Portugal Ventures – Investing in innovation in tourism
Portugal Ventures currently has €184 million under management, has added over 180 startup companies to its portfolios since 2012 and has invested €171 million since. Despite the Covid-19 pandemic it plans to invest between €15-20 million over two years.
Text Chris Graeme
2021 was a busy year for Portugal Ventures, the Lisbon-based public venture capital company that helps finance startup companies and supports the national entrepreneur ecosystem.
It saw the exit of two startups to leading multinationals with the divestment of Zaask to domestic household electrical goods retailer Worten (part of the Sonae Group) and Mercadão to home-deliveries food company Glovo.
It also announced four new investments: one in digital -Taikai, two in engineering and industry – Reckonai and Watgrid and one in Tourism – Sleep & Nature.
In April 2021 Portugal Ventures in partnership with Impresa Nacional Casa da Moeda (INCM) launched Call for Enterprise Deep Tech to invest in deep tech solutions acquired by corporate clients in the areas of Digital Identity, Security, Software Development, Data, Infrastructure and DevOps with investment amounts of €250,000 to €1 million. Projects must be founder-led original ideas and be based in the Northern, Central and Alentejo regions of the country which has suffered decades-long desertification.
In September Portugal Ventures in partnership with the Government of the Azores announced the first edition of Call Azores aimed a promoting access to €200,000 of venture capital financing per project for innovative projects linked to the autonomous region that can contribute towards the region’s growth and development.
Founded at the height of the Great Recession in 2012, Portugal Ventures was the fruit of a merger of three government venture capital companies – Inovcapital, AICEP Capital and Turismo Capital. In 2020 it became part of the Portuguese government’s newly created development bank Banco Português de Fomento.
Call Tourism and Call FIT
Portugal’s tourism industry was probably the sector most hard hit by the Covid-19 pandemic of 2020-2021. It is important, therefore, that Portugal Ventures has its 4th investment in tourism programme Call Tourism currently open with the objective of investing between €200,000 to a maximum of €1million in both technology and non-technology projects in the sector. Applications closed on 15 November 2021.
Pedro Mello Breyner, Portugal Venture’s Executive Board Member (Pictured) adds that the third edition of Call Tourism which ended in January 2021, received 59 submissions with a potential investment of €27.7 million. “Portugal Ventures invested in two companies with an investment amount of €1.9 million and has one project under analysis for investment in the pipeline”.
“Call Tourism invests in more mature seed projects with some traction and startups which have already acquired their first clients and these investment tickets can be up to €1 million”, he says.
“In the tourism sector, we also created in partnership with Turismo de Portugal and NEST – Tourism Innovation Centre Portugal called Fostering Innovation in Tourism, with investment tickets of up to €100,000 for the finalist startup projects”, he continues.
After finishing the acceleration programs, Mello Breyner points out that projects sometimes have difficulties getting investment to scale their businesses. Aware of this market failure, Portugal Ventures also created Call FIT (Call Fostering Innovation in Tourism) to invest in these projects when they have the potential to contribute to the development of the country’s tourism offer, if they are able to increase the competitiveness of the tourism sector and if their solutions improve the tourist experience and its quality.
Partnership with INCM
Portugal Ventures and Imprensa Nacional-Casa da Moeda have partnered to boost projects with global ambition and push entrepreneurs to create unique solutions based on science and technology R&D.
“We aim to invest in Deep Technology solutions acquired by corporate clients, in the following areas: digital identity, security, software development, Data and DevOps. The projects must have a Minimum Viable Product (MVP) with market feedback and some confirmed customers, focusing on tradable goods or services that are part of international value chains, based on fundamental science and technology R&D, and with a clear strategy to protect and enhance intellectual property”, explains Pedro Mello Breyner.
Promoting startups in regions
Many startups in Portugal naturally gravitate towards large urban or high population centres such as Lisbon, Porto or the Algarve. But Portugal has many regions with a developing startup infrastructure often linked to university hubs such as Braga and Coimbra to name two, and Portugal Ventures is keen to attract more startups to the less densely populated regions of the country.
“Some of the funds managed by Portugal Ventures are restricted to some regions, precisely to contribute towards their development because they are more isolated or less attractive for businesses. For example, we manage funds that cannot invest in companies with registered offices in Lisbon or the Algarve. Although one fund, Tourism Funds, has no limits in terms of location,” explains Pedro Mello Breyner.
“Most of the funds that we manage are focused on companies that are registered in the North, Center and Alentejo regions. Also, Portugal Ventures is preparing two specific initiatives for the Azores and Madeira archipelagos,” he continues.
Co-investing with national and international partners
Beyond this, the head of Portugal Ventures says that since 2012 Portugal Ventures has been building an Ignition Partner Network with over 100 partners, from the north to the south of Portugal, including Madeira and the Azores. This network seeks to create a regular engagement with the national entrepreneurial ecosystem and a privileged relationship with universities, interface institutes, R&D Centres, incubators and accelerators, so that it can identify investment opportunities and the creation of innovative businesses and projects all over the country.
Moreover, its Ignition Capital Network currently has more than 15 investment partners and aims to boost the activity of private venture capital, in particular in supporting new investment rounds.
“We favour co-investment operations with Portuguese and International investors to successfully grow early stage ventures, either for our portfolio companies or for new investments.
Taking 2020 as a reference, Portugal Ventures has supported its portfolio companies with 14 follow-on operations and reinforcements of €4.2 million to provide them with the financial capacity to leverage their businesses.
These operations were carried out with the combined efforts of Portugal Ventures’ co-investor partners. It has pet food delivery startup Barkyn on its books with a Series A co-investment with Indico Capital Partners, All Iron Ventures and the 200M Fund; Mindprober, with a structured operation with Wisenext, Ideias Glaciares, Ganexa, Startup Braga, Medioris and Blue Mind Investment, Nutrium in a seed round of €4.2 million, also with Indico and FIS, Primavera and Startup Braga, and DefinedCrowd in its Series B of €50.5 million, together with Semapa Next, Hermes GPE, Bynd Venture Capital, EDP Ventures, Evolution equity Partners, Kibo Ventures, Ironfire Ventures, Amazon Alexa Fund, Sony Innovation Fund and Mastercard.
Pedro Mello Breyner says that the companies that work in the tourism sector – and those in Portugal Venture’s portfolio are no exception – saw a strong contraction in their businesses, yet they have shown a great capacity to readapt their business plans to the ‘new normal’, creating and launching new business models, new products and services.
In fact, it has several examples in its tourism portfolio that illustrate the startups teams’ resilience and their capacity to adapt and turnover quickly.
Doinn – opened its activity to more countries in Europe and entered the USA;
Eat Tasty – changed the logistics of a food distribution focused on delivery to offices in the central area of Lisbon (B2B), to arrive at home delivery to customers directly (B2C) throughout Greater Lisbon, including Cascais, Estoril and Lisbon South Bay; it also opened in Porto;
Great Hotels of The World – launched the “Small Portuguese Hotels” brand to leverage the activity of small, independent hotels;
HiJiffy – extended its activity to the entire “journey” of the customer, from pre-booking, to check-in, in-stay, check-out and post-check-out (they only made pre-reservations);
HomeIT – expanded its offer of products and services, initially directed to Local Accommodation, to B2C – city warehouses, co-working spaces, lockers and an offer for hotels is under development;
Oliofora – launched gel alcohol from vegetable raw material of Portuguese origin (Douro Region), in contrast to most other gel alcohol sold on the market, which is of petroleum origin;
Sailside – expanded its boat rental offer to the Brazilian market.
RRP and Banco Português de Fomento
Portugal’s new public development bank Banco Português de Fomento (BPF) is a relevant shareholder in Portugal Ventures and has a strong partnership with it to help it achieve its mission. BPF will act as one of the implementing institutions of the Portuguese Recovery and Resilience Plan (RRP) with funds going to capitalise Portuguese companies.
Aside for this, Portugal Ventures has adapted its investment strategy to mitigate financing gaps, allowing the funding of projects in sectors that have not been so attractive to other investors.
Until 2019, Portugal Ventures invested in seed and series A startups, with Minimum Viable Product (MVP), market feedback and some existing customers.
Since 2020, as a result of the pandemic crisis, and in an economic environment that discouraged the creation of new businesses, Portugal Ventures was called upon by the Portuguese Government to help entrepreneurs and startups that suddenly saw their businesses slow drastically and in fact kept up the pace of investment by €18 million.
“In response to the pandemic, we launched new financing instruments that aimed to invest in Portuguese pre-seed projects, with investment tickets between €50,000 and €100,000 to boost the development of prototypes, proof of concept and at product-market-fit validation stage”, explains Pedro Mello Breyner.
And it doesn’t stop there according to the Portugal Ventures head who says that over the next two years the VC will aim to invest between €15 million and €20 million per year and is currently fund-raising to create new funds by the end of the year.
Portugal Ventures success stories
Zaask, a precursor of a new generation of Portuguese businesses has been backed since 2013 with a digital technology project conceived in university and brought to life by its founders by its founders with the support of the Portuguese entrepreneurial ecosystem. Today, Zaask is a leading marketplace for service procurement, most notably household services.
Mercadão concluded its exit in August 2021 and has been acquired by Glovo, a personalised multi-category Q-commerce delivery platform operating in 23 countries and inmate than 900 cities. Backed by Portugal Ventures in 2019, Mercadão quickly achieved its high potential thanks to its availability and offering proven quality in the delivery of groceries to thousands of Portuguese families and has become a leading brand in Portugal.
Startups with a promising future
Doinn – Brings local accommodation owners or managers into contact with the best cleaning and laundry services through a highly professional platform in an idea from Noelia Novella; Nuno Rodrigues and Weronika Figueiredo.
HiJiffy – An innovative solution that centralises, automates, and measures all hotel customer service activities, integrating innovative technology in a simple, reliable, and robust platform, used daily in more than 1400 hotels, in 30 countries. The hotels using HiJiffy have an average automation rate of 80%, being fundamental in a time when the guest’s contacts are more and more complex. With HiJiffy hotels can ensure that they will have instant replies 24/7 digital. Its team are Tiago Araújo – CEO & Co-Founder; Pedro Gonçalves – COO & Co-Founder; José Mendonça – CTO & Co-Founder.
Homelt – Founded by Carlos Rosa offers a smart lock that opens doors using a code created by the owner or via an app, thus bypassing the need for a regular key. Property owners can, therefore, create personal keys for their guests/holiday makers, staff and maintenance crews remotely and online. Europe currently has a market of 5 million local lodging establishments and Homeit is present in 15 countries, with almost 2,000 active boxes.
Tripwix – a luxury travel brand for demanding customers from CEO Francisco Bessa. It operates as an online travel agency where all establishments are kept to the highest standards of curatorship. Homes are personally inspected by Tripwix interior designers, thus guaranteeing customer satisfaction. Short-term rentals have been on the rise, as have the demands of customers who are looking for unique family experiences, and currently represent a US$57-billion market worldwide. Tripwix is currently operating in Portugal, Mexico, Spain, Italy and Turkey.