Web Summit, an opportunity for Portuguese venture capital

Access to investors. For the next three years the Web Summit will take place in Lisbon. This global benchmark event in the field of information technologies will establish itself as a step forward towards the development of technological entrepreneurship in Portugal. It is expected that start-ups will gain more and better access to new customers and partners and have greater visibility among venture capital investors.

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How to reach foreign investors. Most investment funds that will take part in the Web Summit rarely invest outside their home market during the pre-seed and seed phases. Foreign venture capital investors tend to invest in Portuguese companies that have already benefited from national investment in phases involving greater risk. In addition to the sustainability of the business model, other indicators are also used for selecting the best projects. For example, these indicators are recurring sales volumes within the domestic or global markets, specific metrics for each sector growth, internationalization potential, management teams’ composition, and promoters with a strong shareholder position.

Domestic venture capital. The Web Summit may facilitate the presentation of entrepreneurs’ projects to domestic investors, similarly with their counterparts from other European countries. Portuguese start-ups have benefited from national financial resources during the pre-seed and seed phases. Subsequent phases of development may be accompanied by foreign investors within a co-investment regime along with early investors or in the context of a single investor regime. Sometimes, these stages are accompanied by increased internationalization or even migration of companies towards new investors. Therefore, Portuguese investors become key players along the upstream phase regarding the entry of foreign investors. Why? Because they make investments during the riskiest stages of the business, thus helping the companies to minimize risks. At the same time, they assure that the company and the new investors are compatible.

Smart money. During the event, national promoters may favour ”smart money” investors, with consideration for the business model implemented and the business sector concerned. Investors must be able to demonstrate that they can add value to businesses, far beyond the invested money. Sophisticated investors engage themselves in the development of start-ups, they have non-executive roles on administration boards and they empower startups by providing them with national and international networking contacts. They use best practices regarding capitalization instruments and lead co-investments. Finally, they organize their positions in a balanced manner, taking into account economic benefits and control over strategic business decisions.

Training of domestic investors. National ecosystem remains small in comparison with its international competitors. The components of angel capital and venture capital in particular are no exception. In this regard, the training of investors will depend on a greater role of the private sector, along with the public sector in regard to market failures. In that matter, Portugal Ventures has invested and will continue to do so in start-ups at a stage where the risk is assessed as being too high for private investors. As far as private operators are concerned, the new templates for public financing and for business angels and venture capital funds which have been launched in the last few months should safeguard the minimum levels of investment needed to sustain the growth of the Portuguese ecosystem. Web Summit will also be an opportunity for the Portuguese players to set-up partnerships with their foreign counterparts.

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