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Is Portugal the next tech hub in Europe? Here is an overview of the Portuguese Tech sector in 2023

Is Portugal the next tech hub in Europe? Here is an overview of the Portuguese Tech sector in 2023 - portugal news
Is Portugal the next tech hub in Europe? Here is an overview of the Portuguese Tech sector in 2023 - Portugal Business News

Portugal news - Is Portugal the next tech hub in Europe? The Portuguese tech sector is highly innovative and represents nearly 10% of the country’s GDP. Investment in Portugal's tech sector has risen significantly, with Lisbon tech startups worth EUR 21.4 B in 2022 compared to EUR 816 M in 2016 according Dealroom.

Despite investment in the tech sector declining in Europe as a whole by 52% in 2023 compared to 2021, as per the 2023 Atomico figures, a few countries registered an upward trend for capital investment. The State of European Tech report 2022 published by Atomico showed that, even during a period of strong macroeconomic headwinds, the biggest risers are Croatia, Iceland, and Portugal, while the biggest falls in investment are the Netherlands, Germany and the UK.

Rising investment in Portuguese tech sector - Portugal news
Rising investment in Portuguese tech sector - Portugal Business News

Moreover, despite the downward trend in tech job postings in Europe, the share of tech jobs remains much higher in Estonia and Portugal where they make up more than double the proportion seen in most European countries in 2022.

Tech job postings in Portugal - Portugal news
Tech job postings in Portugal - Portugal Business News

Portugal’s tech sector employs more than 80,000 people, with a large proportion of young and highly qualified resources. One of the main highlights of Portugal’s digital transformation is the increase in the percentage of ICT specialists, which is now 4.7%, compared to the EU average of 4.5% according to the DESI 2022 report. Portugal also has a very high proportion of STEM graduates and engineering talent at a competitive cost. According to Eurostat, the country has the 3rd highest rate of engineering graduates in the European Union, with around 90,000 students graduating each year.

Lisbon’s tech scene is one of Europe’s fastest-growing ecosystems and is now pointed out as Europe’s next Silicon Valley. The Digital Economy and Society Index (DESI) shows that Portugal is ranking higher in 2022 compared to 2021. It currently ranks 15th among the 27 EU member states and reflects the national social and economic digital transition.

According to the Technology and Innovation Report 2023 by UNCTAD, Portugal ranks 33rd globally and 23rd at European level.

Global ranking fo Technology and Innovation in Portugal in 2023 - Portugal news
Global ranking for Technology and Innovation in Portugal in 2023 - Portugal Business News

Lisbon is a hub for major global tech events such as the Web Summit that brings together the world’s best tech talent, the largest tech companies as well as the most innovative startups. Portugal Tech Week 2023 will be held on 10-20 November with tech events and conferences all over the country that focus on AI, Big Data, Blockchain, Augmented Reality and Machine Learning.

The Portuguese tech ecosystem is consolidating under Portugal Tech Hub, an open alliance of public and private organizations that promotes Portugal as the next tech destination. The country is attracting major global companies due to the availability of tech talent with high English proficiency, the time zone, affordable costs, and quality of life.

According to the 2023 Atomico report, the change in capital invested in Europe between 2021 and 2023F is -52%, with USD 106 billion in 2021 and USD 51 billion in 2023. However, AI is expected to drive a golden age of innovation, with European tech having a key role and the potential for huge value creation.

Portugal’s digital transformation has reached the second phase of the Indústria 4.0 national strategy to digitize the economy with € 600 million in total funding over the next two years, the focus being on AI and advanced computing.

Portugal is now considered the 6th most attractive country in Europe for Foreign Direct Investment (FDI), according to the EY European Attractiveness Survey 2023. According to the study, Portugal attracted 248 FDI projects in 2022, representing a 24% increase compared to 2021, with the US and Switzerland being the top investing countries. In 2022, Portugal climbed two positions in this ranking and is currently ahead of Poland and Ireland. The top three most attractive sectors are software and I.T. services, transportation manufacturers, and Transportation and logistics.

The Portuguese tech sector has one of the most significant numbers of unicorns per capita, having produced 7 unicorns, namely SWORD Health that is a global digital physiotherapy company, OutSystems that is a low-code enterprise development platform, Farfetch that is an online platform for luxury fashion, Feedzai that is a RiskOps platform for financial risk management, Talkdesk that is a cloud-based contact center and AI software provider, as well as Remote that provides global HR solutions. Moreover, digital asset platform Anchorage Digital, that was founded in the U.S. and achieved unicorn status in 2021, now has an office in Porto.

Portugal ranks 12th in the Top 100 Emerging Ecosystems according to the Startup Genome ranking. Since startups have a high-growth potential due to an innovative business model with a technological base, the Government has just enacted a startup law. The regulatory framework provides incentives and tax benefits for promoting enterprise creation that are in line with the EU Startup Nations Standard of Excellence.

The Portuguese startup ecosystem is small-scale but fast-paced, with steadily growing companies representing over 1% of the country’s GDP in 2023 according to the US International Trade Administration. Portugal’s largest cities, Lisbon and Porto, are part of the Scale Cities Alliance. It is a collaboration between public ecosystem builders from 13 European cities that aims to create Europe’s most connected technology hubs.

Portugal’s digital transformation is leading to a paradigm shift towards innovation and enterprise creation with the best conditions for the creation and development of tech start-ups. This is reflected in rising Foreign Direct Investment in Portugal’s tech sector, despite a decline in investment both at global and European levels. Portugal’s tech sector is thus an emerging ecosystem that is rising compared to traditional European tech hubs and that could become Europe’s next tech hub.

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