- Portugal’s small domestic market could be its edge when it comes to scaling companies.
- While the startup ecosystem is young, it has a global-first mindset.
- Capital is tight locally, including from Europe. The US may well plug that gap.
Portugal is one of Europe’s smallest startup and venture capital ecosystems. Its size forces companies to think global from the get-go, which some investors see as its edge, but startups are still hampered by a lack of capital.
Given the domestic market is just 10.7 million people with a GDP of $313 billion, no startup can build a big, VC‑scale business purely for Portugal. Instead, every investment memo starts with one question: what’s the global path?
“Portugal is really small, so normally, the founders that we get in Portuguese deal flow are already thinking abroad from the start,” says Pedro Ramalho Carlos of Portugal’s Shilling VC, speaking on stage at SIM Conference in Porto in a session named ‘Funding The Unknown’.
Portugal is one of Europe’s fastest-growing ecosystems, being home to 8% more startups in 2025 compared with the year prior. Still, startups represent just 1% of its GDP and account for 1.5% of national exports, according to Informa D&B and Startup Portugal’s 2025 report.
The country is often compared to its Iberian neighbour Spain; it’s a similar region, but Spain’s larger market allows for more domestically-focused players. Indeed, Spain has 12 unicorns versus Portugal’s eight. The Spanish-speaking world is also much larger than Portuguese, leading startups to head straight to the US over expanding to Latin America, for instance.
That mismatch between ambition and scale shapes how investors cut cheques. Investors described a poorer ecosystem in terms of capital — but there’s also less competition than in London, Ramalho Carlos notes, presumably due to the size of the ecosystem. One of the ecosystem’s advantages is that it can aggregate good quality technical and product-led teams, he adds.
Building out supportive infrastructure
The national government is taking steps to nurture the ecosystem. João Rui Ferreira, Secretary of State for the Economy, at the conference announced a national, four-month accelerator programme at the conference. It is designed to support scientific and technological teams scaling from lab to market.
Lisbon is a magnet for innovation within Portugal, followed by Porto, where the SIM Conference took place. However, the smaller city of Braga felt well represented at the event. Founders described a vibrant ecosystem tied to the city’s university and Startup Braga accelerator programme.
As the number of startups and supporting institutions grow, Startup Portugal, one of the country’s main organisations fostering innovation, launched a public platform to map its ecosystem. It brings together data on around 7,000 startups and scaleups, unicorns, spinouts, investors, incubators, accelerators and Portuguese universities — likely offering a crucial tool sourcing tool for domestic and international investors.
The platform was co-financed by the European Union through its Recovery and Resilience Plan (RRP), as part of the Next Generation EU program. Portugal’s slice of the scheme will reach €17 billion ($18.36 billion), split between €14 billion ($15.12 billion) in subsidies and €3 billion ($3.24 billion) in loans.
Turning to the US
Still, Lurdes Gramaxo, partner at Bynd VC, said on the ‘From EU innovation to Startup Impact’ panel that Portugal has difficulty accessing European funding. Despite the country’s growing ecosystem, Gramaxo says it is “still lacking” capital and puts that down to being too far away from “the centre of Europe.”
Instead, like many companies in Europe, founders are turning to US investors. It is this reliance on international money that forces companies and investors to go global early, build cross-border syndicates and tap into data and AI tools so they can wrap up deals quickly.
It’s true for investors, too. European pension funds, which invest in venture capital, are still over‑allocated in US assets rather than in domestic venture funds. It means that local innovation, at both levels, is structurally dependent on non‑Portuguese capital — even at a time where the EU is pushing its own sovereign tech capabilities.
“We’re not going to stop having US investors investing in the major European companies,” Stephan de Moraes, managing general partner at Indico tells TFN in an interview at SIM Conference.
“Number one, because we don’t have the capital to do it, and number two, because we actually want them to invest in the largest companies. We want to access that market, and we want to exit in that market, potentially,” he says, speaking about the whole European market.
Thus Portugal’s — and smaller European countries’ — reliance on US money may not be such a problem if it helps startups scale and exit in a much larger market. Investors are also in the game for returns.
