Government program has “signs of ambition”, but lacks “strategic plan” for entrepreneurship

When it comes to entrepreneurship, the government's program shows "signs of ambition", but the challenge, say funds, incubators and entrepreneurs, lies in the speed of its implementation. Not only is there a lack of a "national strategy" for the sector, but also a Ministry that concentrates the portfolio of innovation and artificial intelligence and a clear focus on supporting the internationalization of startups and talent, with measures on immigration giving contradictory signals. With the revision of the Startups Law on the table, what do they want? Changing the stock options regime should be a priority.

The measures in the Government's program for the entrepreneurship ecosystem “represent a clear sign of continuity and reinforcement of the commitment to developing a more competitive, innovative and attractive environment for startups in Portugal ”, says António Dias Martins, executive director of Startup Portugal.

And he is not alone in his positive assessment of the proposed measures, particularly those aimed at creating conditions for the arrival of more private capital into the ecosystem. “The creation of a fund of funds managed by Banco Português de Fomento is very positive, as is the intention to encourage institutional investors, such as pension funds or insurance companies, to participate in funds that invest in national companies”, begins by highlighting Stephan Morais, president of the Portuguese Venture Capital Association (APCRI).

“For the Portuguese economy to grow and produce more qualified jobs, it is necessary to increase the weight of industrial and technological companies in the country's product, which can only be achieved with more private capital and more professional management, which is what these measures promote, namely through venture capital investment funds”, reinforces the investor.

The creation of a fund of funds managed by Banco Português de Fomento is very positive, as is the intention to encourage institutional investors, such as pension funds or insurance companies, to participate in funds that invest in national companies.

There is a lack of tax incentives for business angels

Lurdes Gramaxo positively highlights the review of the SIFIDE program — “one of the reforms we have advocated the most” — which last year was responsible for much of the liquidity that reached the sector. “We expect that this review may include an extension of the application periods for SIFIDE funds, so that instead of being applied in the three years foreseen, their application is extended for another one or two years, which benefits the ecosystem, because it means that there will be more capital for a longer period of time”, she adds.

The president of Investors Portugal also highlights the Executive's intention to rethink the Semente program, encouraging the role of business angels , but, in this area, she issues a warning: “There is still a lack of a more concrete proposal for direct tax incentives for individual investors, especially business angels . There is currently no operational mechanism in Portugal that allows, for example, deducting part of the invested capital from IRS, as is the case with the British programs Enterprise Investment Scheme and Venture Capital Trust, which encourage the reinvestment of benefits and are true drivers of the ecosystem in that country”, points out the president of Investors Portugal, an association that brings together early-stage investors.

There is still a lack of a more concrete proposal for direct tax incentives for individual investors, especially business angels . There is currently no operational mechanism in Portugal that would allow, for example, a deduction from personal income tax of part of the capital invested, as is the case with the British programs Enterprise Investment Scheme and Venture Capital Trust, which encourage the reinvestment of profits and are true drivers of the ecosystem in that country.

Rui Falcão, co-founder of CoreAngels, also considers the review of the Semente program to be “positive” , but “it is necessary to ensure the possibility that tax benefits extend not only to investment funds but also to direct investment in startups”.

“I assume that the Government will want to create an internationally renowned acceleration program in partnership with an international player , rather than creating a program on its own initiative. If so, the presence of a program with international visibility can attract startups and investors to what is happening in Portugal and that will be extremely beneficial”, is one of the aspects of the program, in terms of capital, that Rui Falcão highlights as positive.

But in the opposite quadrant, he leaves a criticism: lack of a global strategy. “Entrepreneurship does not appear explicitly with a dedicated plan. Despite several useful measures for startups, there is no specific national strategy or strong identity for this sector”, laments the business angel who proposes the creation of a “Secretariat of State for Entrepreneurship to centralize and boost the articulation of entrepreneurship as an essential pillar of the Portugal of the future”.

Entrepreneurship does not appear explicitly with a dedicated plan. Despite several useful measures for startups, there is no specific national strategy or strong identity for this sector.

Catarina Gorgulho, founder and CEO of the startup Tarwi, points out the same. “The program is ambitious, but it lacks timelines , objective criteria and responsible entities. The ecosystem needs more than good intentions; it needs execution,” says the entrepreneur. Furthermore, “there is no robust proposal to integrate entrepreneurship across higher or professional education, nor programs to train entrepreneurs in the initial phases,” she says.

“There is a lack of a more robust strategy for entrepreneurship outside of large urban centers. If the country wants to retain young talent and revitalize the interior, it needs targeted measures, from access to financing to digital infrastructure and local acceleration programs,” points out Luís Gutman, CEO of OW Ventures.

The Government’s programme lacks “continuity measures that provide predictability to the sector”, points out Lurdes Gramaxo . And she gives an example. “The RRP has been supporting some initiatives, but it ends in 2025, and many of the lines are not compatible with the market standards required for venture capital, which is why we believe it is important for the Government to plan well for the post-RRP period, repositioning investment instruments and strengthening partnerships with European institutions”, she points out.

“ It is crucial that all these measures are accompanied by legislative simplicity and effectiveness in their implementation . The ecosystem needs clarity, speed, less bureaucracy and predictability so that the impact is effective and not merely legislative”, reinforces the president of Investors Portugal.

“Tripling the fuel available for VC in a country where the annual investment volume is still a third of Spain’s (and the second worst in Europe in terms of VC/GDP) is, ultimately, trying to play in the Champions League instead of the third division. The signal given to pension funds and insurance companies is crucial — it puts patient money on the table,” says Vítor Ferreira, referring to the measures planned to give financial muscle to the ecosystem.

I would like to see greater importance [of AI] within the government structure, with a ministerial portfolio dedicated to innovation and artificial intelligence, as already exists in several countries. Not only does this allow for the development of a more effective strategy, it also ensures greater coordination between the different areas.

The general director of Startup Leiria also lists the national AI sandbox and public procurement of innovation — “if well executed, it is half a recipe for putting Portugal on the European hard science radar” —, as well as the fast track for work visas for qualified workers, as well as the stock-options regime , as good measures to boost the sector.

“In a world where a senior engineer can choose between Leiria, Lisbon, Tallinn or Austin with two clicks on LinkedIn, gaining two weeks on the visa and promising 14% only on cash-out makes a difference”, highlights the person responsible for the incubator in the Central region.

Without a roadmap with goals, the measures are just “good intentions”

Gil Azevedo sees the proposals contained in the Government's program, such as the investment in AI, as “positive signs”, but “ there is still a lack of relevance and more structural measures to ensure that the country can be an international reference for innovation”.

“I would like to see greater importance within the government structure, with a ministerial portfolio dedicated to innovation and artificial intelligence, as already exists in several countries. Not only does it allow for the development of a more effective strategy, but it also ensures greater coordination between the different areas”, considers the executive director of Unicorn Factory Lisbon. And he points out the lack of “concrete objectives and goals, in order to guarantee results”.

And he is not alone in this criticism. “Without a roadmap with KPIs and deadlines, we risk filling the Official Gazette with good intentions instead of execution reports,” says Vítor Ferreira.

Without a roadmap with KPIs and deadlines, we risk filling the Official Gazette with good intentions instead of execution reports.

Luís Gutman shares this concern. “There is a lack of concrete and quantified targets for many of the measures. We know, for example, that there is an intention to support startups and attract qualified talent, but there are no annual targets defined for the creation of new companies, attracting foreign investment or granting technology visas. The absence of these indicators makes it difficult to monitor progress and public scrutiny”, warns the co-founder and CEO of OW Ventures.

Rui Falcão also criticizes the uncertainty regarding the implementation of the program. “Many ambitious measures (e.g. “State pays in 30 days”, “eliminate bureaucracy”) have already been promised by previous governments. Consistent implementation will be the real test — something that the program does not guarantee with clear control mechanisms”, warns the business angel .

Lack of internationalization strategy

There is a lack of concrete goals for implementation, but also an absence of strategy when it comes to internationalization, point out several voices in the ecosystem.

The co-founder of CoreAngels is one of them. There is a lack of a “concrete plan to support startups in international expansion, participation in fairs, soft landings , or attracting talent and foreign investment to the entrepreneurial ecosystem”, he says.

In general terms, the intentions are positive, although not very ambitious, especially in the context of the internationalization of startups.

A 'failure' also pointed out by Luís Gutman . “There is a lack of a clearer reference to the internationalization of startups. Portugal has made progress, but support for entry into strategic markets, strengthening economic diplomacy and integrating startups into global value chains deserve their own emphasis”, points out the CEO of OW Ventures.

And Vítor Ferreira says the same. “There is no mention [in the program] of soft-landing or the diaspora as a gateway to target markets,” he says. This absence was also pointed out by Nuno Pereira, co-founder and CEO of Paynest. “In general terms, the intentions are positive, although not very ambitious, especially in terms of the internationalization of startups. Now we just need to see how it will be implemented and executed,” says the entrepreneur.

There is a lack of a more structured response for companies in the scaling phase, which face different challenges than early-stage startups. Many of these companies have already proven their model, have growing teams and operate internationally, but they face obstacles in terms of tax burden, hiring senior talent and access to investment at later stages.

For Daniela Simões, not only are there a lack of measures to support companies’ internationalization efforts — “it would also be important to deepen the internationalization strategy of Portuguese startups, reinforcing Portugal’s presence as an innovation ecosystem on a global scale and investing in creating conditions for these companies to grow from Portugal — and not despite being in Portugal” —, but also “a more structured response for companies in the scaling phase, which face different challenges than startups in the initial phase”, she says.

“Many of these companies have already proven their model, have growing teams and operate internationally, but they encounter obstacles in terms of tax burden, hiring senior talent and access to investment at more advanced stages”, laments the co-founder and CEO of miio, a startup already present in seven markets, including Germany, Italy, Belgium and the Netherlands.

Strategic talent policy, “biggest gap”

The reduction of the tax burden on startups and on work, in particular on hiring in the initial phases of companies , are measures that, for Luís Santiago Pinto, co-founder of Powerdot, fell short in this Executive program.

“The cost of the first hire — especially for qualified talent — is often a limiting factor. Targeted TSU reductions or other hiring incentives in the first two years of a startup’s life could unlock growth and allow founding teams to build with more ambition from the beginning,” he says. For the CEO of the electric mobility startup, it is also “important to facilitate the attraction of external talent,” he says.

We continue to rely on passive incentives (NHR/IFICI+) that do not solve the problems of those who truly want to create, invest and work in Portugal. Attracting talent is more than a tax policy — it is a question of identity and future.

For Elisa Tarzia, the “absence of a proactive, ambitious and, above all, strategic talent policy” is, in fact, the “biggest gap” in this program.

“The way immigration is framed — almost exclusively from the perspective of control — is misaligned with the needs of a country that wants to compete globally. Portugal is a small country, and therefore does not have an unlimited talent pool ,” notes the co-founder and vice-president of the 351 Startup association.

“We need an integrated strategy involving the Ministries of Economy, Science and Migration, focusing on upskilling profiles — local and otherwise — and attracting profiles that contribute to economic growth, innovation and the future of the country,” argues the entrepreneur. And she gives as an example of a good policy the one implemented by the city of Espoo, in Finland.

“They mapped strategic sectors, identified markets with an abundance of this talent and created reception programs for rapid and effective integration. This is vision. We, on the other hand, continue to depend on passive incentives (NHR/IFICI+) that do not solve the problems of those who truly want to create, invest and work in Portugal. Attracting talent is more than a tax policy — it is a question of identity and future”, he says.

“And this brings us to the issue of nationality,” he adds. “I understand the need for control, but in my opinion, increasing the length of residence as a requirement is a mistake that levels down and ignores merit. Nationality should not be a reward for waiting time, or for marriage, but the recognition of someone’s contribution to the country. There are those who, in two or three years, have already created jobs, paid taxes and boosted the economy. It is this value that we must recognize,” he says. “I defend nationality based on merit, not on a timetable. The message we are sending is contradictory: we want to attract talent and simplify, but we keep the door ajar and the path full of obstacles ,” he reinforces.

On Monday, at the Council of Ministers, the Government announced that it will present to Parliament a new proposal for the Nationality Law, as well as for Foreigners (with changes, for example, to family reunification), as well as changes to work visas for qualified workers.

Startups Law to be revised: what should be changed

The revision of the Startups Law, approved by Parliament in 2023, is in the Government's plans. The law, which was approved with the favorable votes of the PS and PAN, with the PSD being one of the parties that voted against, divided the sector regarding the stock options regime, so it is not surprising that this is the topic that the ecosystem places on the list of review priorities.

“ It is important to review the stock options regime — it continues to be an obstacle when compared to other countries and is a key instrument for attracting and retaining talent ,” argues Luís Santiago Pinto, CEO of Powerdot.

“The exclusion of founders with more than 20% of capital from the preferential tax regime should be reviewed. Founders are the ones who take the most risks and there are several barriers they have to overcome to launch their own company and see it gain traction in the market. This taxation is not a barrier, but it acts as a disincentive”, says Nuno Pereira, co-founder of Paynest.

“The current model is complex and not very competitive. We need a simple, clear and attractive system, in line with what already exists in countries like France or Estonia”, says Catarina Gorgulho, founder of Tarwi.

The current legislation provides for the exclusion of “taxable persons who directly or indirectly hold a stake of no less than 20% of the share capital or voting rights of the entity granting the plan; members of the corporate bodies of the entity granting the plan”. Founders or managers of startups that employ “less than 250 workers” and have “an annual turnover not exceeding 50 million euros” are not excluded from the tax benefit.

Elisa Tarzia reinforces the need for changes to this mechanism, seen as a tool for attracting and retaining talent. “ The weakness of Portuguese law in this regard is amplified by a broader pan-European trend of modernisation and liberalisation of stock option policies. Countries such as Estonia, Latvia and Lithuania are consistently ranked as the most favourable in the world in this regard, functioning as the ‘gold standard’”, points out the entrepreneur and vice-president of the association 351 Startups. “At the same time, movements such as the EU Inc/Not Optional campaign and the proposal for a European ‘28th Regime’ aim to harmonise and improve these rules at a continental level, recognising their strategic importance”, she adds.

The criteria for a company to be officially qualified as a startup or scaleup are quite strict. This means that many innovative companies that do not fit exactly into these parameters are left out of the scheme and lose some important benefits. (…) The process of obtaining and maintaining this qualification can be bureaucratic and complex. For startups that already deal with limited resources and need agility, this can be a challenge and even an obstacle.

But that’s not all. “The review of the Law is an opportunity to align legislation with the operational reality of startups and scaleups . The definition of eligible companies should be updated, reflecting not only criteria such as the age of the company, but also its level of innovation, traction and international ambition”, says Daniela Simões. “It is equally important that incentive instruments — particularly tax ones — be reviewed to ensure simplicity of application and real attractiveness, both for entrepreneurs and for talent and investors. The Law should also promote greater coordination between the public, private and academic sectors, with more agile implementation mechanisms adjusted to the reality of the ecosystem”, argues the CEO of miio.

“The alignment of the criteria for startups to access the reduced IRC rate of 12.5% ​​with the requirements for official recognition of startup status , as proposed in this program, is a measure that we welcome, since there is no point in having a dissonance between formal recognition and access to tax benefits,” highlights Lurdes Gramaxo. However, on the other hand, “there is a lack of effective operationalization of the certification of business angels , which remains to be implemented, despite being a fundamental part of the proper functioning of the ecosystem,” says the president of Investors Portugal.

“The criteria for a company to be officially qualified as a startup or scaleup are quite strict. This means that many innovative companies that do not exactly fit these parameters are left out of the scheme and lose some important benefits,” warns Luís Gutman. Furthermore, “the process to obtain and maintain this qualification can be bureaucratic and complex. For startups that already deal with limited resources and need agility, this can be a challenge and even an obstacle,” adds the CEO of OW Ventures.

Catarina Gorgulho says the same. “The definition of startup should be more inclusive, also encompassing scaleups and companies that are over 10 years old but continue to invest heavily in innovation and growth,” says the entrepreneur.

Gil Azevedo also makes the same warning. “It is essential to ensure that access to the benefits of the law is simple, clear and aligned with the reality of startups. Currently, many entrepreneurs have difficulty knowing whether or not they qualify for support,” highlights the executive director of Unicorn Factory Lisboa.

The definition of startup should be more inclusive, also covering scaleups and companies that are more than 10 years old, but that continue to invest heavily in innovation and growth.

“The practical effectiveness of the startup law is threatened by its reliance on certification and application processes that are sometimes incompatible with the agility required by the sector,” says Elisa Tarzia. “Above all, we hope that this review will be carried out in open dialogue with stakeholders in the ecosystem. Listening to those on the ground is the only way to ensure that the new law goes from paper to practice with real impact.”