come (of course, this is all a bit more complicated since the economic bailout Portugal received has oversight conditions). Perhaps the growing influence of this newly emerging startup culture will help to get some of that story out there on its own, or perhaps more investors need to be courted to come see the opportunities that are here on the ground. In either case, one thing is certain, Portugal seems well on its way to becoming a fine place to launch and grow a startup.

Chad O’Connor is a communication consultant, teaches undergraduate and graduate courses in Organizational Communication and Culture at Northeastern University, and is editor of this blog. Connect with him on Twitter @chadoconnor.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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