After a six-year stint in Dublin, Web Summit has a new home for the next three years. In July, thousands of entrepreneurs, investors and influencers will descend on the Portuguese capital of Lisbon for the week-long tech event. Not only is it a massive endorsement of the city but it’s something that would have been unthinkable a mere five years ago. “Before 2012, nobody in Lisbon really knew what a startup was,” says Anthony Douglas, founder and CEO of Hole19, the golf app.
The roots of Lisbon’s burgeoning startup scene can be traced back to the establishment of Startup Lisboa, the incubator that’s spawned some of the city’s most successful companies. A joint project between Lisbon’s city council, the Portuguese government and Montepio, a Lisbon-based bank, it has helped revitalise the city’s historic district and put it on the map as a serious startup hub. “With a little help from local government, it really brought a lot of people together and created the spark for startups in Lisbon,” says Douglas.
It is also bringing a renewed sense of optimism to a city and country that has been ravaged by recession. “In the context of the economic backdrop, the successes coming out of the startup company were almost a silver lining,” says Ben Grech, co-founder and CEO of Uniplaces, the student accommodation platform. And, in many ways, the downturn created the perfect environment for Lisbon’s startups to thrive. “These times of crises open up windows of opportunity,” says Miguel Fontes, executive director of Startup Lisboa. “And it was one of these windows of opportunity that made us believe that startups, especially in the technological field, [could] succeed in Lisbon.”
On a practical level, Lisbon certainly appears to be an ideal place to launch and grow a successful tech business. As Fontes explains, many young people in the city speak English fluently; there’s an ample amount of tech talent; the quality of life is high; and the cost of living is very low compared to other European capitals. Companies can also rent an office in the city centre for less than ¤12 per square metre. “All of these factors have been decisive to the growth of our entrepreneurs and to the enhancement of their businesses,” he says. “They have also allowed entrepreneurs from other continents to use Lisbon as a gateway for their products in Europe or choose our capital to create their startups.”
The size of the Portuguese market evidently makes Lisbon a prime location from which to springboard into international markets. In fact, any company launching in the city has little choice but to look overseas from day one. “Our advantage is that we can’t afford to think local,” says Douglas. “We have to be global from the get-go.” Yet it still provides startups a small, cost-effective market in which to trial their products before taking them to a global audience. “The size of our market does not allow us to compete with large markets like London or Berlin,” says Fontes. “[This means] we have to focus on what we are really good at and our experience perfectly shows that we can be a strong test market for startups that will eventually want to make the leap to larger markets.”
The ease and cost of doing business in Lisbon might be appealing but a fully-functioning ecosystem depends on a decent flow of funding. Thankfully, the Portuguese city isn’t lacking in early-stage capital: the likes of Faber Ventures and Portugal Ventures have stumped up seed funding for a number of startups, while firms such as Caixa Capital have participated in Series A and B rounds. “There are also a number of EU initiatives that have encouraged angel investment in the market,” says Grech. “That has helped provide a funding background to all of these early-stage businesses.”
However, Lisbon is still a long way off London and Berlin – not to mention Silicon Valley – when it comes to the availability of later-stage capital. “The challenge with any small country like Portugal is usually the next round of financing,” says Vasco Pedro, founder and CEO of Unbabel, the translation startup. “We haven’t had anyone selling their company and starting to reinvest in the ecosystem.” As a result, many startups have had to look further afield for growth finance. And in the case of companies like Veniam and Talkdesk – which have both raised over $20m – it has also meant moving their HQs to California.
Suffice to say, this could all start to change when Web Summit comes to town. “Suddenly you’re going to have a tonne of investors seeing the ecosystem here for the first time,” says Pedro. In Douglas’s view, it’s a chance for Lisbon to truly make it mark on the global stage. “Lisbon needs to define its own identity as a city,” he says. “With the Web Summit coming, it’s a good opportunity for people to see what Lisbon is all about.”
But more than anything, it’s just reward for what the city has managed to achieve in such a short space of time. “Web Summit represents a watershed moment for Lisbon,” says Nuno Sebastiao, chairman and CEO of Feedzai, the fraud prevention startup. “It’s validation of what I’ve witnessed happening for years: that Lisbon is up and coming.”
Living the dream
It’s hardly surprising that the inspiration for student accommodation platform Uniplaces came while it founders were at university. “We were very interested in tech startups and the innovation happening in travel with things like Airbnb,” says Ben Grech, co-founder and CEO of Uniplaces. This opened their eyes to the inefficiencies of the student accommodation market. “We were stunned at how far behind it was compared to the travel industry,” says Grech. “Students spend $200bn in the private rental sector every year and that got us really excited about what we could create.”
One of the first decisions Uniplaces had to make was where to launch. “We didn’t feel an urge to go to a big market,” says Grech. “We needed a place where we could work together relatively cheaply until we were ready to go out and execute.” And Lisbon seemed to tick all the right boxes. “It’s the same time zone as London, there are a lot of well-trained multilingual people, there are good universities producing great engineers and the salary cost is lower,” he says. “It just made a lot of sense.”
By April 2015, Uniplaces was active in 39 cities across eight European countries. And last November, to further propel its international growth, the company raised a $24m Series A led by Atomico, with participation from Lisbon’s Caixa Capital and Shilling Capital Partners. Zoopla’s Alex Chesterman and William Reeve of LoveFilm also invested in Uniplaces at seed stage. “We have attracted a really global group of investors,” says Grech.
The company has had a London office since 2013 but the importance of Lisbon to the Uniplaces story is clear. “I’m not sure we would be around as a business today if we didn’t start in Lisbon,” says Grech.