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Startups are disappearing… Wait, what?

Just kidding. They are here to stay. However truth must be spoken, the number of startups created by year is decreasing significantly.

According to the Portugal Startup Outlook Report this goes from 159 startups created in 2016, to only 20 in 2021. We are talking about an almost 90% decrease in startup creation. But why?

We know what you are thinking, Covid… Well according to “O Ecossistema de Empreendedorismo Português e o COVID-19” study, over 70% of the founders/CEOs stated that they were negatively affected by the pandemic, and around 45% believe they would close the startups until the end of the year. Even the monster WebSummit was close to bankruptcy.

But… Didn’t the pandemic make evident to corporate and public bodies the rapid need of digitalization? Yes. Didn’t they boost their initiatives in digitalization? Yes. So why are the relentless dreamers who create startups decreasing?

Even if B2B was facilitated when it comes to digital solutions - and those are indeed the most common in the startups world in Portugal - startups are understanding that the others in the market are struggling: to sell, to hire, to get funding. Startup Voucher and government support is decelerating, Covid became the major priority, and then elections, and then the war. The flagship of becoming the Silicon Valley of Europe is being lowered, naturally, through time. Also, many of the startups created have international founders, and as you may guess those also decreased when borders were closed. With the new tight rules for Visas start flourishing, these entrepreneurs started to understand how difficult it was to come to Portugal. And just like that, like a snowball coming down the hill, the problem went growing and growing…

We often fail to look to the future, but this will have a critical impact over a 5-10 year period. In terms of maturity of the market, success numbers, and attractivity for others to come to Portugal and start their own businesses.

What about you, what is your opinion? Share it with us. Let’s start an important conversation!

Also read: Top Reasons Startups Fail