StartUP visa for Portugal

A foreign entrepreneur that starts up an innovative business with a projected value of assets or annual turnover of at least €325,000 to be reached in five years gets a residence permit in Portugal.

The Portuguese Ministry of Economy launched Portugal’s StartUP visa programme in early 2018. The Portuguese StartUP Visa is a residence permit conferred to businessmen willing to start up a business in Portugal or to relocate a division of the existing business from their home country to Portugal.

An investor can make an online application in Portuguese or English on the official programme website to take part in the StartUP visa programme for Portugal. An applicant must draw a business plan and convince the approving commission that the proposed project is innovative and beneficial for the Portuguese economy.

Sufficient financial means to start up a business is a prerequisite for programme participation. Financial aid in Portugal, if needed, may come from business angels, investors, venture funds, or state-financed grants.

Who is eligible for a StartUP visa?

• An entrepreneur willing to start up a business in Portugal or transfer the existing startup from another country,
• Over 18 years of age,
• Not a citizen of the EU or Schengen area,
• With a clean criminal record,
• Tax compliant,
• With enough cash in the bank — €5,146 per person.

Family members and up to five people may be included in the entrepreneur’s application.

What startup qualifies?

• A business must be innovative and beneficial for the national economy of Portugal,
• A business transferred from abroad must be profit-making and no more than four years old,
• A project is to be of interest for at least one of the certified incubators in Portugal,
• A startup has five years to reach capitalisation or turnover of at least €325,000 a year,
• A startup should have the potential to create at least five job positions in two years,
• The immigrant entrepreneur must lead the startup team.

Stages in obtaining a StartUP visa

An application for a StartUP visa can be made in English on the official website of the Portuguese Institute to Support Small and Medium Sized companies (IAPMEI). An applicant will have to go through two stages of the application process.

First, an entrepreneur fills in an identification form, describes the proposed project, and uploads documents to the system.

Required documents:

1. Motivation letter explaining the desire to develop the proposed innovation project in Portugal,
2. Copy of passport,
3. Certificate proving an obtained tax or social security number in Portugal. Upload the respective application for your number in case the certificate is not yet available,
4. Clean criminal record from the applicant's home country,
5. Bank statement proving enough cash in the bank for self-sustaining life in Portugal — at least €5,146 and transferability of the funds to a Portuguese bank,
6. CV with detailed job experience,
7. Slides presenting the proposed project.

Second, an entrepreneur should get approval from at least one of 78 incubators. After making an application on the website and submitting documents, an entrepreneur is to make an application for a declaration of interest from incubators. 

An incubator looks at several criteria to evaluate the proposed startup:

1. The innovative character of the project,
2. Growth potential,
3. Market scalability of the proposed business,
4. Prospect of the proposed project in Portugal after the programme ends.

After an incubator approves the proposed project, an entrepreneur submits a complete set of documents and makes an application on the e-platform of IAPMEI. 

There is a mini guide for application submission and legal framework for startups in Portugal on the official IAPMEI website.

An application for a StartUP visa is processed in 30 days, and then a visa decision is made. If a StartUP visa is granted, a successful applicant has 40 business days to make an agreement with an incubator. It is crucial that a business must start up during incubation but not before it. An incubation contract is valid for 12 months and may be renewed for another 12 months if the contract parties agree so.

An e-application on IAPMEI’s website is not a substitute for the compulsory procedure of obtaining an entry visa or a residence permit in the consulate of Portugal or the Immigration and Borders Service (SEF). 

Incubators and accelerators

Startup Lisboa founded by the municipality of Lisbon, Portugal, the bank Montepio and IAPMEI in 2012 is one of the most effective incubators that has received 4,500 applications and supported 400 startups that have raised over €150,000,000 and have created 3,500 jobs. Startup Lisboa supports startup founders providing mentors, lawyers, investors, the business hotel Casa Startup Lisboa, offices, and co-working facilities. It takes up to three months to process an application. Incubation may last for up to three years, as an entrepreneur may wish.

The popular accelerator Lisbon Challenge proposes €70,000 for 7% equity interest. Applications are made in January, and the programme lasts from April to June ending on Investors Day. After the programme is over, an entrepreneur gets support with attracting investments for six months. Lisbon Challenge has received 4,300 applications, 210 startups have completed acceleration, and 105 businesses attracted investments totalling €75,000,000.

The governmental support in Portugal is given through the 200M Fund that attracts foreign investors and co-funds up to 50% of the required total amount. The total investment amount that may be sought through the Fund is from €1,000,000 to €10,000,000. The Fund has invested about €80,000,000 in 20 startups that are expected to create over 1,500 jobs.

Grants

The UE programme Portugal 2020 allows entrepreneurs to get 50% as equity and 50% as a six-year loan at 0% with a two-year grace period. An entrepreneur that shows growth of sales, revenue, and jobs is eligible for the programme. The programme Portugal 2020 lasts for two years and has €5,000,000,000 (20%) uncommitted funds. About 350 foreign companies have already been granted financial support, and every 6 of 10 companies get financing.

R&D grants cover up to 75% of funds contributed over two years — from €100,000 to €1,000,000. A grant may be channelled to cover payroll, marketing, acquisition of companies in Portugal. 

Moss & Cooper is extensively providing grants: 85% of grant cases are successful. A success fee of 5% capital raised is to be paid for the support to attract investments. A setup fee of €2,000–5,000 is charged for case review and programme selection.

Business angels and venture capital

Business angels help startups at the onset and actually invest in a business idea even when the project is not there and the product is not yet marketed. Business angels make only equity contributions to projects, so the most common investment in a startup is up to €100,000.

A syndicate of business angels might comprise up to 70 investors. The most active syndicates in Portugal are Olissipo Way, Red Angels, Vega Ventures, and Shilling. See details on the official websites of the Portuguese Association of Business Angels APBA and the National Federation of Business Angel Associations FNABA.

A startup seeking financing of €300,000 or more should turn to a venture fund. The most active Portuguese venture funds are Armilar, Bright Pixel, Bynd, EDP, Faber, Indico, Kibo, LC, Pathena, Portugal Ventures, Semapa, and Sonae.

Venture funds help to attract the funds from institutional investors, such as insurance companies, pension funds, family offices, and high or ultra-high net worth individuals, and for this reason, usually, administer a capital dozens of times larger than that of business angels.

Immigration through startup

After a StartUP visa for Portugal is obtained, an entrepreneur has four months to enter Portugal and apply for a residence permit. A residence permit is issued in 90 days. An entrepreneur obtains a residence permit in Portugal for one year that may be renewed during five years to come. A valid residence permit may be cancelled if the holding entrepreneur does not stay in Portugal for more than six consecutive months or for a total of eight months in a year.

How a startupper obtains a residence permit in Portugal?

• Get a StartUP visa,
• Confirm your intention to develop a startup in Portugal,
• Not have permanent residence in the Schengen area,
• Have a clean criminal record,
• Have sufficient subsistence funds — at least €600 per month.

How to obtain permanent residency and citizenship in Portugal when starting up a business?

An immigrant entrepreneur that has lived in Portugal under a residence permit for five years is eligible for permanent residency. Such an entrepreneur must have created at least 10 job positions for the Portuguese, be tax compliant, and know Portuguese at least at the A2 level.

An application for Portuguese citizenship may be made just in a year after living for six years in Portugal.

Author: Ani Muradyan