Lisbon’s startup scene rises as Portugal gears up to be a European tech tiger

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Man using laptop at 25th of April Bridge in Lisbon, Portugal
Image Credits: Westend61 (opens in a new window) / Getty Images

Almost four years ago I wrote a long deep dive into Lisbon’s tech scene. So it’s great to check back in with both Lisbon and Portugal for a slightly briefer update on where it’s at.

As well-outlined by Stephan Morais, founder and managing general partner at Indico Capital Partners, Portugal has a very high quality of engineering talent at a competitive cost; an extremely high level of English language proficiency (compared to Spain, France, Italy); and a preference for launching product globally from day one. Portuguese founders are highly qualified, with the majority of them holding at least a master’s degree.

However, the ecosystem is still in an “early phase” and there are few founders turned angel investors; there have been limited exits until recently; and there is limited available talent in sales and marketing fields. That said, there is still plenty of growth to come, as you will see below, and in the COVID-19 era, Lisbon — and Portugal generally — is becoming a magnet for digital nomads with talent.

Given the lack of a large home consumer market, startups in Portugal tend to err toward enterprise and SaaS over consumer applications, according to the Startup Portugal Ecosystem report. While the gap between domestic and foreign sources of funding is closing, there is still a gap in early-stage financing. According to government figures, in 2019 there was €285 million available for investment, and the top 25 later-stage companies raised a total of €117.8 million.

VCs in the country include Portugal Ventures, Indico Capital, Faber Ventures, Armilar Venture Partners, Bynd Capital, Semapa Next, Bright Pixel, EDP Ventures and Shilling Capital Partners. While Mustard Seed is a VC, it’s fashioned as an impact fund, only investing in startups that use technology to address social and environmental challenges inside the country.

Portugal is undergoing some changes. In particular, many British refugees from Brexit are relocating there (and everywhere else in Europe, but Lisbon has beaches and startup-friendly taxes). Non-EU residents are able to get a golden visa and tech entrepreneurs can get a startup visa. Meanwhile, Portuguese startups are starting to raise money internationally, so, therefore, punching out of their Portugal-shaped box.

Domestic VC capacity went through a period of great scarcity 2016-18, but this has greatly improved in the 2019-20 period. And international VCs, including nearby Spanish ones (K Fund, Kibo, Conexo Ventures, etc.), are taking an interest in the ecosystem, as explained by one here.

Due to the recent successes of Farfetch, Talkdesk, Outsystems, Feedzai and DefinedCrowd, among others, international investors are becoming interested in Portugal. According to investor Pedro Almeida in 2020, less than 40% of overall venture rounds had the participation of an international investor, but international investors account for over 30% of seed and pre-seed rounds.

This indicates that international investors will increasingly participate higher up the funding stack as the startups grow. Corporate VC has also become more active and professional during the period.

Key Government initiatives to stimulate the ecosystem include Startup Portugal and 200M, a 50:50 matched-funding initiative with a call option within 3-4 years at a low price point (3%-4% IRR); and the FIS social innovation fund with a 70:30 match funding initiative and a call option within 3-4 years also at a low price point.

Plus, “Portugal Tech” is the first-ever proper fund-of-funds initiative, market rules, owned by IFD (the development bank) but professionally managed by the European Investment Fund.

Unicorns emerging from the Portugal ecosystem include OutSystems; Talkdesk (which relocated its HQ to SF); and while Farfetch can claim Portuguese heritage via its founders, it’s better known as a London startup. On their way to bigger things are startups to watch like Feedzai, Codacy, BIZAY, Aptoide, Unbabel and Uniplaces.

Among the up-and-coming “new kids on the block” there are Rows, Didimo, Tonic App, SWORD Health, Barkyn, Utrust, Sensei, Vawlt, Lovys, StudentFinance, Nutrium, Reatia, LegalVision, Kitch, Rnters, kencko and YData.

Key accelerators/incubators include Beta-i, Bright Pixel, BGI (Building Global Innovators), Tec Labs, Startup Lisboa, Fábrica de Startups, Techstars Lisbon (run for two years, but now on a pause), Demium, EDP Starter, Maze X, Blue Bio Value and the Indico Pre-Seed Program.

Co-working spaces (Lisbon only) include LACS, Fintech House, Cowork Central, Second Home, Startup Lisboa, SITIO, Impact Hub and NOW_Beato. Then there is the giant “campus” style Factor Lisbon, which has happily rejiggered its plans ahead of launch to make the spaces COVID-safe.

Lisbon — and Portugal more generally — is emerging on the European and global stage as an increasingly fast-moving ecosystem that will benefit from its continued EU membership, international outlook, welcoming culture and can-do work ethic.

We talked with the following Portugal-based VCs:

Cristina Fonseca, partner, Indico Capital Partners

What trends are you most excited about investing in, generally?
Digitalization of supply chains and AI-powered decision-making processes.

What’s your latest, most exciting investment?
Digitizing beehives — honey production and pollination industry.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
IoT and AI will finally come to be with 5G; time to invest is now.

What are you looking for in your next investment, in general?
We are going deeper in founder personality analysis pre-investment.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Digital health, fintech in general, e-commerce.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Portugal mostly, Spain a bit.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
B2B SaaS and marketplaces (sometimes a combination that creates the moat). Watch out for Barkyn, Nutrium, Unbabel, Zenklub, kencko, Consentio.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Business as usual, great engineering, global ambition.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
For sure, already a reality in Portugal and Spain for some years and more to come.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
On the plus side more consumers moving to online for all needs. On the negative side startups that have SMEs as customers will continue to be impacted as will travel, proptech and fintech (because of bank reactions).

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Cash is king, make sure you don´t run out of money and prioritize that — cost reduction, fundraising and focus on positive margins, road to zero burn.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Absolutely — consumer move to online shopping and interactions has benefited almost half of our portfolio directly.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
The end of home schooling.

Any other thoughts you want to share with TechCrunch readers?
We might be back to a 2008 situation or worse, but we are better prepared this time.

 

Pedro Ribeiro Santos, partner,  Armilar Venture Partners

What trends are you most excited about investing in, generally?
Having always invested in deep tech, we’ve been advocates of the low-code/no-code movement for more than a decade (e.g., through our early investment in OutSystems), and it’s really exciting to see all that not just becoming a reality but also expanding even further toward the “citizen developer,” with products such as dashdash, Airtable, etc.

What’s your latest, most exciting investment?
Our latest investment was in Didimo, a young company with very exciting tech to automate the creation of high-fidelity and fully animatable human avatars in just seconds and from just a photo taken with any handheld device. Traditional processes use a sequence of piecemeal technology, several hours of computer graphics artists and computational processing. Enormous range of applications, the most immediate in gaming/entertainment and retail.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Teleportation :)
More seriously, while many T&H startups are enduring the impacts of COVID, the dramatic and long-enduring effect that it will have in change of habits (e.g., in business traveling) will likely open a world of new opportunities.

What are you looking for in your next investment, in general?
I’ll go with the general: Tech with strong defensibility (IP) with wide market applicability.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

While there are obviously several marketplaces that I wish we had invested in, I’m generally wary of that type of investment at the early stage, due to the low barriers to entry/no tech defensibility. (Of course, at the later stage, scale itself and the network effects become evident and extraordinary barriers to entry.)

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

While we’ve been investing globally since the beginning (20 years ago), we’ve been investing closer to home as the regional-to-local (European, Southern European, Portuguese) ecosystems really started to develop. Our current flagship fund V has a defined allocation to Portugal (not just Lisbon) of more than 50%, and we currently have a smaller fund 100% dedicated to Portugal.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
I’m biased, but I am a strong believer that Portugal is particularly well-poised to thrive in companies that are capital-light and engineering-heavy, that rely more on their proprietary tech (rather than deep pockets) to scale fast: deep tech B2B software companies. Software engineering/developer tools/DevOps/low-code tools/SW-based infrastructure spring to mind, as well as strongly grounded AI products. As Portugal still needs to fully close the loop of startup -> success -> exit -> liquidity -> reinvestment, I’m most excited about the companies that appear to be closer to that feat: OutSystems (our portfolio), Feedzai (our portfolio), Talkdesk (not our portfolio). I’m also really excited about companies less mature than those but with a very high potential, such as DefinedCrowd (not our portfolio), SWORD Health (not our portfolio), Codacy (our portfolio), dashdash (our portfolio), Didimo (our portfolio), among others that I’m surely and unfairly leaving out.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Portugal is characterized by:
• Enormous talent (particularly technical) at a relatively low cost (versus most of Europe).
• A place where people want to live (security, climate, friendliness, infrastructure, languages … the list could go on).
• Where capital has historically been scarce (it has recently developed significantly, but it remains relatively scarce by any European measure), but with very meaningful local experience.
• Companies born with a global mindset (Portugal is, at best, a good pilot market) and a capital efficiency mindset (do a lot with a little).
• Resulting in a ratio of good companies (measured, e.g., in the number or value of unicorns, or any other measure) per (capita, GDP, local capital or other metric of choice) far above most European countries (OK, maybe not Romania).
The scarcity of capital has been opening up a lot of opportunities for international investors, attracted by all of the above.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not necessarily. Many founders come from outside Lisbon or Porto already, with the cities serving as a central focus point.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

After the first 4-6 weeks of uncertainty, no change in the investment strategy. Biggest concerns of founders revolve around delays in buying decisions from their customers/frozen budgets. Hang tight!

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes. In many cases (except for the most critically hit arenas such as travel and hospitality), there are signs of business going back to normal.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Many businesses that had dramatically cut their plans for 2020 are now realizing that it won’t be as bad as they had initially thought.

Tocha, partner, Olisipo Way

What trends are you most excited about investing in, generally?
Looking for companies aiming at profitability that can become startups or businesses.

What’s your latest, most exciting investment?
Reatia.com and HunterBoards.com.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Small niches that traditionally are not big enough markets for VCs.

What are you looking for in your next investment, in general?
Passionate founders that want to create businesses where they want to work for the rest of their life.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Marketplaces, crypto.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
100% local Portuguese only.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Tourism, relocation.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Great founders, great and affordable teams. Companies focused since day one in international markets.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Tourism, restaurants and retail.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes. All related to home delivery or remote work.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
General understanding that the pandemic is here to stay for the next 2-5 years. And it’s not a short-term issue.

Any other thoughts you want to share with TechCrunch readers?
Come to Portugal, create and invest in companies.

Adão Oliveira, investment manager, Portugal Ventures

What trends are you most excited about investing in, generally?
At this point in time, looking forward to e-commerce, cloud and remote work solutions.

What’s your latest, most exciting investment?
Barkyn, which delivers all products and services a pet needs, online and offline, with a subscription plan. Barkyn delivers a package with personalized food (Barkyn’s private label) among other articles and access to a dedicated vet, solving two regular needs of dog owners in one single service.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
It would be great to have a startup that would allow us all to keep eye contact during a video call by using software, but perhaps that’s more like a DIY project :)

What are you looking for in your next investment, in general?
In general? A good return on investment :) Just being funny, but serious though. As a seed/early-stage investor we naturally thrive for having a successful exit, but we do have a big focus on assisting the startups in all their initial challenges and also in securing new rounds of funding for further growing and expansion.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
At this point all areas that have a tiny and small opportunity window — even if the market is big — will be having difficulties in getting funding, more than in the past. Startups that are only “marginally” improving current processes, meaning that if they are not brand new nor bringing breakthrough disruptive innovation their probability of succeeding will be too small.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Portugal Ventures is focused on Portugal only.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Companies excited about in the portfolio:
Barkyn (founder: André Jordão), which closed a €5 million round during the pandemic and that is already present in two international markets (Italy and Spain) besides Portugal.
DefinedCrowd (founder: Daniela Braga), another company that has secured a round of fundraising in the amount of $50,5M during the pandemic.
Curiously, both founders have won the first two editions João Vasconcelos’ award for entrepreneur of the year, Daniela in 2019 and André in 2020. That’s two in a row for Portugal Ventures :)

How should investors in other cities think about the overall investment climate and opportunities in your city?
IMO, and on general terms, the main drivers for other investors to look into Lisbon but also to Portugal are the following ones:

DEVELOPED LOCAL MARKET

  • Allows for business model validation at a reduced cost.
  • Important entrepreneurial hubs (Lisbon, Porto, Braga and Coimbra).

AVAILABILITY OF LOW-COST TALENT AND ALSO CHEAP LIVING COSTS

  • High-capital efficiency but with needs of international talent, for instance in the sales and marketing fields.

RELATIVELY LOW VALUATIONS

  • Maturing ecosystem.
  • Buyers’ market, meaning supply exceeds demand, giving purchasers an advantage over sellers in negotiation.

PUBLIC INCENTIVES ON INNOVATION

  • Leverage the equity investment with long-term nondilutive state and regional grants, R&D tax breaks or even a matching fund like 200M.

MORE STARTUPS GROWING FASTER AND ACHIEVING HIGHER MULTIPLES

  • It contributes to the creation of a real ecosystem, where network effects start to be more tangible.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
In the case of Portugal and the Lisbon hub I think it works quite on reverse. What I mean is that I envision Lisbon (and Portugal) receiving digital nomads essentially for some of the reasons I mentioned above, and the weather, never forget the weather :) Besides the quality life the country has to offer, other things will be contributing, IMO, for this inflow.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
On the downside, tourism-related ventures look definitely weaker under the current pandemic situation, which is easily understandable considering all the current restrictions. On the upper side, e-commerce as well as on-demand services have been experiencing a particularly good moment. In short, all businesses that can ride the trend of allowing a transition from the offline to the online world, preferably in untapped markets can benefit from a big window of opportunity.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
The investment strategy hasn’t changed as we are still looking for the best opportunities and the most promising ventures. What indeed happened during Q1 and Q2 2020 was that we needed to go through all our portfolio companies and assess their exposure to the pandemic situation — it’s like protecting the family first — then make decisions on further financing to sustain operations under the uncertain times of the pandemic. This put on hold the new opportunities we were looking into. But from Q3 2020 onward we got back on track with our deal sourcing as well as investing in new startups. The biggest worries of the founders of the portfolio was the impact of COVID on business activities in general and also to try to guarantee the biggest runway possible considering the uncertainty of the times ahead.
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
As mentioned some of them take benefit from the pandemic situation, others don’t.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
During the pandemic I closed my first fully remote deal (Barkyn) — I still haven’t met the CEO (André Jordão) in person nor even anyone from the team actually (looking forward to that!). Also participated in the TNW 2020 Conference (fully remote) as a speaker on the topic of scaling up and expanding in the Iberian Peninsula. Both “moments” made me think how the things are indeed transforming and perhaps how this way of living, making business and sharing knowledge can speed up things rather than slowing them down and also how efficient they can be, at least IMO.

Any other thoughts you want to share with TechCrunch readers?

Portugal, the next 10 years, a VC perspective: I saw the evolution from the last 10 years, and I do think that if we are able to keep the current trajectory in Portugal we will continue to stand out and impress. I think it is a mix of being ambitious but also credible and the most recent wave of entrepreneurs and founders I have been talking with seem to be better prepared than their predecessors. The other thing I do expect is that we are able to create a real ecosystem in Portugal, true ecosystems are good if network effects could be activated and also deliver positive outcomes for everyone involved, and I think we have a journey ahead of us. Last but not least, I hope that successful entrepreneurs in 5-10 years time can be able to give back to the community and share their knowledge with new startups in that time. They can do this through becoming investors themselves, that is something we see in other more mature countries happening, or simply by acting as facilitators in any type of challenges that startups will face.

Alexandre Barbosa, partner, Faber

What trends are you most excited about investing in, generally?
Faber invests in teams transforming the world with emerging technologies and we believe data-centric startups are accelerating digital transformation and driving innovation in several industries.

We are excited about the technologies enabling resilience, intelligence, agility or automation in the enterprise world, including next-gen solutions around AI Engineering (e.g., DataOps, MLOps), NLP, explainable AI, data management, data privacy and cybersecurity. Additionally, we also see value in using proprietary data and innovative human-machine interfaces (e.g., neurotechnologies) to enable precision and/or personalization in several industries (e.g., digital health).

What’s your latest, most exciting investment?
Over the last few months we have completed four new investments out of our new AI/data-focused fund: SWORD Health, who are building the future of digital physical therapy, and three other investments (to be announced soon) around DataOps/synthetic data, neurotechnologies and explainable AI.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
A growing percentage of enterprise IT budgets is being allocated to accelerating digital transition by working with data-centric startups, so there’s still significant opportunity for next-generation startups to challenge and transform the tech stack in multiple industries. Our belief is that entrepreneurship is also a core engine for a sustainable future through a combination of new business models, technology innovation and positive impact. As we are seeing in digital health, we expect to see a growing number of startups on a mission to tackle pressing societal challenges, such as climate change, through innovative applications of AI/ML/robotics to Earth science or natural resource management.

What are you looking for in your next investment, in general?
We are typically the first local investor in early-stage (pre-seed/seed) B2B data-driven startups primarily starting from Southern Europe to scale globally.
We look for highly specialized tech teams on a mission to transform an industry, who aim to build a diverse, balanced and inclusive culture with an open mindset, endless curiosity and relentless ambition to capture a large opportunity and conquer the world.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Within our B2B focus, startups launching undifferentiated SaaS products or with too much exposure to stressed industries should rethink their priorities.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our stage/tech specialty focus and value-add approach fill a gap in Iberia and we believe that we are now well-positioned to be investors in the next vintage of data-driven successes from Southern Europe (that typically scale up to the U.S.). In this context, we are planning to invest most of our capital in companies starting from Iberia to become a world-class benchmark, and selectively co-invest in promising teams across Europe.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
We believe that some of the most valuable and innovative startups emerging from Southern Europe are working in the “intelligent enterprise” space and/or driving digital innovation in financial services, cybersecurity, healthcare, manufacturing, agro-food and retail industries.
We have been first local investors in companies like Unbabel, Codacy, Seedrs and EnjoyHQ, who have started their companies from Portugal and rapidly scaled up to become distributed and acknowledged innovators in their industries/market spaces (just like Feedzai, who started before Faber existed). We are obviously excited about their success and how strongly they reflect our thesis.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Iberia has a solid track record of being a launch pad for a significant number of successful startups over the last 10 years. The region continues to be a magnet for talent from across Europe to blend with local talent and start a new venture, leveraging the growing maturity and specialization of the local ecosystem and its resources with a clear mindset from founders to start locally and scale up to the U.S.
Both Portugal and Spain have experienced pre-Series A investors who have historically co-invested with international VCs, a growing layer of later stage/growth capital (both local and international) and now more institutional LPs are following to get exposure to the asset class.
We strongly believe that Southern Europe will continue to produce a substantial number of innovative companies that will challenge and lead their industries at global scale, proving that the region is becoming the next emerging opportunity for venture in Europe.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The ecosystem has been rapidly adapting and we expect to see a growing number of new companies starting with distributed teams, ready to work around market restrictions and more resilient in general.
This will hopefully lower the barriers for founders from outside major cities, but we also believe that the major hubs in the region will continue to offer a powerful combination of resources to power new companies. So we don’t see remote work and new work dynamics as detrimental to major cities, but as a facilitation of access to capital or talent and an amplification of the deal flow in the region.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Although some industries are more exposed to the consequences of this pandemic (e.g., travel and hospitality), our investment strategy focuses on data-centric startups applying AI/ML/data science to enterprise digital transformation.
The immediate implications of C19 for business continuity, agility and performance open a realm of enterprise-grade opportunities for B2B data-driven startups that can help corporations adapt or drive innovation in their industries by leading “the new normal.”

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Our investment strategy hasn’t changed, if anything these times have validated our thesis and our focus on teams and companies challenging their industries with innovative solutions across the data stack that can help accelerate enterprise digital transformation.
The immediate priority of our portfolio was to work with us and our co-investors in ensuring solid runways, quickly adjusting go-to-market strategies to focus on less-exposed industries or longer sales cycles and, in general, review priorities and plan/prepare for uncertain times ahead. Fortunately the overall balance is currently positive, with the vast majority of our portfolio growing this year.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, so far the overall portfolio has been adapting and overcoming this challenge with a better performance than initially expected (in several cases with significant YoY growth), demonstrating that B2B/cloud/data-centric startups are more resilient and necessary.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
As in previous downturns, it is always invigorating and encouraging to see the audacity and the resolve of a new generation of entrepreneurs turning difficulty into opportunity and launching their ventures to challenge the status quo and build a better future.
Over the last months and despite these current times, we have been fortunate to witness this kind of long-term sight across a growing number of mission-driven founders and investors, alongside a vibrant momentum at technical universities and research institutions.
Together with the collective behavior and determination to adapt to and overcome this pandemic, we believe the entrepreneurial signs are strong enough to offer hope for the future.

Any other thoughts you want to share with TechCrunch readers?
Stay tuned for the next generation of startups arising from Southern Europe, the ecosystem is maturing fast and there’s a large number of new teams working around innovative applications of AI/engineering/deep tech in the region.

António Miguel, partner, Mustard Seed MAZE

What trends are you most excited about investing in, generally?
Sharing economy (more linked to circularity, like rental solutions); elderly care; skills development (requalification at scale post-COVID); female tech.

What’s your latest, most exciting investment?
Investment in a femtech business that is offering people who bleed with superior menstruation products and using a tech-enabled platform to be a full-spectrum companion across all period cycles.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Elderly care is ripe for disruption despite being talked about for some years; I wish I would see more on specific female health topics (e.g., menopause); overlooked opportunities include areas like environmental footprint of e-commerce and online to offline solutions given that people are now craving more than ever for meaningful connections.

What are you looking for in your next investment, in general?
A strong impact thesis through a lockstep model where the creation of social/environmental impact is the driver of top line.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Sustainable consumption apps and carbon footprint personal tracking; urban mobility.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
50% in local ecosystem; 50% all Europe (EU and non-EU).

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Well-positioned to thrive: Blue economy ventures; elderly care ventures; food tech.
Not well-positioned to thrive: Consumer businesses.
Companies I’m excited about: Hopin; StudentFinance.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Portugal is a great place to find price-competitive talent and an excellent location to be a first second-market for European businesses given its size, small distance between product and market (and therefore faster feedback loops) and sophistication of users.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Definitely. Take Lisbon as an example: Every week I learn about a founder or investor moving to Lisbon as a way to move out of U.K./Germany/France/U.S. as a result of the pandemic. The local ecosystem has never been so cosmopolitan and diverse.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Impact in our strategy: de minimis. Our strategy is focused on the belief that the most successful businesses are those that profit whilst solving social and environmental issues. COVID has only corroborated the need for such businesses. If anything, we have just invested more earlier tickets given the nature of fundraising in Q2 and Q3 of 2020.
Worries of founders: fundraising amidst uncertain times; how much of current traction is an indication of future traction versus a time-constrained trend (e.g., D2C revival as a distribution channel).
Advice: execution first and foremost; double down on stakeholder management, especially with super clients, partners and investors.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, especially because our portfolio is exclusively based on companies that generate revenues by solving social and/or environmental challenges. As a result, during and post-pandemic, demand for their solutions has increased.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Hearing Michael Seibel saying that social impact is the biggest trend he has seen in the last YC batch.

Any other thoughts you want to share with TechCrunch readers?
Thanks for what you do for the venture ecosystem in general!

Jaime Parodi Bardón, partner, impACT NOW Capital

What trends are you most excited about investing in, generally?
Our focus is impact investing and social innovation. Startups tackling the challenges that are at the heart of the UN 2030 Sustainable Development Goals (SDGs).

What’s your latest, most exciting investment?
We are currently structuring our first VC fund, which hopefully will be up and running in the beginning of 2021.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We expect to see an imminent development at the intersection between business, impact and technology … potentially through an emerging vertical: impact tech. It is still an immature field but it is rapidly gaining awareness and traction from entrepreneurs and investors.

What are you looking for in your next investment, in general?
We are looking for startups developing technology as a way to solve problems at the core of the UN SDGs agenda and/or using it as a channel to scale their solutions faster. These startups must create societal or environmental impact while producing financial performance. Personally, I want to see AI and blockchain as a force for good.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
In the impact landscape there is still plenty of room to grow. There are many local initiatives that are not sustainable nor scalable. It is needed to professionalize the commercialization of these initiatives (through products and services) to make them sustainable (and profitable), and incorporate technology in order to make them scalable.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our plan is to invest 50% in Iberia (it includes Portugal, our local ecosystem, and Spain) and 50% between Europe and CPLP (Community of Portuguese Language Countries).

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
The Portuguese government, through the Social Innovation Fund (SIF), is supporting social innovation and stimulating the impact economy. We are observing a significant development in areas such as healthcare and well-being (SDG #3), education (SDG #4), clean energy (SDG #7), and sustainable cities and communities (SDG #11). We have also seen great initiatives working in other fields such as responsible consumption and production, climate action and inequalities reduction. However, it is still not enough to meet the societal and environmental demands. We need to feel the sense of urgency and understand the dramatic consequences of not tackling these challenges on time.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Lisbon is a vibrating startup ecosystem. Investors from other countries are conscious of that and keep a good relation with the city and its ecosystem. Lisbon holds relevant entrepreneurial and investment events with Web Summit at the forefront. In addition, the Social Innovation Fund is creating opportunities for foreign investors to invest in Portuguese impact startups.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The increasing adoption of remote work tools during the pandemic has only accelerated the trend that was already in place. Lisbon was already a hub for entrepreneurs and digital nomads (not only working for Portuguese startups but global ones). It is possible that current big cities as startup hubs are losing people now while virtual communities are gaining ground. That would contribute to a more delocalized VC industry. However, in my opinion, the human touch is very important and physical events are a big part of building a community, so as soon as they are back, people will be attracted to them.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
The pandemic has aggravated some of the challenges already present in the UN SDGs agenda. Apart from the obvious devastating health outcomes, the COVID-19 pandemic has brought to the surface the weaknesses of the, until now, reducing inequalities efforts. On the other side, it is offering a great momentum and opportunity to review the concept of humanity through core values, population solidarity or global collaboration … all of them empowered by the digital transformation and adoption. The UN SDG agenda is not a choice but a must. Any startup that is able to implement a profitable and scalable business model addressing one of the challenges at the core of any of the SDGs will have a great opportunity to thrive in the medium and long term. In the short term, we can see a faster lane for these startups that keep a broader vision for the future while executing a narrower mission focused on solving problems related to COVID-19 itself.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
COVID-19 has brought even more sense of urgency in solving the problems already identified by the UN. Our investment strategy has not changed but has been reinforced by the current situation.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Since we don’t have an official portfolio yet we can not answer completely this question. What we have seen so far, in our prospects, is the creation of new markets and extension of the existing ones thanks to the aforementioned digital transformation/adoption. In addition, the increasing awareness of the consumer about the societal and environmental challenges together with the sense of responsibility in its purchasing behavior has lead to new and revolutionary revenue streams.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
It might sound cliché but the recent birth of my baby girl gives me even more energy to help build a better future.

Any other thoughts you want to share with TechCrunch readers?
We would like to keep on encouraging entrepreneurs, investors, corporates, governments and the rest of the ecosystem stakeholders to work together in finding formulas that create significant impact and financial benefits.

Stephan Morais, partner, Indico Capital Partners

What trends are you most excited about investing in, generally?
SaaS solutions, AI applications, digital health, data monetization, IoT SaaS platforms, engineered biology, marketplaces.

What’s your latest, most exciting investment?
Nutrium, a digital health platform that serves 800,000 nutrition patients and aims to put together dietitians, patients and their appointments, including wellness data and products and supplements.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Still many traditional areas and industries to digitize. AI is in its first stages in most industries so we need to address these traditional large opportunities.

What are you looking for in your next investment, in general?
We look for great founders that can actually be good leaders and CEOs. That’s a combination of vision, being able to take advantage of the market opportunity and having the necessary resilience to break the necessary barriers to create a success case. Additionally, teams need to be very good technically.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Food delivery, most e-commerce and SaaS for SMEs and startups. Given the saturation and competition in the advertising space, everything that depends on that to get off the ground is challenging.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We are 100% focused on Portugal and Spain.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
B2B SaaS companies: Unbabel, InnovationCast, Infraspeak, Onalytics.
AI and deep tech: Feedzai, Smartex, Cleverly.ai, Sound Particles.
Digital health: Nutrium, Zenklub, SWORD Health, Tonic App.
Fintech: StudentFinance, Switch Payments.
Consumer: Barkyn, EatTasty, Pleasy Play.
Digitalization of traditional industries: BitCliq, Apis Tech.

How should investors in other cities think about the overall investment climate and opportunities in your city?
In regards to Portugal, the ecosystem still has room to evolve. Most of the opportunities are in the early stage and the majority of the rounds are below €1 million. International investors should partner with local players in the early stages.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Portugal has been very attractive to international companies that have setup local offices in the past years to take advantage of the great technical talent available. The safety and lifestyle also makes the country attractive for nomads and remote workers, as well as senior executives that are willing to relocate here with their families. As more people work remotely, Portugal is expected to become even more of a destination for tech workers and startups.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Some industries like travel, hospitality and aviation are clearly suffering and some of our companies addressing these sectors have been impacted. We expect that to persist for the next couple of months.
Other sectors are booming like online deliveries, automation of processes and team sync and communication.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We focused the last months in making sure our portfolio had enough runway for the next year. We know cash is king, companies need to balance that with executing on their vision, taking advantage of the current opportunities.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Definitely. In some sectors, tech has been fundamental in keeping the society working and companies productive.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
Lots of successful companies in the U.S. were created by European founders, and some of them are returning to their home countries, which will generate a very positive impact! There will be a lot of interesting companies coming out of Europe in the coming years.

Any other thoughts you want to share with TechCrunch readers?
Europe has so much to do to catch up — severe lack of depth in the availability of capital still makes companies move to the U.S. after Series B.

Gavin Goldblatt, managing partner, Portugal Gateway

What trends are you most excited about investing in, generally?
Energy and fintech, particularly around mobile money.

What are you looking for in your next investment, in general?
A proven management team and proven product with international expansion potential.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Lisbon provides fantastic work-life balance and low startup and living costs as well as a good supply of skills. As a result it is likely to benefit from the recent COVID-inspired move away from more established startup hubs in less desirable locations.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Too early to tell. Obviously tourism and many services have been negatively impacted, but even in these areas innovators are taking advantage of the disruption to position themselves well if there is a recovery (and a release of pent-up demand) post-vaccine.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Surprisingly, the net result has been positive across our portfolio with significant opportunities arising. Turmoil and change bring opportunity,
Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
All of our investments are outperforming budget and expectations this year.

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