Portugal's Startup Ecosystem: The Unfiltered Truth

A candid look at what's really happening in one of Europe's fastest-growing startup hubs: the wins, the walls, and what needs to change.

Last week at Web Summit, I sat down for dinner with Graeme Barlow, a serial entrepreneur and investor. He asked me a simple question: "What's really going on with Portugal's startup ecosystem?"

That conversation stuck with me. Not because the answer was complicated, but because it revealed how much we've been sugarcoating the reality. The glossy startup reports celebrate our growth. The Web Summit keynotes paint an inspirational picture. But underneath? There's a more complex story that founders, investors, and policymakers need to hear.

So here it is, unfiltered.

The Web Summit Effect: Visibility Isn't Sustainability

Ten years ago, when Web Summit first landed in Lisbon, Portugal had roughly 1,000 startups. Today? We're almost 5,000! The numbers tell a compelling story: €2.6B in aggregate turnover, €1.5B in exports, 26,000 jobs created, and six unicorns on the board (Sword Health, Farfetch, OutSystems, Talkdesk, Feedzai, and TEKEVER).

Web Summit didn't just bring a conference. It brought legitimacy. Suddenly, Lisbon wasn't just a beautiful city with good pastel de nata. It was a tech destination. The annual pilgrimage of 70,000+ attendees created an ecosystem gravity that didn't exist before.

National fintech startups alone have reportedly raised €1.2B since Web Summit's arrival. In 2024, startups raised €886M, a 55% increase from 2023. The ecosystem is decentralizing beyond Lisbon and Porto into Coimbra, Aveiro, even Bragança and Guarda. Two-thirds of our startups were founded in just the past five years.

But here's what the glossy reports don't tell you: visibility isn't the same as sustainability.

Countless founders attend Web Summit, get inspired, network furiously, and then launch their ventures elsewhere. Why? Because inspiration doesn't overcome bureaucracy. Global connectivity doesn't magically solve local market size constraints or the structural barriers that keep promising ventures from taking root here.

The real question isn't whether Web Summit transformed Portugal. It's whether Portugal can transform what Web Summit brought into lasting, locally-rooted growth.

Ten years in, we're still figuring that out.

The Nationality Paradox: When "Portuguese Startups" Means Something Different

A Portuguese VC of a US-based fund posts on LinkedIn: "We invest in Portuguese tech startups at Pre-Seed and Seed stage. Our goal is to significantly increase the number of Portuguese Startups that make it to the United States. It's time to give back to the Portuguese Startup community!"

Their website doubles down: "Investing in early-stage, AGENTIC AI B2B startups led by Portugal's top talent."

Beautiful mission. We loved it!

So we reached out with GYST (Get Your Sh*t Together), an agentic AI B2B startup with US clients and angels. Incorporated in Portugal. Certified as a SME by IAPMEI, I.P. - Agência para a Competitividade e Inovação. Recognized as an innovative startup by Startup Portugal. Incubated at Unicorn Factory Lisboa. Founded by residents in Lisbon exercising EU free movement rights. Active mentors in both Unicorn Factory and Acelera Portugal.

The response? "We're focused on startups led by Portuguese founders. You don't fit our thesis at the moment."

Wait, what?! Not Portuguese enough despite being more integrated into the ecosystem than many "native" startups. Do I hear "Make Portugal Great Again" vibes? LPs beware!

Here's the data-backed truth that such VC is ignoring: multiple studies (Harvard Business School, World Economic Forum, etc.) show immigrant-founded firms grow faster and survive longer on average, and immigrant founders are more likely to found scientifically innovative and financially successful startups. Not to mention that ~43% of Fortune 500 were founded by immigrants/their children...

Why invest in xenophobic initiatives when you can fund organizations like COREangels, where Cintia Mano, Rui Falcão and the team have built a truly global angel network? They've expanded from Portugal to 14 angel funds across 8 countries, invested in 110+ startups, and manage nearly €50M in assets, all while actively championing diversity and welcoming international founders. These are the investors building the future. The others are just building walls.

Portugal prides itself on openness. On being the gateway to Europe. On attracting global talent. But there's a gap between what we say we want and what we actually fund.

If we're serious about competing with London, Berlin, or Amsterdam, we need to decide: Are we building a Portuguese ecosystem, or a globally competitive one that happens to be in Portugal?

Because right now, it's not working.

The Champions Who Refuse to Give Up

After sharing these critiques, people asked me: "Is it really that bad in Portugal?"

No. It's not all bad. In fact, there are people fighting like hell to make this work.

Carlos Moedas, Lisbon's mayor, didn't just talk about making Lisbon an innovation capital, he put city resources behind Unicorn Factory Lisboa. A flagship initiative that's now ranked in Europe's top 10 startup hubs by the Financial Times. Since 2022, it's attracted more than 50 tech centers to the city and provides real acceleration, mentorship, and connections that actually matter.

Startup Portugal isn't just a government checkbox. They're in the trenches (Road 2 Web Summit, Startup Visa and Tech Visa programs), working to reduce friction for both local and international founders. Alexandre Santos and Miguel Aguiar genuinely understand what founders need and are actively building the infrastructure to deliver it.

Founders Institute, 351 Startups, and Acelera Portugal aren't just accelerators running cookie-cutter programs. They're tailored support systems that have produced real companies, real exits, real value.

The collaborative energy is real. When you sit in a room at Unicorn Factory, you feel it. Locals and expats working together. Mentors who actually care. Programs that connect founders to real opportunities, not just photo ops.

These people believe Portugal can be more than a lifestyle destination for digital nomads. They believe it can be a legitimate innovation powerhouse.

The frustrating part? They're fighting with one hand tied behind their backs.

The Bureaucratic Disconnect: When Box-Checkers Kill Innovation

At the top of Portugal's startup support structure, you have visionaries. People who understand lean startup methodology. Who value customer discovery, hypothesis testing, rapid prototyping. Who know that the best ideas emerge from iteration, not from perfect business plans written in a vacuum.

Then you have the technicians. Here's where it gets painful...

We applied for the Startup Voucher in April, three days after incorporating GYST. We'd spent months before incorporation talking to potential customers, validating problems, prototyping solutions with no-code tools, gathering feedback. Classic pre-product-market-fit work. No money exchanged hands. The actual project (hiring a team, building the real product, etc.) only began after incorporation.

Outcome of the application? Denied.

The technician's reasoning? "The project had already started before the application, therefore breaking the rules of the call for proposals."

Wait, what! Testing hypotheses before incorporation is now disqualifying?! So you'd prefer we apply with zero customer validation?! With just a pretty slide deck and wishful thinking like in dot-com bubble days?! Haven't we learnt anything since?

We appealed. The technician didn't budge.

The Cost of Checking Boxes

Let me be clear about what this means: As a Portuguese taxpayer, I'm watching my money potentially fund untested paper concepts while data-backed, customer-validated ventures get sidelined because someone checked the wrong box.

This is the disconnect that's killing us.

Startup Portugal leadership embraces everything we know about building companies. They get it. But the actual gatekeepers are still operating in a 1990s mindset where "projects" must be neat, linear, and fully defined from day one.

The irony is suffocating. We have leadership trying to build a world-class ecosystem while low-level bureaucrats (covering their asses, checking boxes, following "rules") systematically undermine it.

You can't have it both ways. Either you trust the entrepreneurial process, or you don't. Either you fund validated experiments, or you fund business plans that will fail because they never touched reality.

Right now, we're doing the latter. And wondering why our ecosystem isn't growing faster.

This needs to change. Not through more programs or initiatives, but through fundamentally rethinking how public funds reach founders. The technicians need training in how startups actually work, or they need to get out of the way.

Why I'm Still Betting on Portugal

After everything I've shared, you'd think I'm ready to pack up and leave.

I'm not.

Here's what keeps me here, and it's not just the pastel de nata (though that helps).

The quality of life is unmatched. Portugal ranks 7th globally for peace. Lisbon has Mediterranean weather, 300+ days of sunshine, and you can live in Cascais and be at the beach in 10 minutes or in the city in 30. Try doing that in London or Berlin.

The talent is extraordinary and undervalued. Portuguese engineers, designers, and operators are world-class but cost 40-60% less than their Bay Area or London counterparts. This isn't exploitation, it's arbitrage. And as remote work normalizes, that arbitrage becomes a massive competitive advantage.

The ecosystem is young enough to shape. Unlike Silicon Valley where the playbook is entrenched, or London where the hierarchy is calcified, Portugal is still figuring itself out. That means there's room to influence, to build, to create the culture we want rather than inherit someone else's.

The connectivity is real. We're the closest point in mainland Europe to the US. We're in the same timezone as London. Portuguese is the 5th most-spoken language globally (260M speakers). We're a natural bridge to Brazil, Angola, Mozambique, and Lusophone markets that represent 700M+ people.

The government is actually trying. Yes, I've criticized the bureaucracy. But the €200M fund, the Startup Visa, the ESOP tax regime (one of Europe's most competitive), the Tech Visa, etc. aren't accidents. There's genuine political will to make this work.

Portugal's Greatest Asset

But here's what I've realized through all of this: Portugal's greatest asset isn't any single program or policy.

It's the people who refuse to accept mediocrity.

The mayors like Carlos Moedas who put political capital behind innovation. The Startup Portugal team grinding through bureaucracy to create pathways for founders. The incubator leaders who mentor at midnight because they believe in someone's vision. The investors like COREangels who build global networks while staying rooted locally. The founders, both Portuguese and international, who choose to build here despite the obstacles.

We're at an inflection point. In 2016, Web Summit put us on the map. In 2025, we have the infrastructure, the talent, and the momentum to become a genuine innovation hub, not just a conference destination.

But only if we're honest about what's broken and willing to fix it.

What Needs to Change

If Portugal wants to compete with Europe's top startup ecosystems, here's what must happen:

1. Align funding criteria with entrepreneurial reality. Train grant assessors in lean startup methodology. Reward customer validation, not polished business plans. Stop penalizing founders for doing the right thing.

2. Define "Portuguese startup" inclusively. If a company is incorporated in Portugal, employs Portuguese talent, pays Portuguese taxes, and contributes to the ecosystem, it's Portuguese enough. Full stop.

3. Bridge the vision-execution gap. Leadership gets it. Now ensure that every person touching public funds understands how startups actually work. Create accountability when bureaucratic rigidity kills promising ventures.

4. Celebrate and amplify inclusive investors. Shine a spotlight on funds like COREangels and others building bridges. Make xenophobic investment theses socially and commercially unacceptable.

5. Measure what matters. Track not just the number of startups, but how many survive, scale, and stay. Monitor funding access by founder nationality. Publish data on grant approval rates and rejection reasons. Transparency drives accountability.

Building the Ecosystem We Want

So yes, I'm staying. Not because Portugal is perfect, but because it's worth fighting for.

To everyone building in Portugal, local or international, funded or bootstrapped, celebrated or overlooked, keep going. The ecosystem we want doesn't exist yet. We're building it.

This article is part of our build-in-public journey with GYST. We believe transparency accelerates progress, for ourselves and for the ecosystem. If you're building in Portugal or considering it, we'd love to hear your story. Connect with us.