Portugal’s Entrepreneurial Revolution: Why Startups and Innovation Thrive (And What Needs to Change)

A Country Built on Bold Exploration and Innovation

Portugal’s legacy as a global pioneer began long before the word “startup” existed. In the 15th and 16th centuries, Lisbon was the Silicon Valley of its time, launching a wave of global exploration that transformed commerce, navigation, and trade. With figures like Vasco da Gama and Ferdinand Magellan leading the charge, Portugal didn’t just discover new trade routes—it built new economic paradigms. This willingness to explore the unknown, take risks, and innovate is embedded in the Portuguese DNA.

However, after centuries of wealth and dominance, Portugal spent much of the 20th century under the Estado Novo dictatorship, an authoritarian regime that stifled economic and technological progress. It wasn’t until the Carnation Revolution in 1974 and Portugal’s subsequent entry into the EU in 1986 that the country was able to re-engage with the global economy. The transition was slow, but the modern Portuguese government has recognized that entrepreneurship, foreign investment, and technological innovation are the country’s best tools for economic growth.

And yet, Portugal isn’t just another European country trying to build a tech or startup scene (which is a failed effort in and of itself) — it has serious advantages that make it a compelling global destination for founders, investors, and technologists.  Keep in mind what I’ve written about and has been proven time and again, investment in tech alone, or even education, will not manifest a startup ecosystem because it’s the creativity and the culture that foster entrepreneurship; Portugal’s past is a pivotal part of why it’s the future.

“From my research in ecosystem development, I’ve observed that the most resilient startup communities successfully integrate with local cultural rhythms rather than imposing external models. Portugal’s ‘saudade’ (a deeply rooted cultural concept of longing, melancholy, and hope) and historical maritime identity as explorers could be more intentionally woven into the startup narrative. The explorers’ mindset of calculated risk-taking in pursuit of new horizons perfectly aligns with entrepreneurial values. By connecting Portugal’s rich past with its innovative future, the ecosystem can develop a more authentic identity that resonates both locally and globally, creating deeper buy-in from all stakeholders.” – Jonathan Alba; COO

Lisbon: The Epicenter of Portugal’s Startup Renaissance

Lisbon is the undisputed economic and cultural capital of Portugal. More than just a postcard-perfect city of terracotta rooftops and iconic yellow trams, Lisbon has undergone a profound transformation in the last two decades. What was once a laid-back capital known mostly for its historical sites is now a rising global business hub, attracting talent, investment, and innovation from around the world.

Why Lisbon?

Lisbon’s growing reputation as a startup-friendly city is built on several key factors:

• Cost of Living & Talent Attraction: Unlike London, Paris, or Berlin, Lisbon offers a much lower cost of living while maintaining access to a skilled workforce, drawing in remote workers, digital nomads, and global entrepreneurs.
• Quality of Life: Around 280 days of sunshine, a vibrant cultural scene, world-class food, and proximity to some of Europe’s best beaches make it one of the most attractive places for founders to live and work.
• Startup Infrastructure: Programs like Startup Lisboa and Unicorn Factory provide significant support to entrepreneurs.
• Access to European & Global Markets: Portugal’s location makes it an easy launchpad to both European and North American markets.

Beyond Lisbon: Portugal’s Surrounding Startup Hubs

Beyond Lisbon, the surrounding regions are also growing into important economic centers and as evidenced in other vibrant ecosystems, a city is rather handicapped without the region (e.g. Silicon Valley isn’t San Francisco). Notably, the Sines Tech Hub project a €17M investment is transforming the port city into a tech center focused on data centers and green energy; Deloitte published a study presented by Start Campus at the Pacific Telecommunications Council (PTC) nothing that the “hidden gem of connectivity” has everything to respond to the European data strategy. Portugal has a unique set of conditions to connect Europe to markets such as North America, South America, Africa, and the Middle East/Asia. Closer to home even? …

• Porto: Portugal’s second-largest city is developing a reputation as an engineering and deep tech hub, thanks to its strong university ecosystem. Porto is home to a growing number of AI, robotics, and clean tech startups.
• Braga: The country’s oldest city is rapidly modernizing, with a focus on industrial innovation and advanced manufacturing.
• Cascais & Estoril: Just outside Lisbon, these coastal towns are attracting a wave of high-net-worth individuals, digital nomads, and executives looking for a more relaxed business environment.

And let’s not forget Spain. Madrid and Barcelona are just a short flight away and provide key connections for Portuguese startups looking to expand.

Portugal’s Role in Modern Innovation

Portugal’s startup scene isn’t just about trendy coworking spaces—it’s about real, cutting-edge innovation happening across specific sectors, which, let me reiterate as I do incessantly about this, is critical to expose – do not be a tech hub or startup scene; clarify specifically what excels:

Key Sectors of Strength

1. Fintech & Payments: Companies like RAUVA are simplifying business registration and financial transactions.
2. Aerospace & Space Tech: Portugal is home to startups like Neuraspace, which is solving space debris management through AI.
3. Healthcare & Biotech: Glooma is making early cancer detection easier with wearable devices.
4. Sustainability & Energy: Portugal is a leader in renewable energy, with strong investments in wind and solar technology, and Sunflow or EDP Renewables worth a closer look.

With this kind of diversity in its startup landscape, Portugal isn’t just another small European country—it’s a serious contender for global innovation.

The Web Summit Saga: How Lisbon Became a Global Tech Destination

It seems that we’re incessantly referring to COVID-19, but we should still, as not only is it relevant but it’s important to remind economic development offices and governments that change breeds entrepreneurship and innovation. Portugal emerged as a preferrable remote work hub and such immigration, evident in what happened in the U.S. to Austin, Texas, is critical to embrace so that your ecosystem matures thanks to fresh perspective, incoming experience, and new connection to elsewhere.

Web Summit, now a cornerstone in the global tech conference circuit, has a history as dynamic as the startups it showcases. Founded in 2009 by Irish entrepreneurs Paddy Cosgrave, David Kelly, and Daire Hickey, the event was initially held in Dublin, Ireland. The choice of Dublin was strategic; the city was emerging as a burgeoning tech hub, attracting both startups and established tech giants. Aimed to bridge the gap between technology companies and the broader business community, Web Summit fostered environment ripe for innovation and collaboration.

It, among a few other such conferences, remain a part of the story economic consultants such as me tell, in working with a government or region to appreciate the critical role of such things.

Over its first five years, the Web Summit experienced exponential growth, evolving from a modest gathering to a massive event drawing attendees from around the globe. However, as the conference expanded, challenges began to surface. Dublin’s infrastructure, particularly its venue capacities and accommodation options, struggled to keep pace with the event’s rapid growth. Issues such as inadequate Wi-Fi connectivity during the 2014 summit highlighted these limitations. Despite efforts to address these concerns, including discussions with the Irish government for increased support, a satisfactory resolution remained elusive.?

In 2015, Paddy Cosgrave announced a pivotal decision: the Web Summit would relocate to Lisbon, Portugal, starting in 2016. This move was influenced by several factors. Lisbon offered robust infrastructure, including a world-class venue in the Altice Arena (now MEO Arena) and ample accommodation facilities. The city’s vibrant startup ecosystem and supportive government policies further aligned with the Web Summit’s mission to foster innovation. The Portuguese government’s proactive approach, including logistical support and infrastructure enhancements, played a significant role in attracting the conference.? In a follow up, as I’ve done for other cities, I’ll highlight how and why the location of such a thing is pivotal to a startup community.

Under Cosgrave’s leadership, the conference has not only relocated but also expanded its global footprint, organizing events like RISE in Hong Kong, Collision in Canada (now Web Summit Vancouver), and Web Summit Rio in Brazil. This expansion reflects a strategic vision to create platforms for tech innovation across diverse markets.

The relocation to Lisbon has been transformative for both the Web Summit and the city itself. Much like Austin’s SXSW, the Web Summit has evolved beyond a traditional tech conference as it must if it’s to have the impact it has been having. It has become a cultural and economic phenomenon, integrating technology with arts, music, film, and local culture.  “People would say ‘What are you?’” shared Hugh Forrest, SXSW’s Chief Programming Officer, with Austin journalist Susan Lahey “We’re a little bit of everything. I tend to encourage people to go to sessions they don’t know anything about. If you’re a social media expert, go to the panels on transforming the health industry, or sessions on government and technology, something slightly out of your wheelhouse.” This holistic approach has been instrumental in showcasing Lisbon’s dynamic cultural scene to a global audience, thereby enhancing the city’s international profile.

“It is no secret that we have been looking at various locations around Europe to support future growth and provide attendees with the best possible experience,” noted Cosgrave in 2015. “We chose Lisbon because of the strong infrastructure in the city, the world-class venue and the thriving startup community.”

For a conference to serve as a catalyst for a vibrant startup ecosystem, it must transcend conventional tech discussions. SXSW in Austin exemplifies this by blending technology with music, film, and interactive media, creating a multidisciplinary festival that attracts a diverse audience. This fusion fosters serendipitous interactions among creatives, technologists, and entrepreneurs, leading to innovative collaborations and a thriving local economy.?

Similarly, the Web Summit’s integration of various cultural elements has the potential to invigorate Lisbon’s startup ecosystem. By embracing local arts, music, and cultural narratives, the conference can create an immersive experience that resonates with a broader audience. This approach not only enriches the event but also stimulates year-round entrepreneurial activities, cultural engagements, and policy discussions within the city.?

To fully capitalize on the Web Summit’s presence, Lisbon must ensure that the event is deeply woven into the city’s cultural and economic fabric. This involves fostering collaborations between tech innovators and local artists, supporting creative industries, and promoting policies that nurture a diverse creative economy. By doing so, Lisbon can transform the Web Summit from an annual event into a perpetual engine driving innovation, cultural richness, and economic vitality.?

In essence, while many cities host tech conferences, only those that successfully blend technology with arts and local culture, can catalyze a standout startup scene. Lisbon, with the Web Summit as a focal point, has the opportunity to achieve this synthesis, positioning itself as a global nexus of innovation and creativity. And oh, what does that have to do with quarantine and COVID-19? That with the establishment of Web Summit in markets throughout the world, we remained connected, vested, and interested, and with Web Summit started out in Brazil in 2023, we can see how these experiences help bring about change, help us overcome challenging times, and invest in what’s next.

We’re Not There Yet

(but then, no one is, Startups are description and innovation, which means everything can always be improved)

Portugal’s startup ecosystem has tremendous potential, but it also has obstacles that need to be addressed.

What Local Governments and Stakeholders Need to Do

Drawing from this framework for economic development:

1. Capital Availability: More early-stage venture funding is needed to support homegrown innovation; not government funding and not grants, we need to attract more of the capital that expects valued and valuable outcomes.  To be clear, yes, I said attract and not develop; venture capital is drawn in, it’s a consequence of a healthy ecosystem, not the catalyst.
2. Regulatory Clarity: Portugal must simplify bureaucracy and reduce barriers to business formation.
3. Infrastructure Investment: Better connectivity, transportation, and tech hubs outside Lisbon.  I’ve said it time and again about cities in the United States, the singular focus on a given city can not compare to the region of “Silicon Valley” – failing to appreciate and accept this will *rightly* keep an ecosystem second rate.
4. Attracting & Retaining Talent: Competitive salaries and education reforms to prevent brain drain but most importantly, this is accomplished through effective communication, marketing, and storytelling; most startup ecosystems lack this, neglect it, or under appreciate it, and the all-too-common focus on jobs, doesn’t actually result in people wanting to be there, which is where we need to be.

Primarily to drive those changes?

• Bureaucracy & Regulation: Despite its startup-friendly reputation, Portugal has work to do in terms of ease of doing business.
• Affordability Crisis: Rising demand is pricing out locals, which leads to social tensions but, frankly, the presumption many have that affordability is better in startups is wrong, rising costs can result in greater concentration of wealth, which fuels VC.  What is considered in the balance?  Infrastructure and accessibility to the region – if we can’t get a round and be productive throughout, the higher cost becomes a problem.
• Marketing and Storytelling: What causes the changes, attracts the resources, and accelerates startups is the community being capable of effectively promoting everything, globally (both the good and the challenges).  Get these people in place by every means necessary because exposure is a good thing.

Certain regulatory hurdles can impede entrepreneurial momentum. Two of the most significant challenges are:

1. Rigid Labor Laws and High Employment Costs

Portugal’s labor laws, designed to protect employees, create significant hurdles for startups needing flexibility. Hiring involves excessive paperwork, while firing employees—even for valid reasons—requires long notice periods and expensive severance payouts. Additionally, high social security contributions further increase labor costs, making it difficult for startups to compete with international ecosystems where hiring and firing are more agile. These rigidities discourage rapid scaling and make Portugal a less attractive location for early-stage companies operating on lean budgets.

2. The Startup Law’s Failure to Address Stock Options Effectively

Portugal’s rightly celebrated 2023 Startup Law introduced tax breaks for stock options, deferring taxation until shares are sold and applying a reduced 14% tax rate. However, this benefit only applies to startups incorporated in Portugal, while many founders register abroad (e.g., Delaware) to attract global investors. Additionally, companies must undergo a bureaucratic certification process to qualify, which is slow and impractical. As a result, the law fails to benefit many Portuguese startups, limiting its impact on talent retention and venture investment.

The Golden Visa Program & Why Portugal Matters

Where do we start? Take a look at the Golden Visa Program, which has been a major driver of foreign investment. It allows non-EU citizens to gain Portuguese residency (and eventual citizenship) through investment.

What Makes It Appealing?

• Visa-free travel within the EU.
• The ability to live, work, and study in Portugal.
• Access to Portugal’s business and financial systems.

The program has been controversial, with concerns about real estate speculation and its impact on housing affordability (which though too, seems to have been a lesson learned and moved on from). Future iterations of the program should prioritize investments in startups, respective job creation, and underwriting startup development organizations and marketing the ecosystem rather than the focus it has had in real estate.

At an inflection point, Portugal has all the right ingredients to be a major global innovation hub; if it addresses its challenges strategically, its history and culture, breadth and exposure thanks to things like Web Summit, focus on distinct areas of strength, and investment in the right ways, make it a gateway to Europe.

If you’re an entrepreneur, investor, or policymaker, now is the time to engage. Whether through venture capital, startup accelerators, or government policy, working with Portugal could be one of the smartest economic moves of the next decade.