PORTUGAL Trends and Developments Contributed by: Domingos Cruz, Joana Bugia and Constança Morão, CCA Law Firm
Introduction The Portuguese venture capital ecosystem remains robust. The entrepreneurial community continues to expand, attracting an increasing number of international VC funds seeking co- investment opportunities, while new domestic investment funds are entering the market and challenging established players. At the same time, the Portuguese government is actively rolling out a variety of programmes aimed at fostering innovation and supporting investment across all stages of a company’s development. The National Agency for Innova - tion (ANI) has also issued significant guidelines to facilitate the entry of foreign companies into Portugal, allowing them to benefit from dedicat - ed research and development funding. Moreover, a new tax incentive programme for scientific and innovation-related activities has been introduced. It provides for a flat 20% per - sonal income tax rate on Portuguese-source income and an exemption on foreign-source income, enhancing Portugal’s attractiveness as a destination for innovative talent. Investment Landscape Investment funds remain generally interested in seed and Series A rounds, although their approach has become more selective. Investors now commonly require consistent performance metrics before committing to funding. There is also a more cautious tone to investment strate - gies, with initial tranches of funding often made conditional upon the achievement of specific milestones, such as increases in sales, subscrib - er numbers, or gross merchandise value (GMV). Largely due to external factors and the uncer - tainty surrounding 2024, SAFE rounds have
surged in popularity and are now viewed as a credible alternative to priced equity rounds. Unquestionably, there has been strong demand for AI-focused companies, with artificial intelli - gence emerging as the industry’s defining trend of 2024. Finally, following the introduction of favourable tax legislation concerning stock option plans, 2024 marked the year many start-ups imple - mented such schemes. These allow for a single taxable event at the point of liquidity, subject to certain criteria, taxed at a rate of 14%. Portuguese Government-Backed Programmes B.P.F. – Banco Português do Fomento (Portu - guese Investment Bank) underwent a major restructuring and consolidation process to bring together all investment alternatives under a sin - gle umbrella institution. This restructure allows B.P.F. to be more nimble and agile in the deci - sion-making process. The main programmes are: • Co-Investment Deal-by-Deal: EUR200M for co-investment with private investors in early- stage investment; • Venture Capital: EUR400M to invest in private investment funds in early-stage investment; • Consolidar Programme: EUR500M to invest in private investment funds focused on SMEs and mid caps; • Portugal Blue: EUR50M to invest in private investment funds focused on the blue econ - omy; • Portugal Growth: EUR100M to invest in private investment funds focused on growth capital and acquisitions; and
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