Will the next Fintech unicorn come from Portugal?
Web Summit in Lisbon put the local ecosystem under the spotlights… Like the Netherlands (home of Adyen) or Sweden (home of Klarma), Portugal is a small but dynamic country: if their startups want to go big, they have to think global from Day 1. A good starting point to build the next Fintech unicorn?
I had the chance to be at Web Summit this year, and I took advantage of the event to meet the Portuguese ecosystem. I was also part, as a VC investor at Blackfintech, of the jury of the pitching competition organized by Accenture, with a focus on Fintech.
Following my trip to Portugal, here are the 5 main trends I see in the Portuguese Fintech ecosystem:
- As Portugal doesn’t represent a huge market potential in terms of business opportunities, some Portuguese fintechs created bridges directly with the USA to spread their innovations at a larger scale. For example, Feedzai, the local market leader in fighting fraud with AI opened offices in the Silicon Valley at a quite early stage. Nuno Sebastiao says ‘we decided very early on to go abroad”. He adds that it could be linked to the fact that Portugal is a “small type of country”. James.Finance too, opened offices in the USA (NY) at quite an early stage.
- In terms of topics of interest, the ecosystem has quite the same equilibrium than in France or Spain, except that Crypto / Blockchain tools are more and more numerous. Among the Fintech Pitching competition, 1/3 of the competing fintech startups were related to crypto and blockchain technologies. Among the Top 25 Portuguese Fintechs, numerous solutions associated with this topic, like HOLD, which provides an alternative solution to sell cryptocurrencies, Coinvision, that delivers analytics to assess the crypto risks and opportunities better, or UTRUST, a cryptocurrency payment provider offering consumer buyer protection and instant settlement for merchants.
- Regtech seems to be a hot topic too in Portugal. Plenty of « Identity Management » tools are emerging there. to be fair, even though we are in fond of this investment space, it is not so easy to see clear entrance barriers and differentiation. On top of Identity Management startups, various Portuguese regtechs were presenting their solutions at Web Summit, to handle risks better, to fight fraud, to launch RGPD strategies and so on.
- Related to their main challenges, fintech startups in Portugal seem very clear about the fact that regulation is a painful process : 26% of the fintech startups think it is their main stake, The Portugal Fintech Report 2018 says. Then, comes access to the market (22%), getting the marketing mentality (17%), cracking the sales cycles (17%) and searching for talents (13%). I guess other European countries’ fintech could have declared the HR stakes as one of the most important challenges they face. Seems like Portugal is very appealing to talents ;)
- That leads us to the 5th trend: tech talents abound in Portugal ! In 2012, Spain and Portugal’s economies felt by 3,2%, while the unemployment rate soared to 18%, especially for the youth, says Matt Pitt, Head of Research at Wilbury Stratton. But 6 years later, Portugal is booming and the evolution of its growth and unemployment rates is amazing! Tech talents are flowing from the University of Porto or the Braga-based University of Minho. Every year, at least 90,000 graduates emerging from the country’s top 10 universities have highly relevant skills to a work in tech startups, including fintech ones.
Our friends from Portugal Fintech just published the Portugal Fintech Report 2018, powered by Accenture and Morais Leitao Galvao Teles Soares Da Silva… I encourage you to read it if you want to go deeper into the topic.
At BlackFin we are fueling fin’ serv’ pioneers since 2009. Founded by 4 FinTech entrepreneurs (after Fortuneo success story), BlackFin is pumping over € 700m into this space through 2 ‘buy out’ & 1 ‘venture capital’ funds. At BlackFin Tech (the VC part), we invest from 1 to 15m€ in fintech, insurtech and fintech. > Let’s meet! hello@blackfincp.com <
NB. Thanks to Joao Andrade for the report:)
