If Lisbon’s “Unicorn Factory” are the physical heart of Portugal’s startup ecosystem, Startup Portugal is its central nervous system: the interface connecting policy, capital, incubators, and founders.
On the ground for our Tech Odyssey series, we turned to the organization that has shaped nearly every major national initiative for startups in Portugal. Part public-facing agency, part private association, Startup Portugal acts as both coordinator and translator—linking government action with founder needs, in a role rarely seen in European startup ecosystems. In an extended conversation with its president, Alex Santos, we explored how a small European nation has built a deeply interconnected innovation system, despite its limited size.
Defining Startups — by Law
In most countries, startups are lumped into the broad category of small and medium enterprises, with no dedicated policy track. For Portugal, a defining turning point came down to one question: legally defining what a startup actually is.
Before the relevant legislation passed, Santos explained, the Portuguese state could not launch targeted public support for startups — because they did not exist as a distinct category. Once the law took effect, startups were formally recognized, allowing the government, investors, and incubators to build tailored support tools around this new classification.
In setting this legal standard, Portugal has become a benchmark across Europe.
Alongside the legislation, Startup Portugal is building a national ecosystem data platform — a sort of “control room” for entrepreneurship. It maps startups, investors, incubators, and founders nationwide, tracking growth, failures, and new company creation. The goal is to unify support policies under a single, data-driven framework, rather than relying on fragmented experiments.
As Santos put it: once “startup” is clearly defined institutionally, the entire ecosystem aligns. Government can deploy resources more precisely. Investors and incubators coordinate around shared goals. Founders operate within a clearer, more supportive structure.
“Forced Globalization” — the Small-Country Advantage
Larger European economies offer startups the luxury of scaling domestically first. Portugal has no such luxury.
With a limited domestic market, Portuguese entrepreneurs must think globally from day one. Santos argues that this structural constraint has become a strength: closer alignment between government, investors, incubators, and startups, with lower coordination costs, allows the entire country to act as a testing ground.
Many international startups choose Portugal to validate their product and business model before expanding into larger European markets. The country continues to attract global talent, creating diverse teams that blend local and international perspectives — a defining feature of its modern startup landscape.
The pandemic normalized remote work, while AI has lowered barriers to entry. Creating a global company from anywhere is now a reality — and Portugal is well-positioned to benefit. Size cannot be changed, but connectivity can: a small nation can turn itself into a launchpad for global business.
Capital and Commercialization: Two Gaps to Close
For all its progress, Portugal’s ecosystem still faces clear challenges.
Contrary to common belief, the biggest funding gap is not in late-stage growth rounds, but at the angel level. Many early angel groups from the 2010s have evolved into venture capital firms, shifting their focus to seed and Series A. As a result, the earliest capital has become harder to secure.
Santos believes more incentives are needed to encourage individuals and institutions to invest at the pre-seed and angel stages, expanding the overall pipeline of new companies.
A second challenge lies in the bridge between universities and industry. Portuguese higher education produces strong research and intellectual property, but technology commercialization remains underdeveloped. While roughly half of startups pass through incubators, links between academia and these programs are inconsistent. Turning university research into spin-off companies remains a priority.
Making the Known Known
Portuguese startups have long looked primarily to Europe and the U.S. for growth. Santos acknowledges that understanding of Asian markets remains limited — less a complete unknown, he says, than a case of “making the known known.”
As global competition shifts, the Asia-Pacific region could open new growth avenues — but only with deeper understanding of different business cultures and rhythms. A key mission for Startup Portugal moving forward is to equip local founders with this knowledge and these connections.
For an ecosystem born global, expanding perspective is part of upgrading the system itself.
When a Country Becomes a Startup Accelerator
Research cited by Santos shows that every dollar invested in startups can generate an economic multiplier effect of roughly seven times. For Portugal, supporting entrepreneurship is not just industrial policy — it is a long-term national investment.
From legal definition to ecosystem coordination to global orientation, this small country is using institutional design and network effects to compensate for market size. For many startups, Portugal is both a starting point and a testing zone for global expansion.
What Startup Portugal reveals is not just the work of one organization, but a new form of national infrastructure. Through legislation, data, and cross-institutional collaboration, it has woven fragmented resources into a self-sustaining system.
Market size cannot be easily enlarged. But systems can be redesigned.
Portugal is showing the world how to turn an entire country into a long-running, high-performance startup accelerator.
