When you think of Portugal, what things come to your mind? Several things, certainly. Beach, good food, beautiful landscapes, friendly people, fado, football, Cristiano Ronaldo... And we could count many more things. But our country is not just a paradise due to its beauty. It is also a paradise for startups, as it is a country that promotes technological development. The Web Summit also acted as a gimmick and attracted many entrepreneurs looking to expand their enterprises.
The startup ecosystem in Portugal is growing at a rate twice as fast as the European average. In 2018, it already represented 1.1% of the national Gross Domestic Product (GDP). The volume of foreign investment into the country has also contributed greatly to the growth of the Portuguese technological ecosystem. Our entrepreneurial scenario is viewed as a promising destination for startups by founders and stakeholders in Europe because of talent availability, and greater value for money. Other factors also influence, such as the quality of life, the pleasant climate, the privileged position in the geopolitical landscape, the rich culture, among others. But, what about Portuguese investors? What do Portuguese investors look for in a startup? What are the key points that a startup should have?
Foreigners know how to recognize Portuguese talent, but so do Portuguese. According to our Portugal Startup Outlook 2019 report the majority of Portugal’s Venture Capital financing is sourced from foreign investors (66.8%), however domestic investors play a key role at the earlier stages of financing (contributing 70% of seed financing).
Portuguese startups have value and can be successful. The proof of this is the case of two well known unicorns - startups valued at more than one billion dollars - Farfetch and Outsystems. We can take these two examples to describe the most attractive features for investors.
1. The Attitude
Having a clear vision and mission is key. The investor will sense it right away. You need to be “in love” with your solution, and truly believe it will work, even before starting to make sales. If you don’t believe it, most probably no one will. Also, it is key you know how to receive feedback, respond within 24 hours to important emails, even if it is just saying “I’ve seen it, it will take me x time to follow up with the required documents”. You need to protect your startup, as if it is your baby. As Rita, former Portugal Ventures CEO, said in our ScaleUp Portugal Series, good arrogance is important. You need to be humble to accept feedback, but also be confident that your startup will work and is the right investment to be made.
2. Have competitive differentials
Rule number one: avoid following the crowd. Nobody will invest in an idea that already exists. To attract investors make sure you bring something new to the market and, most importantly, make sure that your innovation solves a real problem.
3. Detailed planning and strategy
The elaboration of a detailed business plan is essential to have an idea of the viability of the startup. More than showing the investor that your idea is good, it will help you think about what objections, strengths and weaknesses investors will point out when you present your idea. In addition, seeking advice is very important. Why not ask an investor for advice before proceeding with your presentation? By strategically seeking advice for an investor in the first place, in addition to showing that you value their contribution, you can build a relationship with them and this gives them the chance to point out possible flaws in your business.
4. Have good results and present them in a competitive way
This seems complicated and contradictory. You need money to get customers, but you need customers to get money. Although it seems like a difficult cycle to break, it is very important to make an effort to have some customers before approaching an investor, simply because it demonstrates how well your idea can work. Present results and metrics that demonstrate that people are using your product or service. Also, work on your speech. The purpose of your speech is to sell, correct? Seek advice from those who understand the subject and practice until you succeed. The key words? Investment and profit. Investors may believe in your business, but their investment is ultimately a means to an end — they need to make money on their investment. So, it's important to highlight what they will gain from investing in your business.
5. Have co-founders
In addition to selling an idea, you also sell your team. Starting a company on your own is very difficult and investors know that, which is why Angels and VCs generally look for teams with talented co-founders, as opposed to a single founder.
6. Join a startup accelerator
This is a recommended option, especially for first-time entrepreneurs, who have little to no experience or network. We are not trying to sell our fish. That is, in fact, helpful! Accelerators can guide you through every step by giving mentorship and tools that will make your life easier. They can advise you on new opportunities, help you with your speech, lend your network, connect you with important people and investors and help you build credibility for your startup. A startup with good credibility is, of course, more appealing to an investor.
Do you fit these parameters? If not, don't worry! We can help you! Meet the BGI Accelerator and find out how you can make your business grow, or as they say here in Portugal, "voar de vento em popa"! We are looking for startups with less than 5 years working on solving global challenges in the following areas:
Medical Devices & Health Care;
Smart Cities & Industry 4.0;
Blockchain Applications & AI;
Know more here and apply until 15th May!
Do you want to know more about investors? Check out our Scaleup Report series, where we interview 5 Portuguese Investors and they tell you these and much more, on Youtube and Spotify!