Nearly four years ago, I conducted an extensive analysis of the technology landscape in Lisbon. It’s a pleasure to revisit both Lisbon and Portugal to provide a concise update on its current status.

As Stephan Morais, founder and managing general partner at Indico Capital Partners, points out, Portugal boasts a highly skilled engineering workforce available at a competitive rate. The country also benefits from a remarkably high level of English proficiency – a significant advantage when compared to nations like Spain, France, and Italy – and a strong inclination among its founders to target global markets from the outset. Portuguese founders generally possess strong academic credentials, with a large percentage holding at least a master’s degree.

Despite this potential, the ecosystem remains in a relatively “early phase” of development. There are currently limited numbers of founders who have become angel investors, and substantial exits have been infrequent until recently. Furthermore, there’s a constrained supply of professionals specializing in sales and marketing. Nevertheless, considerable expansion is anticipated, as detailed below, and the post-COVID-19 environment has seen Lisbon – and Portugal as a whole – attract a growing influx of digital nomads.

Due to the limited size of the domestic consumer market, Portuguese startups typically focus on enterprise and SaaS solutions rather than direct-to-consumer applications, as indicated in the Startup Portugal Ecosystem report. While the disparity between local and international funding sources is diminishing, a gap persists in early-stage financing. Official government data reveals that €285 million was available for investment in 2019, with the top 25 late-stage companies collectively securing €117.8 million.

The venture capital firms operating within the country include Portugal Ventures, Indico Capital, Faber Ventures, Armilar Venture Partners, Bynd Capital, Semapa Next, Bright Pixel, EDP Ventures, and Shilling Capital Partners. Mustard Seed distinguishes itself as an impact fund, exclusively investing in startups leveraging technology to address social and environmental issues within Portugal.

Portugal is currently experiencing a period of transformation. Notably, an increasing number of individuals relocating from the UK following Brexit are choosing Portugal as their new home (along with other European destinations, but Lisbon’s combination of beaches and favorable tax policies is particularly appealing). The country offers a golden visa program for non-EU residents, and a startup visa is available for tech entrepreneurs. Simultaneously, Portuguese startups are increasingly successful in securing funding from international sources, allowing them to expand beyond the confines of the national market.

The availability of domestic venture capital experienced a period of scarcity between 2016 and 2018, but has significantly improved in the 2019-20 timeframe. Moreover, international VCs, including those based in neighboring Spain (such as K Fund, Kibo, and Conexo Ventures), are demonstrating growing interest in the Portuguese ecosystem, as highlighted by various sources.

The successes of companies like Farfetch, Talkdesk, Outsystems, Feedzai, and DefinedCrowd have attracted the attention of international investors. According to investor Pedro Almeida in 2020, international investors participated in less than 40% of all venture rounds, but accounted for over 30% of seed and pre-seed funding.

This trend suggests that international investment will become more prevalent at later funding stages as these startups continue to mature. Corporate venture capital activity has also become more robust and professional during this period.

Government initiatives designed to stimulate the ecosystem include Startup Portugal and 200M, a matched-funding program offering a 50:50 contribution with a call option within 3-4 years at a low return rate (3%-4% IRR). Additionally, the FIS social innovation fund provides a 70:30 match funding initiative with a similar call option.

Furthermore, “Portugal Tech” represents the country’s first dedicated fund-of-funds initiative, governed by market regulations and owned by IFD (the development bank) but professionally managed by the European Investment Fund.

Portugal has seen the emergence of unicorns such as OutSystems and Talkdesk (which has since moved its headquarters to San Francisco). While Farfetch has Portuguese roots through its founders, it is widely recognized as a London-based startup. Other promising startups to watch include Feedzai, Codacy, BIZAY, Aptoide, Unbabel, and Uniplaces.

Among the newer, emerging companies are Rows, Didimo, Tonic App, SWORD Health, Barkyn, Utrust, Sensei, Vawlt, Lovys, StudentFinance, Nutrium, Reatia, LegalVision, Kitch, Rnters, kencko, and YData.

Leading accelerators and incubators in the region include Beta-i, Bright Pixel, BGI (Building Global Innovators), Tec Labs, Startup Lisboa, Fábrica de Startups, Techstars Lisbon (currently paused after a two-year run), Demium, EDP Starter, Maze X, Blue Bio Value, and the Indico Pre-Seed Program.

Lisbon offers a variety of co-working spaces, including LACS, Fintech House, Cowork Central, Second Home, Startup Lisboa, SITIO, Impact Hub, and NOW_Beato. The large-scale “campus” style facility, Factor Lisbon, has adapted its plans to ensure a COVID-safe environment prior to its launch.

Lisbon – and Portugal in general – is rapidly gaining prominence on the European and global stage, benefiting from its continued EU membership, international outlook, welcoming culture, and dedicated work ethic.

We consulted with the following Portugal-based VCs:

• Cristina Fonseca, partner, Indico Capital Partners
• Pedro Ribeiro Santos, partner, Armilar Venture Partners
• Tocha, partner, Olisipo Way
• Adão Oliveira, investment manager, Portugal Ventures
• Alexandre Barbosa, partner, Faber
• António Miguel, partner, Mustard Seed MAZE
• Jaime Parodi Bardón, partner, impACT NOW Capital
• Stephan Morais, partner, Indico Capital Partners
• Gavin Goldblatt, managing partner, Portugal Gateway

Cristina Fonseca, partner, Indico Capital Partners

Regarding general investment trends, what areas currently generate the most enthusiasm?
We are particularly interested in the increasing digitization of supply chains and the application of artificial intelligence to enhance decision-making processes.

What is your firm’s most recent and compelling investment?
We recently invested in a company focused on the digitization of beehives, impacting both honey production and the pollination industry.

Are there specific types of startups you are hoping to encounter that are currently lacking in the market? What opportunities are currently being underestimated?
The convergence of IoT and AI, now enabled by 5G technology, presents a significant investment opportunity that is becoming increasingly relevant.

What key characteristics are you seeking in potential investments?
We are placing increased emphasis on in-depth analysis of the founder’s personality and characteristics prior to making an investment decision.

Which sectors appear overly crowded or present significant competitive challenges for new startups? Are there any product or service categories that cause concern?
We are cautious regarding investments in digital health, the broader fintech landscape, and e-commerce due to existing market saturation.

To what extent is your investment focus concentrated within your local ecosystem versus a broader, global scope? Does your local region account for more or less than 50% of your investments?
The majority of our investments are made in Portugal, with a smaller portion allocated to Spain.

Within your city and region, which industries appear poised for long-term success, and which face potential challenges? Are there any specific companies or founders that particularly excite you, whether within your portfolio or not?
We see strong potential in B2B SaaS and marketplace models, particularly when combined to create a competitive advantage. Companies like Barkyn, Nutrium, Unbabel, Zenklub, kencko, and Consentio are particularly noteworthy.

What advice would you offer to investors in other cities who are considering the investment climate and opportunities in your region?
The business environment is stable, offering access to skilled engineering talent and companies with global aspirations.

Do you anticipate a growing trend of founders emerging from areas outside of traditional startup hubs in the coming years, potentially driven by the pandemic and the rise of remote work?
Yes, this trend is already evident in Portugal and Spain and is expected to continue.

Which of the industry segments you invest in appear most vulnerable to shifts in consumer and business behavior resulting from COVID-19? What opportunities might startups be able to capitalize on during this period?
The increased shift towards online channels benefits many businesses. However, startups serving SMEs, as well as those in the travel, proptech, and fintech sectors, may face ongoing challenges due to the impact of the pandemic and related banking responses.

How has COVID-19 influenced your investment strategy? What are the primary concerns expressed by the founders within your portfolio? What guidance are you currently providing to these startups?
Maintaining sufficient cash flow is paramount. We advise prioritizing cost reduction, fundraising efforts, and achieving positive margins, ultimately striving for a path to zero burn rate.

Are you observing positive indicators, such as revenue growth or improved retention rates, within your portfolio companies as they adapt to the pandemic?
Indeed, the increased consumer adoption of online shopping and digital interactions has directly benefited nearly half of our portfolio companies.

Can you share a recent experience that has instilled a sense of optimism? This could be related to your professional life, personal experiences, or a combination of both.
The resumption of in-person schooling after the period of home learning.

Do you have any final thoughts you would like to share with readers of TechCrunch?
We may be facing a situation comparable to or even more challenging than 2008, but we are currently in a stronger position to navigate these difficulties.

Pedro Ribeiro Santos, partner, Armilar Venture Partners

Regarding general investment trends, what areas currently excite you?
We have consistently focused on advanced technologies, and have long recognized the potential of the low-code/no-code trend – dating back over ten years with our initial investment in OutSystems. It’s encouraging to witness this concept not only becoming a reality but also broadening its scope to empower “citizen developers” through platforms like dashdash and Airtable.

What is your firm’s most recent and compelling investment?
We recently invested in Didimo, an innovative company developing technology to rapidly automate the creation of highly realistic and fully animated 3D human avatars. This is achieved using only a single photograph captured on any standard mobile device. Traditional methods involve complex, multi-stage processes, requiring significant time from computer graphics professionals and substantial computational resources. The potential applications are extensive, with initial impact expected in the gaming, entertainment, and retail sectors.

Are there any types of startups you’d like to see emerge in the industry that are currently missing? What opportunities are currently being underestimated?
Teleportation, naturally!
On a more practical note, despite the challenges many technology and healthcare startups are facing due to COVID-19, the lasting changes in behavior – particularly in areas like business travel – are likely to generate a wealth of new possibilities.

What key characteristics do you seek in potential investments?
Generally, we prioritize technologies with robust intellectual property protection and broad applicability across various markets.

Which sectors appear overly competitive for new startups, or present significant barriers to entry? What types of products or services cause you concern?

Although numerous marketplaces have caught our attention, I generally approach investments in this area with caution at the early stages, due to the typically low barriers to entry and lack of inherent technological advantages. (However, it’s important to note that at a later stage, scale and network effects can create substantial barriers to entry.)

To what extent does your investment focus prioritize your local ecosystem versus broader startup hubs? Is it more than 50%? Less?

While we’ve consistently invested internationally since our founding (20 years ago), we’ve increasingly focused on opportunities closer to home as the ecosystems in Europe, Southern Europe, and Portugal have matured. Our current Fund V has a dedicated allocation exceeding 50% to Portugal – encompassing areas beyond Lisbon – and we also operate a smaller fund exclusively focused on Portuguese ventures.

Looking ahead, which industries in your city and region appear best positioned for long-term success, and which may struggle? Which companies, within or outside your portfolio, and which founders do you find particularly promising?
I may be biased, but I firmly believe Portugal is uniquely positioned to excel with companies that are capital-efficient and heavily reliant on engineering expertise, leveraging proprietary technology for rapid scaling. This includes deep tech B2B software, software engineering tools, DevOps solutions, low-code platforms, and software-based infrastructure, as well as AI products with a strong practical foundation. Given that Portugal is still developing a complete cycle of startup growth – from inception to successful exit, liquidity, and reinvestment – I’m particularly enthusiastic about companies nearing this milestone, such as OutSystems and Feedzai (both portfolio companies), and Talkdesk (not in our portfolio). I’m also impressed by emerging companies like DefinedCrowd, SWORD Health, Codacy, dashdash, and Didimo, among many others that I may be inadvertently overlooking.
What advice would you give to investors considering the investment climate and opportunities in your city?
Portugal offers:
• A wealth of skilled talent, particularly in technical fields, available at a competitive cost compared to much of Europe.
• An attractive quality of life, characterized by safety, favorable climate, welcoming culture, and robust infrastructure.
• Historically limited access to capital – although this is improving – resulting in a strong emphasis on capital efficiency.
• Companies with a naturally global outlook, viewing Portugal as an ideal testing ground.
• A remarkably high ratio of successful companies – measured by metrics like unicorn status – relative to its size, GDP, or local capital investment, exceeding that of many European nations.
The relative scarcity of capital has created significant opportunities for international investors seeking these advantages.

Do you anticipate a significant increase in founders relocating from major cities to smaller geographies in the coming years, driven by the pandemic, remote work trends, and concerns about urban hubs?
Not necessarily. Many founders already originate from outside Lisbon or Porto, with these cities serving as central hubs.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you providing to your portfolio companies at this time?

Following an initial period of 4-6 weeks of uncertainty, our investment strategy remained unchanged. The main concerns voiced by founders center around potential delays in customer purchasing decisions and budget freezes. Our advice is to remain resilient!

Are you observing positive indicators – such as revenue growth, customer retention, or other momentum – within your portfolio as companies adapt to the pandemic?
Yes, in many instances (with the exception of sectors severely impacted like travel and hospitality), we are seeing signs of a return to normal business activity.

Can you share a recent experience that has instilled optimism in you? This could be professional, personal, or a combination of both.
Numerous businesses that had significantly scaled back their 2020 plans are now recognizing that the year will not be as challenging as initially projected.

Tocha, partner, Olisipo Way

What investment trends currently generate the most enthusiasm for you?
We are seeking out companies with a clear path to profitability, whether they are emerging startups or established businesses.

What is your most recent and compelling investment?
Our latest investments include Reatia.com and HunterBoards.com.

Are there any types of startups you’d like to see emerge in the industry that are currently missing? What currently undervalued opportunities exist?
We believe there’s potential in smaller, specialized niches that are often considered too small to attract venture capital funding.

What qualities do you prioritize when considering a new investment?
We look for founders who are deeply committed and driven to build businesses they envision themselves working at for the long term.

Which sectors appear overly competitive or challenging for new startups to enter? What products or services give you pause?
We are cautious regarding marketplaces and cryptocurrency-related ventures.

To what extent does your investment focus remain within your local area versus expanding to other startup ecosystems? Is it more than 50% local? Less?
Our investments are exclusively focused on Portuguese companies – 100% local.

Which industries in your city and region appear poised for long-term success, and which face challenges? Are there any specific companies or founders you find particularly promising, regardless of whether they are in your portfolio?
We see strong potential in the tourism and relocation sectors.

What advice would you give to investors in other cities who are considering the investment landscape and opportunities in your city?
They will find exceptional founders and access to highly skilled, cost-effective teams. Companies here are often focused on international markets from the outset.

Do you anticipate a growing number of founders originating from areas outside of major cities in the coming years, potentially as startup hubs experience shifts due to the pandemic and the rise of remote work?
Yes, we do expect to see this trend.

Which of the industry segments you invest in appear most vulnerable to changes in consumer and business behavior as a result of COVID-19? What opportunities might startups be able to capitalize on during this period?
The tourism, restaurant, and retail industries have been significantly impacted.

Are you observing positive indicators – such as revenue growth, customer retention, or increased momentum – within your portfolio companies as they adapt to the challenges of the pandemic?
Yes, we are. This positive activity is primarily related to home delivery services and remote work solutions.

What recent event or realization has instilled a sense of optimism in you? This could be related to your professional life, personal experiences, or a combination of both.
There’s a growing acceptance that the pandemic will be a long-term reality, lasting for the next 2-5 years, and is not a temporary situation.

Do you have any final thoughts you’d like to share with TechCrunch readers?
We encourage you to come to Portugal, establish businesses, and make investments.

Adão Oliveira, investment manager, Portugal Ventures

What investment trends currently generate the most enthusiasm for you?
Currently, I am particularly interested in the potential of e-commerce, cloud computing, and solutions that facilitate remote work.

Could you describe your most recent and compelling investment?
We recently invested in Barkyn, a company that provides a comprehensive range of products and services for pet owners, both online and through physical locations, utilizing a convenient subscription model. Barkyn delivers customized food – produced under their own brand – alongside other essential items and provides access to veterinary professionals, effectively addressing two key needs of dog owners with a single, integrated service.

Are there any types of startups you’d like to see emerge in the industry that are currently missing? What opportunities are currently being underestimated?
It would be beneficial to have a startup focused on maintaining eye contact during video conferences through software solutions, although that might be better suited as a personal project :)

What key characteristics do you seek in your next investment, generally speaking?
Naturally, we aim for a strong return on investment :) That’s a bit of a lighthearted response, but it’s genuinely important. As a seed and early-stage investor, a successful exit is a primary goal, but we also place significant emphasis on supporting startups through their initial hurdles and assisting them in securing additional funding for continued growth and expansion.

Which areas are becoming overly competitive, or would present significant challenges for a new startup? What types of products or services cause you concern?
Currently, ventures entering areas with limited growth potential – even within large markets – may encounter difficulties in attracting funding compared to the past. Startups offering only incremental improvements to existing processes, lacking truly innovative or disruptive elements, face a reduced probability of success.

To what extent is your investment focus directed towards your local ecosystem versus other startup hubs? Is it more than 50%? Less?
Portugal Ventures concentrates its investments exclusively within Portugal.

Which industries in your city and region appear best positioned for long-term success, or not? Which companies, within or outside your portfolio, and which founders do you find particularly exciting?
Companies within our portfolio that are particularly promising include:
Barkyn (founder: André Jordão), which successfully closed a €5 million funding round during the pandemic and has already expanded into two international markets – Italy and Spain – in addition to Portugal.
DefinedCrowd (founder: Daniela Braga), another company that secured $50.5 million in funding during the pandemic.
Notably, both founders were recognized with João Vasconcelos’ Entrepreneur of the Year award, with Daniela winning in 2019 and André in 2020 – two consecutive wins for Portugal Ventures :)

What advice would you give to investors in other cities regarding the investment landscape and opportunities in your city?
In my opinion, and generally speaking, the primary factors attracting investors to Lisbon, and Portugal as a whole, are as follows:

A WELL-DEVELOPED LOCAL MARKET

• Enables cost-effective validation of business models.
• Features significant entrepreneurial centers (Lisbon, Porto, Braga, and Coimbra).

ACCESS TO AFFORDABLE TALENT AND LIVING COSTS

• Offers high capital efficiency, although there is a need for international talent, particularly in sales and marketing.

RELATIVELY LOW VALUATIONS

• A maturing ecosystem.
• A buyers’ market, where the supply of opportunities exceeds demand, giving investors a negotiating advantage.

GOVERNMENT INCENTIVES FOR INNOVATION

• Opportunities to leverage equity investment with long-term, non-dilutive state and regional grants, R&D tax benefits, or matching funds, such as the €200 million fund.

RAPID GROWTH AND INCREASING VALUATIONS OF STARTUPS

• This fosters a genuine ecosystem with increasingly tangible network effects.

Do you anticipate an increase in founders relocating from smaller cities to major hubs in the coming years, as pandemic-related concerns and the rise of remote work impact startup hubs?
In the case of Portugal and Lisbon specifically, I believe the trend will be reversed. I foresee Lisbon (and Portugal) attracting digital nomads, driven by factors I’ve already mentioned, as well as the favorable climate. Beyond the quality of life, other elements will contribute to this influx, in my view.

Which industry segments within your investment portfolio appear weaker or more vulnerable to changes in consumer and business behavior due to COVID-19? What opportunities might startups be able to capitalize on during these unprecedented times?
Tourism-related ventures are undoubtedly weaker given the current pandemic situation and associated restrictions. Conversely, e-commerce and on-demand services have experienced substantial growth. In essence, businesses that can facilitate a shift from offline to online operations, particularly in underserved markets, have a significant opportunity for success.

How has COVID-19 influenced your investment strategy? What are the primary concerns of the founders within your portfolio? What guidance are you providing to startups in your portfolio at this time?
Our investment strategy remains consistent – we continue to seek the best opportunities and most promising ventures. However, during the first and second quarters of 2020, we prioritized assessing the exposure of our existing portfolio companies to the pandemic and making decisions regarding further financing to ensure operational sustainability during the uncertain period. This temporarily paused our pursuit of new opportunities. Starting in the third quarter of 2020, we resumed deal sourcing and investing in new startups. The primary concerns of our portfolio founders revolved around the pandemic’s impact on business activities and securing sufficient runway given the prevailing uncertainty.

Are you observing positive indicators – such as revenue growth, customer retention, or other momentum – within your portfolio as companies adapt to the pandemic?
As previously mentioned, some companies are benefiting from the pandemic, while others are not.

Can you share a recent experience that has instilled optimism in you, either professionally, personally, or a combination of both?
During the pandemic, I completed my first fully remote deal (Barkyn) – I still haven’t had the opportunity to meet the CEO (André Jordão) or any member of the team in person (I look forward to that!). I also participated as a speaker at the TNW 2020 Conference (also fully remote), discussing the topic of scaling up and expanding within the Iberian Peninsula. Both experiences highlighted how these changes can potentially accelerate processes and improve efficiency, in my opinion.

Do you have any final thoughts you’d like to share with TechCrunch readers?

Portugal, a VC perspective for the next 10 years: Having observed the evolution over the past decade, I believe that if Portugal maintains its current trajectory, it will continue to distinguish itself and impress. I see a combination of ambition and credibility, and the latest generation of entrepreneurs and founders I’ve engaged with appear better prepared than their predecessors. I also anticipate the development of a true ecosystem in Portugal, where network effects can be activated and deliver positive outcomes for all stakeholders. We have a journey ahead of us. Finally, I hope that successful entrepreneurs in the next 5-10 years will give back to the community and share their knowledge with emerging startups, either by becoming investors themselves or by providing guidance and support through various challenges.

Alexandre Barbosa, partner, Faber

What trends are you most excited about investing in, generally?
Faber concentrates its investments in teams that are reshaping the world through the application of cutting-edge technologies, and we firmly believe that companies centered around data are accelerating digital progress and fostering innovation across numerous sectors.

We are particularly enthusiastic about technologies that enhance organizational resilience, intelligence, responsiveness, and automation, including advanced solutions in areas like AI Engineering (such as DataOps and MLOps), Natural Language Processing, interpretable AI, data governance, data security, and cybersecurity. Furthermore, we recognize the potential of utilizing unique data assets and innovative human-machine interfaces – for example, neurotechnologies – to deliver precision and customized experiences in various industries, including digital healthcare.

What’s your latest, most exciting investment?
In recent months, we’ve finalized four new investments from our recently launched AI/data-focused fund: SWORD Health, which is pioneering the future of digital physical therapy, and three additional investments (details to be released shortly) centered 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?
An increasing portion of enterprise IT spending is being directed towards accelerating digital transformation through collaboration with data-focused startups, creating substantial opportunities for next-generation companies to disrupt and revolutionize technology stacks across diverse industries. We maintain the conviction that entrepreneurship is a vital force for a sustainable future, driven by novel business models, technological advancements, and positive societal impact. As demonstrated in the digital health sector, we anticipate a growing number of startups dedicated to addressing critical global challenges, such as climate change, through the innovative application of AI, Machine Learning, and robotics to Earth science and natural resource management.

What are you looking for in your next investment, in general?
We typically serve as the initial local investor in early-stage (pre-seed/seed) B2B, data-driven startups, primarily originating from Southern Europe, with ambitions for global expansion.
We seek highly specialized technical teams committed to transforming their respective industries, fostering a diverse, equitable, and inclusive culture characterized by an open mindset, unwavering curiosity, and a determined drive to capitalize on significant opportunities and achieve global success.

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 introducing undifferentiated Software-as-a-Service (SaaS) products or those heavily reliant on struggling industries should carefully re-evaluate their strategies.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Our specialized focus on stage and technology, combined with our value-added approach, addresses a gap in the Iberian market. We are now well-positioned to support the next wave of data-driven successes originating from Southern Europe, which often expand to the U.S. Consequently, we plan to allocate the majority of our capital to companies based in Iberia, establishing a world-class standard, while selectively co-investing 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 promising and innovative startups emerging from Southern Europe are operating within the “intelligent enterprise” space and/or driving digital innovation in financial services, cybersecurity, healthcare, manufacturing, agro-food, and retail.
We have been early local investors in companies such as Unbabel, Codacy, Seedrs, and EnjoyHQ, all of which originated in Portugal and have rapidly scaled to become recognized innovators in their respective industries and markets – mirroring the success of Feedzai, which predates Faber’s involvement. We are naturally enthusiastic about their achievements and how well they align with our investment philosophy.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Iberia has consistently demonstrated its ability to serve as a launchpad for numerous successful startups over the past decade. The region continues to attract talent from across Europe, blending it with local expertise to create new ventures, leveraging the growing maturity and specialization of the local ecosystem and its resources, with a clear focus from founders on launching locally and scaling to the U.S.
Both Portugal and Spain have established pre-Series A investors who have historically collaborated with international VCs, a growing ecosystem of later-stage/growth capital (both local and international), and increasing engagement from institutional Limited Partners seeking exposure to this asset class.
We are confident that Southern Europe will continue to generate a substantial number of innovative companies that will challenge and lead their industries on a global scale, solidifying the region’s position as the next emerging opportunity for venture capital 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 adapting quickly, and we anticipate a growing number of new companies launching with distributed teams, prepared to navigate market limitations and demonstrate greater resilience overall.
This development should lower barriers for founders outside major cities, but we also believe that major hubs in the region will continue to offer a powerful combination of resources to support new companies. Therefore, we don’t view remote work and evolving work dynamics as detrimental to major cities, but rather as a facilitator of access to capital and talent, and an expansion 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?
While certain industries are more vulnerable to the effects of the pandemic (such as travel and hospitality), our investment strategy centers on data-centric startups applying AI, Machine Learning, and data science to enterprise digital transformation.
The immediate consequences of COVID-19 for business continuity, agility, and performance create a wealth of opportunities for B2B, data-driven startups that can assist corporations in adapting or driving innovation within their industries by shaping “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 has remained consistent; in fact, these circumstances have reinforced our thesis and our focus on teams and companies challenging their industries with innovative solutions across the data stack, accelerating enterprise digital transformation.
The initial priority for our portfolio companies was to collaborate with us and our co-investors to ensure sufficient cash reserves, swiftly adjust go-to-market strategies to target less-affected industries or accommodate extended sales cycles, and generally reassess priorities and prepare for potential uncertainties. Fortunately, the overall outlook is currently positive, with the majority of our portfolio experiencing growth this year.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, to date, the portfolio has demonstrated adaptability and resilience, exceeding initial expectations (with significant year-over-year growth in many cases), confirming that B2B/cloud/data-centric startups are more robust and essential.

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 economic downturns, it is consistently inspiring to witness the boldness and determination of a new generation of entrepreneurs transforming challenges into opportunities and launching ventures to challenge the status quo and build a better future.
In recent months, despite the current circumstances, we have been fortunate to observe this long-term vision among a growing number of mission-driven founders and investors, alongside a vibrant momentum within technical universities and research institutions.
Combined with the collective commitment to adapt and overcome this pandemic, we believe the entrepreneurial indicators are strong enough to offer optimism for the future.

Any other thoughts you want to share with TechCrunch readers?
Keep an eye on the next generation of startups emerging from Southern Europe; the ecosystem is maturing rapidly, and a significant number of new teams are working on innovative applications of AI, engineering, and deep tech in the region.

António Miguel, partner, Mustard Seed MAZE

Generally speaking, which investment trends currently generate the most enthusiasm for you?
The sharing economy, particularly as it relates to circularity – for instance, rental services – is appealing. Additionally, I’m excited about opportunities in elderly care, large-scale skills development and retraining following the COVID-19 pandemic, and technology companies led by women.

Could you describe your most recent and compelling investment?
We recently invested in a femtech company dedicated to providing individuals who menstruate with enhanced period products. This business utilizes a technology platform to offer comprehensive support throughout the entire menstrual cycle.

What types of startups are you hoping to encounter in the industry, but are currently lacking? What potential opportunities are being underestimated at this time?
The elderly care sector is poised for significant innovation, despite ongoing discussion. I would also like to see increased focus on specific areas of female health, such as menopause. Overlooked opportunities exist in addressing the environmental impact of e-commerce and developing solutions that bridge the gap between online and offline experiences, as people increasingly desire more meaningful interactions.

What key characteristics are you seeking in your next investment, broadly speaking?
We prioritize a robust impact thesis, integrated with a business model where the creation of positive social and environmental impact directly drives revenue growth.

Which sectors are becoming overly crowded, or present too much competitive difficulty for a new startup? What kinds of products or services cause you concern or hesitation?
The market for sustainable consumption applications and personal carbon footprint trackers is becoming saturated. Similarly, the urban mobility space presents significant challenges.

To what extent is your investment focus directed towards your local ecosystem versus other startup hubs – or a broader geographic scope? Is it more than 50%? Less?
We allocate 50% of our investments to our local ecosystem and the remaining 50% across all of Europe, including both EU and non-EU countries.

Which industries in your city and region appear best positioned for long-term success, and which are not? Are there any companies, regardless of whether they are in your portfolio, or founders that you find particularly inspiring?
Industries poised for growth: ventures in the blue economy, elderly care businesses, and food technology companies.
Industries facing challenges: consumer-focused businesses.
Companies I admire: Hopin and StudentFinance.

What advice would you offer to investors in other cities regarding the investment landscape and opportunities in your city?
Portugal offers access to cost-effective talent and serves as an ideal second market for European businesses due to its manageable size, proximity to markets, and sophisticated consumer base, enabling rapid feedback loops.

Do you anticipate a growing number of founders emerging from areas outside of major cities in the coming years, potentially leading to a decline in startup activity in established hubs due to the pandemic and the increasing appeal of remote work?
Absolutely. Lisbon, for example, is experiencing a consistent influx of founders and investors relocating from the U.K., Germany, France, and the U.S. as a result of the pandemic. This has made our local ecosystem more cosmopolitan and diverse than ever before.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders within your portfolio? What guidance are you currently providing to startups in your portfolio?
The impact on our strategy has been minimal. We maintain our belief that the most successful businesses are those that generate profit while addressing social and environmental issues. COVID-19 has only reinforced the importance of such businesses. In fact, we have increased our early-stage investments, particularly during the fundraising period in the second and third quarters of 2020.
Founders’ concerns: securing funding in an uncertain environment; determining whether current traction is indicative of future growth or a temporary trend (such as the resurgence of direct-to-consumer channels).
Our advice: prioritize execution above all else; strengthen stakeholder relationships, particularly with key clients, partners, and investors.

Are you observing positive indicators – such as revenue growth, customer retention, or other momentum – within your portfolio companies as they adapt to the pandemic?
Yes, particularly because our portfolio consists exclusively of companies that generate revenue by solving social and/or environmental problems. Consequently, demand for their solutions has increased both during and after the pandemic.

Can you share a recent experience that has instilled optimism in you? This could be professional, personal, or a combination of both.
I was encouraged to hear Michael Seibel state that social impact is the most significant trend he observed in the latest Y Combinator cohort.

Are there any additional thoughts you would like to share with TechCrunch readers?
Thank you for your contributions to the venture ecosystem!

Jaime Parodi Bardón, partner, impACT NOW Capital

What investment trends currently generate the most enthusiasm for you?
We concentrate our efforts on impact investing and social innovation, specifically supporting startups dedicated to addressing the critical challenges outlined in the UN 2030 Sustainable Development Goals (SDGs).

Could you describe your most recent and compelling investment endeavor?
We are presently in the process of establishing our inaugural venture capital fund, with an anticipated launch in early 2021.

Are there specific types of startups you’d like to see emerge within the industry, or are there currently undervalued opportunities?
We anticipate a significant evolution at the convergence of commerce, positive impact, and technological advancement – potentially manifested through a developing sector we call “impact tech.” While still in its early stages, this field is rapidly gaining recognition and attracting interest from both entrepreneurs and investors.

What key characteristics define your ideal investment prospect?
We seek startups that leverage technology to resolve fundamental issues aligned with the UN SDGs agenda, or utilize it to broaden the reach of their solutions. These ventures must demonstrate both positive societal or environmental impact alongside strong financial performance. From a personal perspective, I am keen to witness the constructive application of artificial intelligence and blockchain technologies.

Which sectors appear overly crowded, or present excessive competitive hurdles for new startups? Are there particular products or services that cause you concern?
The impact investing space still offers considerable potential for expansion. Numerous localized initiatives currently lack the sustainability and scalability needed for long-term success. A greater emphasis on professionalizing the commercialization of these initiatives – through the development of viable products and services – is essential to ensure their sustainability and profitability, alongside the integration of technology to facilitate scalability.

To what extent does your investment focus prioritize your local ecosystem versus broader startup hubs? Is it more than 50% local?
Our strategy involves allocating 50% of our investments to Iberia – encompassing both our local ecosystem in Portugal and Spain – and the remaining 50% to opportunities across Europe and the Community of Portuguese Language Countries (CPLP).

Which industries within your city and region appear best positioned for long-term success, and which face challenges? Can you highlight any companies, within or outside your portfolio, or founders that inspire you?
The Portuguese government, through the Social Innovation Fund (SIF), is actively fostering social innovation and stimulating the impact economy. We are observing substantial progress in areas such as healthcare and well-being (SDG #3), education (SDG #4), clean energy (SDG #7), and sustainable cities and communities (SDG #11). Furthermore, we’ve seen promising initiatives addressing responsible consumption and production, climate action, and the reduction of inequalities. However, current efforts are insufficient to fully address the pressing societal and environmental needs, requiring a heightened sense of urgency and recognition of the potential consequences of inaction.

What advice would you offer to investors considering the investment climate and opportunities in your city?
Lisbon is a dynamic and thriving startup ecosystem. Investors from other nations recognize this and maintain strong relationships with the city and its network. Lisbon hosts significant entrepreneurial and investment events, with Web Summit being a prominent example. Additionally, the Social Innovation Fund is creating avenues for foreign investors to participate in Portuguese impact startups.

Do you foresee an increase in founders originating from areas outside major cities in the coming years, potentially driven by the pandemic, remote work trends, and the decline of traditional startup hubs?
The growing acceptance of remote work tools during the pandemic has only accelerated an existing trend. Lisbon was already attracting entrepreneurs and digital nomads, serving not only Portuguese startups but also global organizations. It’s conceivable that established startup hubs are currently experiencing an outflow of talent, while virtual communities are gaining prominence, contributing to a more geographically dispersed venture capital landscape. However, I believe that personal interaction remains crucial, and physical events will continue to draw people together once they resume.

Which industry segments within your investment portfolio appear most vulnerable or susceptible to changes in consumer and business behavior due to COVID-19? What opportunities might startups be able to capitalize on during these unprecedented times?
The pandemic has exacerbated existing challenges related to the UN SDGs agenda. Beyond the obvious health crisis, COVID-19 has highlighted shortcomings in efforts to reduce inequalities. Conversely, it presents a valuable opportunity to re-evaluate fundamental human values, such as population solidarity and global collaboration, all of which are empowered by digital transformation and adoption. Addressing the UN SDG agenda is not optional, but essential. Any startup capable of implementing a profitable and scalable business model that tackles challenges central to the SDGs will be well-positioned for success in the medium to long term. In the short term, those startups that maintain a broad vision for the future while focusing on solving problems directly related to COVID-19 will likely experience accelerated growth.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders within your portfolio? What guidance are you currently providing to startups in your portfolio?
COVID-19 has amplified the urgency of addressing the issues already identified by the UN. Our investment strategy has not fundamentally changed, but has been reinforced by the current circumstances.

Are you observing positive indicators – such as revenue growth, customer retention, or other momentum – within your portfolio as they adapt to the pandemic?
As we have not yet formally established a portfolio, a comprehensive response to this question is not possible. However, we have observed the creation of new markets and the expansion of existing ones, driven by the aforementioned digital transformation and adoption. Furthermore, increased consumer awareness of societal and environmental challenges, coupled with a sense of responsibility in purchasing decisions, is leading to innovative revenue streams.

Can you share a recent experience that has instilled optimism in you, whether professionally, personally, or a combination of both?
While it may seem commonplace, the recent arrival of my daughter provides me with renewed energy to contribute to building a more sustainable future.

Do you have any final thoughts you’d like to share with TechCrunch readers?
We encourage entrepreneurs, investors, corporations, governments, and all ecosystem stakeholders to collaborate in developing solutions that generate both significant impact and financial returns.

Stephan Morais, partner, Indico Capital Partners

What investment trends currently generate the most enthusiasm for you?
We are particularly interested in Software-as-a-Service (SaaS) offerings, applications of Artificial Intelligence, advancements in digital health, strategies for data monetization, IoT SaaS platforms, the field of engineered biology, and marketplace models.

What is your firm’s most recent and compelling investment?
Our latest investment is in Nutrium, a digital health platform serving a substantial base of 800,000 nutrition patients. Nutrium aims to connect dietitians, patients, and appointment scheduling, while also integrating wellness data and product/supplement information.

What types of startups are you hoping to encounter, and what opportunities are currently being underestimated?
Significant opportunities remain in the digitization of many traditional industries and sectors. As Artificial Intelligence is still in its early phases of implementation across most industries, addressing these established, large-scale opportunities is crucial.

What qualities do you prioritize when considering a new investment?
We seek exceptional founders who demonstrate strong leadership and CEO capabilities. This includes a clear vision, the ability to capitalize on market opportunities, and the resilience needed to overcome obstacles and achieve success. Strong technical expertise within the team is also essential.

Which areas appear overly competitive or challenging for new startups, and what product/service categories cause you concern?
The food delivery sector, much of e-commerce, and SaaS solutions targeted at small and medium-sized enterprises (SMEs) and startups are becoming increasingly saturated. Furthermore, any venture heavily reliant on advertising for initial traction faces considerable challenges due to the competitive landscape.

To what extent does your investment focus lie within your local ecosystem versus broader startup hubs? Is it more than 50%? Less?
Our investment strategy is entirely focused on Portugal and Spain.

Which industries in your city and region appear best positioned for long-term success, and which do not? What companies and founders are you particularly impressed by, whether within your portfolio or not?
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.

What advice would you give to investors considering the investment climate and opportunities in your city?
Regarding Portugal, the ecosystem is still developing. The majority of opportunities are at the early stage, with most funding rounds being under €1 million. We recommend that international investors collaborate with local partners, particularly in the initial phases.

Do you anticipate an increase in founders originating from areas outside major cities in the coming years, potentially driven by the pandemic, remote work trends, and concerns about hub saturation?
Portugal has become increasingly appealing to international companies establishing local offices to access the skilled technical talent available. The country’s safety and lifestyle also attract remote workers, nomads, and senior executives seeking relocation opportunities for their families. As remote work becomes more prevalent, Portugal is expected to become an even more desirable destination for tech professionals and startups.

Which of your investment areas appear most vulnerable or susceptible to changes in consumer and business behavior due to COVID-19? What opportunities might startups be able to leverage during these unprecedented times?
Industries such as travel, hospitality, and aviation have undoubtedly been significantly impacted, and some of our portfolio companies operating in these sectors have experienced challenges. We anticipate these effects will continue for the foreseeable future.
Conversely, sectors like online deliveries, process automation, and team synchronization/communication tools are experiencing substantial growth.

How has COVID-19 influenced your investment approach? What are the primary concerns of the founders within your portfolio? What guidance are you currently providing to your portfolio companies?
Our recent focus has been on ensuring our portfolio companies have sufficient financial resources to navigate the next year. We emphasize the importance of balancing cash management with the pursuit of their vision and the exploitation of current opportunities.

Are you observing positive indicators – such as revenue growth, customer retention, or other momentum – within your portfolio as companies adapt to the pandemic?
Absolutely. In several sectors, technology has proven essential in maintaining societal function and business productivity.

What recent development has instilled optimism in you? This could be professional, personal, or a combination of both.
The fact that numerous successful U.S.-based companies were founded by European entrepreneurs, and that some are now returning to their home countries, is a very encouraging trend. This will undoubtedly lead to a wave of innovative companies emerging from Europe in the years ahead.

Do you have any final thoughts to share with TechCrunch readers?
Europe still faces a significant gap in the depth of available capital, often prompting companies to relocate to the U.S. after securing Series B funding.

Gavin Goldblatt, managing partner, Portugal Gateway

Regarding general investment areas, what current trends generate the most enthusiasm for you?
We are particularly interested in opportunities within the energy sector and the financial technology space, notably advancements in mobile payment solutions.

When considering a new investment, what key characteristics are you seeking?
We prioritize companies demonstrating a capable and experienced leadership team, coupled with a well-established product that possesses the potential for growth in international markets.

To what extent does your investment focus remain within your local market compared to exploring opportunities in other startup ecosystems? Is it more or less than 50%?
It is less than 50%.

What perspective should investors in other locations adopt when evaluating the investment environment and potential within your city?
Lisbon offers an appealing combination of a favorable work-life balance, reduced costs for both startups and individuals, and a readily available skilled workforce. Consequently, it is well-positioned to attract businesses and talent shifting away from more traditional startup centers in less attractive areas, a trend accelerated by the recent global health crisis.

Do you anticipate an increase in founders originating from areas outside of major metropolitan centers in the coming years? Could established startup hubs experience a decline in personnel due to the pandemic and ongoing concerns, combined with the growing appeal of remote work?
Yes, we do expect to see this happen.

Within the industries you invest in, which segments appear most vulnerable or susceptible to changes in consumer and business patterns resulting from COVID-19? What possibilities exist for startups to capitalize on the challenges presented by these unprecedented circumstances?
It is presently too soon to draw definitive conclusions. While sectors like tourism and numerous service industries have experienced negative effects, even within these areas, innovative companies are leveraging the disruption to strategically position themselves for a potential recovery and the subsequent release of accumulated demand following widespread vaccination.

How has the COVID-19 pandemic influenced your investment approach? What are the primary concerns expressed by the founders within your portfolio? What guidance are you currently providing to the startups you invest in?
Remarkably, the overall impact on our portfolio has been positive, with numerous new opportunities emerging. Periods of disruption and change invariably create opportunities.

Are you observing positive indicators – such as revenue increases, improved customer retention, or other positive momentum – within your portfolio as companies adapt to the pandemic?
Yes, we are.

Can you share a recent event or observation that has instilled optimism in you? This could relate to your professional life, personal experiences, or a combination of both.
All of the companies we have invested in are currently exceeding their budgetary projections and performance expectations for this year.