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Portugal Ventures – Venture Capital Fund
Published on 27 January 2020
Portugal
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About this good practice
Portugal has undergone significant structural change to a more knowledge-intensive economy. However, the significant research capabilities on new areas, such as health and ICT, contrasted with the slower pace of new technology-based firms (NTBFs) birth rate, despite the country delivering policies to boost innovation. One market failure that hindered the transformation was finance. The Portuguese market depended too heavily on the traditional banking system, alongside significant market failure in business angel and venture capital.
To stimulate the creation of NTBFs, in a context lacking a significant number of private players, the Government created Portugal Ventures, a company in the State Business Sector. In 2012, the company took on the role of reference investor in VC at a national level, becoming one of the main drivers of the national entrepreneurial ecosystem.
In order to deliver a better strategy and build up effective scouting Portugal Ventures formed a network of more than 70 partners, allowing them to connect with the main actors of the entrepreneurial ecosystem. This network helps to materialize a program of regular interaction and close proximity to universities, R&D and interface centres, incubators and accelerators, detecting opportunities for the entrepreneurial ecosystem. To increase leverage, Portugal Ventures also addressed the market failure from the supply side, promoting a network of capital investors to facilitate investment syndication operations.
To stimulate the creation of NTBFs, in a context lacking a significant number of private players, the Government created Portugal Ventures, a company in the State Business Sector. In 2012, the company took on the role of reference investor in VC at a national level, becoming one of the main drivers of the national entrepreneurial ecosystem.
In order to deliver a better strategy and build up effective scouting Portugal Ventures formed a network of more than 70 partners, allowing them to connect with the main actors of the entrepreneurial ecosystem. This network helps to materialize a program of regular interaction and close proximity to universities, R&D and interface centres, incubators and accelerators, detecting opportunities for the entrepreneurial ecosystem. To increase leverage, Portugal Ventures also addressed the market failure from the supply side, promoting a network of capital investors to facilitate investment syndication operations.
Resources needed
Portugal Ventures leverages on European Structural Funds managed by COMPETE2020 and the Alentejo ROP, injected through policy instruments managed by IFD (Instituição Financeira de Desenvolvimento).
Total funding adds up to 10.8M€, of which 9,6M€ come from COMPETE2020 and 1.2M€ from Alentejo ROP.
Total funding adds up to 10.8M€, of which 9,6M€ come from COMPETE2020 and 1.2M€ from Alentejo ROP.
Evidence of success
Since 2012, Portugal Ventures has analysed over 1811 projects; established a network of more than 70 ignition partners; invested more than 140M €; funded more than 110 start-ups.
Reference indicators, such as the Regional Innovation Scoreboard, demonstrate the relevant progress made by Portugal, especially, in terms of firm-level innovation. At the same time, the national venture capital market is becoming more structured and the market failure has been reduced.
Reference indicators, such as the Regional Innovation Scoreboard, demonstrate the relevant progress made by Portugal, especially, in terms of firm-level innovation. At the same time, the national venture capital market is becoming more structured and the market failure has been reduced.
Potential for learning or transfer
Portugal Ventures’ mission is to invest in startups in the pre-seed and seed stages. Their selection is based on an innovative reference matrix that evaluates the quality of the projects in terms of coherence, rationality and innovative nature of the investment. It also capitalizes on a network of partners to increase technical and financial capabilities, leveraging ESF beyond the scope of traditional innovation policy instruments (e.g. subsidies).
As a public operator, the investment strategy follows clear objectives mostly linked to the systemic impact of projects - its externalities and risk-aversion - in order to fully address the identified market failure, focusing on expanding the spectrum of NTBFs and reinforcing of the Portuguese innovation system by creating a strong entrepreneurship milieu.
This practice shows a successful implementation of public-funded financial instruments, with a high potential for transfer to regions or countries facing industrial transition.
As a public operator, the investment strategy follows clear objectives mostly linked to the systemic impact of projects - its externalities and risk-aversion - in order to fully address the identified market failure, focusing on expanding the spectrum of NTBFs and reinforcing of the Portuguese innovation system by creating a strong entrepreneurship milieu.
This practice shows a successful implementation of public-funded financial instruments, with a high potential for transfer to regions or countries facing industrial transition.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Organisation
National Innovation Agency (ANI)
Portugal
Norte
Contact
Project Manager