A Happy Union: Tech Start-ups and Portugal
San Francisco, Austin, Berlin, Tel-Aviv and now Lisbon. Cities associated with Venture Capital, tech start-ups and digital nomads. This ecosystem in Portugal is at an earlier stage than others, but no less exciting and increasingly on the lips of international investors. There is an increasing draw to the innovative locals, opportunities the country can provide and the lifestyle accompanying it.
Besides a strategic location connecting Europe, Africa and, to an extent, Latin America, Portugal offers great talent coming out of a conveyor belt of tech focussed universities. Unsurprisingly, it is a value proposition for companies looking to expand particularly into Europe or scale up. Areas where Portugal is seen as particularly strong would be the automotive, aeronautics, food, information technology, and life sciences industries. All sectors of activity that have the greatest potential to attract FDI.
When companies like Cloudflare, Bose, and Google establish tech hubs in a country, it is a positive sign that the quality of available talent is high as it is an essential criterion for such a decision. Portugal has the second highest rate of graduating engineers out of premier jurisdictions in the EU with other equally talented non-Portuguese engineers looking to call Portugal home due to tax incentives, security, and lifestyle. Cloudflare, for example, considered 45 cities from 29 countries when selecting where to base their EU tech hub. Choosing Portugal is thus a strong indictment of the country’s quality and great potential to become the next great tech spots.
The trend of remote work, which has accelerated worldwide since the pandemic, combined with the persistent international demand, has pushed the country to add the Digital Nomad Visa to an array of residency programme options. This decision has proved to be very effective with 200 registered applications coming in within the first 3 months of the launch. This is unsurprising for a country consistently rated as the best for remote work.
This naturally has had an impact on the real estate market in preferred Portuguese locations for digital nomads such as Lisbon, Porto, Ericeira, Setubal and Madeira. Since the launch of this Visa, there’s been a strong shift to the mid-term rental market –6 months to 1-year contracts, which are charged at a premium. Once settled and the benefits of living in Portugal are experienced, many nomads choose to apply for permanent residency and make Portugal their home for the long-term.
Michael Maxwell of EQTY Capital notes, "Great weather, vibrant social scene, minimal crime rates and affordable living costs make it an incredible place. That means remote workers apply themselves to get work done during the day and plunge themselves in Portuguese culture and lifestyle in evenings and weekends. Many ends up staying or at least extending their initial plans."
Similarly, Luiz Maia of Maia International commented that "On an almost weekly basis Brazilian and American digital nomads are getting in touch with many looking at acquiring property, which relative to Sao Paulo or San Francisco, is well priced, especially when their properties back home are rented out or sold at rates which more than cover their Portuguese real estate costs."
This venture Capital, tech start-ups and digital nomads’ ecosystem is a long-term benefit to Portugal, sustainable wealth creator and source of tax collection. The view is that it has just started, and the opportunities of growth are significant, which bodes well for the country.
João Hilario, Business Development Manager at EQTY Capital