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Portuguese Startup Scene Report 2022

Armilar
29 Mar 2023
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Portuguese Startup Scene Report 2022

  1. Lisbon March 2023 PORTUGUESE STARTUP SCENE REPORT 2022 Lisbon, March 2023
  2. Lisbon March 2023 About Armilar Venture Partners 1 23 years of investment experience 70+ companies backed since 2000 20 exits, 3 IPOs 2 unicorns 4 dragons1 European investment scope, focusing on Digital companies with tech at the core 1. A “dragon” is an investment that returns the entire fund
  3. Lisbon March 2023 2 This report accounts for startups “with a Portuguese origin” which includes startups with HQ outside Portugal 1. Includes startups “founded” in Portugal or by Portuguese founders. If the HQ is outside of Portugal, the startup needs to have a relevant number of employees in Portugal AND, Portuguese founders, or some International founders based in Portugal Note: Analysis based on headquarters stated in LinkedIn or Crunchbase companies’ pages Source: Armilar database 59% 81% 41% 19% 118 rounds Startups with HQ elsewhere1 Startups with HQ in Portugal Number of rounds 839 EUR M Amount raised (% of 2022 total) (% of 2022 total) 2022 Portuguese startup scene 5% Coimbra 3% Aveiro 9% Other Many Portuguese startups / scaleups move their HQ elsewhere after raising a relevant funding round with international investors, others set-up abroad from the start Of which: 60% Lisbon 15% Porto 8% Braga
  4. Lisbon March 2023 When a similar criteria is applied to other European ecosystems, we see that Portugal is punching above its weight in nurturing high potential startups 3 Notes: Country data based on HQ and founding location according to Dealroom; includes countries with >= 300 million invested in the last 3 years and with more than 2 million in population; does not include Russia nor Ukraine; Source: Dealroom Number of unicorns per average amount invested in the last 3 years (Unicorn per USD Billion invested) 0 2 4 6 8 10 2.4 2.0 3.0 3.1 3.2 3.3 3.5 3.5 3.7 4.1 4.3 4.3 4.6 5.0 5.9 6.7 7.1 7.2 3.2 4.2 2.9 1.9 3.2
  5. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 4 In 2022, more than €800M was invested in Portuguese startups 2022 had a lower investment activity overall when compared to 2021 groundbreaking year Estimated number of deals (# of rounds) Estimated investment amount (EUR Million) Source: Armilar database 132 159 118 2020 2022 2021 -26% 354 839 2022 1 417 2021 2020 -41% Coming from a record year in 2021, 2022 was marked by an international market contraction, due to the rise of interest rates and consequent reduction of tech companies' valuation in the public markets
  6. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 -60% 5 More than half was invested in a few later-stage rounds Though Series B+ rounds decreased by 60% when compared to 2021 Estimated number of deals by stage (# of rounds) Estimated investment amount by stage (EUR Million) Source: Armilar database 73 83 24 42 55 67 13 12 21 159 9 118 4 132 2022 6 2021 2020 -26% 11 97 109 96 237 219 488 2022 4 2021 13 80 354 839 43 1 212 1 417 2020 -41% Series A Series B and beyond Seed Pre-Seed Growth ’22 vs. ‘21 -33% +22% +75% -71% Growth ’22 vs. ‘21 +13% +147% -66% Series B and beyond were the most affected by the international environment in 2022 Most of the contraction in Pre-Seed explained by a lower number of rounds announced by Public entities and BAs vs. previous years
  7. Lisbon March 2023 In fact, the 10 largest funding rounds in 2022 represented +70% of the total amount raised % of the total amount raised 32% 18% 8% 3% 3% 2% 2% 2% 1% 1% Amount raised in 2022 $300M €150M $76M1 €25M $25M €20M $19M $15M $12M $12M Valuation $3B N/a N/a N/a N/a N/a N/a N/a N/a N/a Round C Growth A A A C B B B A Startup 1 Includes equity and debt Source: Pitchbook; Crunchbase; Dealroom; Armilar database Round Investors SoftBank Vision Fund 2, Accel, Sequoia, Index Ventures, Two Sigma Ventures, General Catalyst, 9Yards, Adams Street, Base Growth, Indico Capital Partners 6 72% Antin Infrastructure Partners Hiro Capital, Accel, Makers Fund Verdane Lightspeed Venture Partners, Build Collective, EX Capital, H&M Goup, DCVC, SOSV’s HAX, Spider Capital, Momenta Ventures, Bombyx Capital Partners, Faber Ventures, Fashion for Good, Shilling Capital Partner Ventura Capital, Iberis Capital Semapa Next Bright Pixel Capital, Armilar Venture Partners, Faber Ventures, Join Capital, Caixa Capital, EQT Ventures, Iberis Capital Digital Turbine, Faurecia, Portugal Ventures, 200M Draper Associates, Holt Xchange, Holdun Opportunity Fund, Brendan Holt Dunn, Holdun Family Office, SDC Management, Expert Dojo, Uniera, Level One Robotics
  8. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 7 This market contraction was mostly reflected in the 2nd half of the year This is mostly driven by the lag between starting to raise and announcing a round Estimated number of deals by stage (# of rounds) Estimated investment amount by stage (EUR Million) Source: Armilar database 28 45 55 28 13 11 21 21 25 30 30 37 5 8 5 7 6 15 5 69 76 56 H2 2022 H1 2022 3 4 66 3 52 H2 2020 H2 2021 2 90 H1 2020 H1 2021 2 6 5 54 56 54 52 58 124 114 60 159 445 766 442 46 2 122 2 624 532 885 H2 2021 H1 2021 42 7 H2 2020 H1 2020 16 H2 2022 27 38 232 28 6 215 H1 2022 -66% Series B and beyond Series A Seed Pre-Seed Growth H2 vs. H1 -90% -8% -5% -13%
  9. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 8 As a result, 2022 was a challenging year to raise follow-up rounds, particularly in Series B+ stage Pre-Seed to Seed conversion Seed to Series A conversion Series A to Series B conversion Share of startups that raised the next round within a given period (cumulative) Source: Pitchbook; Armilar database Time since previous round % 0 5 10 15 20 18 months 24 months 12 months 6 months 2020 cohort 2021 cohort 0 5 10 15 20 24 months 18 months 12 months 6 months % % While it became harder to raise during the 2nd half of 2022, several companies raised internal rounds (most not announced) and reduced cash burn, delaying their next relevant round 0 5 10 15 20 24 months 18 months 12 months 6 months
  10. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 9 Despite the market contraction, Pre-Seed and Seed continued its upward trend, while Series A median round size had a slight reduction Pre-Seed Seed Series A 100 114 150 2021 2020 2022 +32% Median round size (EUR thousand) Median round size (EUR thousand) Median round size (EUR thousand) 658 1 500 2021 2020 1 275 2022 +18% 8 000 4 250 2022 7 277 2021 2020 -9% Note: Analysis only include rounds with known amount; Source: Armilar database
  11. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 10 Both international and Portugal-based Investors were less active in 2022 Local investors reduction is mostly explained by a lower activity from Public entities and BAs International Investors participated in >50% of the rounds… … while VCs were the most active local Investors Source: Armilar database 52% 81% Portugal-based Investors International Investors Delta vs 2021 (# of rounds) -14% -21% 18% 8% 20% 26% 40% Other Public entities Business Angels VC Investors CVC or Corporates Delta vs 2021 (# of rounds) +7% -45% -27% -23% +40% Portugal-based investors Participation per type of Investor (% of total rounds in 2022) Participation per type of Investor (% of total rounds in 2022)
  12. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 11 Pre-Seed was the most impacted stage by the lower activity from local Public entities Pre-Seed Seed Series A 49% 0% 5% 2% 17% 25% 42% International Investors 4% 12% Other Public entities Business Angel 17% CVC/ Corporate 17% Venture Capital 25% Participation in Portuguese startups’ investment rounds (% of total rounds) Source: Armilar database 2022 2021 18% 4% Venture Capital 48% 48% 24% 49% Public entities 15% Other 35% CVC/ Corporate International Investors Business Angel 56% 18% 16% 27% 8% 42% 17% 24% 19% Business Angel 42% 83% 0% 67% Other 33% Public entities International Investors 38% CVC/ Corporate 33% Venture Capital In 2022, Private Equity firms - leveraging SIFIDE funds - have increased participation, particularly in the Series A Several pre-seed rounds realized during 2022 were not yet announced
  13. Lisbon March 2023 Portugal Ventures was the most active Investor, followed by several local VC Investors 12 Most active Investors in Portuguese startups in 2022 (# of rounds) 27 18 9 8 8 7 7 6 5 5 5 4 4 3 3 3 3 3 Mustard Seed Maze Semapa Next Hcapital Bright Pixel Lince Capital Techstars EDP Ventures Wisenext Caixa Capital Armilar Iberis Capital Newzone Demium Indico Capital Shilling Portugal Ventures Olisipo Way Faber Ventures Other (e.g. PE) CVC/ Corporate International Investors VCs Public Entities Business Angels -22 +3 -1 +3 +6 0 -6 +1 +3 0 +2 -2 +1 -1 0 -3 -3 +2 Delta vs. 2021 (# of rounds) Note: Includes Investors with at least 3 investments; Source: Armilar database
  14. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 13 Splitting by round stage, Portugal Ventures covered the full spectrum of early-stage rounds in 2022, only surpassed by Demium Capital in Pre-Seed rounds Pre-Seed (# of rounds) Seed (# of rounds) Series A (# of rounds) Note: Includes Investors with at least 3 investments; Source: Armilar database 6 4 3 Newzone Portugal Ventures Demium Capital 17 12 7 6 3 3 3 3 3 3 3 3 Techstars Faber Hcapital Wisenext Indico Capital Newzone Iberis Capital Armilar Shilling Lince Capital Portugal Ventures Mustard Seed Maze CVC/ Corporate International Investors Business Angels VCs Public Entities Other (e.g. PE) 5 4 3 3 3 3 Iberis Capital Caixa Capital Armilar Shilling Portugal Ventures Bright Pixel Capital Most active Investors in Portuguese startups in 2022 per round stage (# of rounds)
  15. Lisbon March 2023 Demium is also the most active international Investor, followed by several other VC and late-stage Investors Note: Includes follow-on investments Source: Armilar database 14 Most active international Investors in the last 3 years (number of Portuguese startups invested) 19 11 3 3 3 2 2 2 2 2 2 2 2 2 2 2
  16. Lisbon March 2023 1 2 3 4 5 6 7 8 9 10 11 12 Finally, Portuguese startup scene continues to be a B2B market, with 70%+ of funding rounds and 80%+ of funding amount Number of rounds (% of total number of rounds) Amount invested (% of total amount invested) Source: Armilar database 15 70% 2021 27% 28% 73% 2020 72% 2022 30% B2C B2B 2022 2021 4% 82% 96% 18% 2020 7% 93% In 2022, there were twice more B2C Series A+ rounds vs. 2021
  17. Lisbon March 2023 As insiders, we often feel that traditional information sources poorly reflect the reality of the Portuguese startup scene • A relevant number of successful Portuguese startups move their headquarters (HQ) outside of Portugal, particularly after raising funds from international investors and, consequently, they stop being considered as part of the Portuguese startup universe in traditional data sources, even when keeping most of their operations in Portugal • Information on funding rounds is spread across multiple information sources, and there is no widely adopted aggregating entity As such, we felt the need to build our own database. We manually gather information based on publicly available, free sources, including (but not limited to) news websites and investors' websites We define the Portuguese startup scene in a broad sense, including startups with Portuguese roots but without their HQ in Portugal. In this report, we include: • Startups that have their HQ in Portugal (typically the standard definition in other databases), and • Startups that do not have their HQ in Portugal but that have strong links to Portugal, namely by having Portuguese founders or international founders located in Portugal, and a relevant local presence Whenever a deal is made public, but round size or name (Seed, Series A, etc.) is unknown, we try to estimate them. We classify the round name based on the perceived stage of the startup, using several variables, and assume a standard round size for each stage. • To determine the stage, the main variables used are: prior rounds information, number of employees, round size, and product readiness • To estimate the round size, we assume EUR 100 thousand for Pre-seed, EUR 400 thousand for Seed and EUR 3 Million for Series A rounds; we acknowledge that this may evolve significantly with time, and we will review this criteria regularly Given that exact transactional data is frequently not publicly available, data in this report should be considered as our educated guess of what happened in the Portuguese startup scene. We also provide the data we used in this report in our Rows workspace Report methodology 16
  18. Lisbon March 2023 17 Contacts Armilar Venture Partners, SGFCR, SA Rua Tierno Galvan, Amoreiras, Torre 3, piso 17 1070-274 Lisbon, Portugal Tel: +351 216 030 166 www.armilar.com info@armilar.com www.linkedin.com/company/armilar/ twitter.com/armilarvp
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