“Startups in Portugal and Israel are in a similar situation because the local market is not big enough”
For the two countries, collaboration is mutually beneficial: Startup Nation gets a foothold in the EU, and the Portuguese get a taste of Israeli talent.
“Startups in Portugal are in quite a similar situation as I understand with small countries like Israel, because we are also a small country. Essentially, all the startups have to think about going abroad in some way because the local market is not big enough, and if they are innovative, why should they keep their innovation just to the country?” says Professor João Gabriel Silva, President of the IPN Research Institute, established in 1991 to drive transnational projects.
Throughout recent history, diplomatic relations between Israel and Portugal have been strong. Even before they were formally established in 1977, the European country helped support Israel during the Yom Kippur War when it allowed American aircraft to refuel in the Azores. Years later, as the countries embrace and settle into the 21st century, the tech connections have strengthened even more: making the two nations close partners in science, trade, and business.
In 2025, the two countries can learn how to tackle similar problems to achieve success outside their borders.
Portugal’s tech sector is considered a rising star in Europe, represents roughly 10% of the country’s GDP, with turnover reaching approximately €20 billion and employing over 80,000 people. It can be said that recent years have seen a boom in its startup scene, specifically, Portugal is home to 4,719 startups, marking a 16% year-on-year increase. These startups generated €2.6 billion in revenue, of which €1.5 billion (or 58%) came from exports, and created over 26,000 jobs. Not bad for a country of just over 10 million people, almost exactly what Israel represents.
Israel and Portugal signed a 2014 science and technology MoU, which was designed to encourage joint research, seminars, and institutional exchanges supported by Portugal's science foundation, FCT, and Israel’s MOST. Two years later, Lisbon became the headquarters of Web Summit, “where tech world meets”, drawing over 70,000 attendees (Israel and alike) and further cementing Portugal’s tech visibility on the world stage.
Today, Portugal is home to more than 100 AI startups, with prominent unicorns including Feedzai, OutSystems, and Talkdesk. Each year, there are 90,000 engineers who graduate from school, ranking third in the EU. With its growing tech scene, EU integration, and friendliness with Israel, the nation can position itself as a natural counterpart to Startup Nation. And the Portuguese might benefit from the talent, attitude, and resilience that Israel can bring.
One such way that Israelis can enter Portugal’s tech scene is through the CoimbraTech Challenge initiative, established in the university city of Coimbra. Encouraged and managed by the city’s mayor, Jose Manuel Silva (brother of Professor Silva), it is a multi-year and multi-stage initiative that aims to connect international startups with the developing economy and ecosystem of Coimbra and open the door for them to Europe. One Israeli company, Filo Systems, is located there and benefited from the opportunities. "CoimbraTech has allowed us boots on the ground in Portugal in record time,” said CEO Dr. Ofer Markman. “We are pleasantly surprised with the conditions and the people that we have encountered in a very short period of time, all anxious to support and co-create in the best possible way.”
CoimbraTech is looking for more companies to join its accelerator in October, with Israeli companies front and center of that search. Focus areas include health tech, AI, space tech, smart cities, ESG, and Industry 4.0. There are no direct costs for the basics for offices for the first several months to get set up, and it can set them on the way to going to market across the continent.
Israeli companies can benefit more than just the sunshine and young talent of Coimbra - factors already in abundance along the shores of Tel Aviv. Startups that qualify under Portugal's new innovation regime (IFICI or NHR 2.0) benefit from a flat 20% personal income tax rate on income from employment or self-employment, applicable for up to 10 years for founders and employees instead of higher progressive rates. This could be especially attractive compared to standard rates that can reach up to 53% not to mention the local taxes in Israel.
For corporate income tax, startups are generally subject to a reduced 12.5% corporate income tax rate on their first €50,000 of taxable income, with the remainder taxed at standard rates.
Portugal has been growing its tech hub locations to sway techies away from Lisbon and toward regions like Coimbra, which has a slew of academic institutions and is considered the healthcare center of the country. It is home to Instituto Pedro Nunes (IPN), one of the top-ranked global university incubators with a 60%+ startup survival rate, and the University of Coimbra Hospital. One of the challenges faced by the region is keeping the talent that it fosters. According to Nirit Harel, founder of the Baixinova initiative, Coimbra has “an endless supply of skilled talent who often leave abroad in search of opportunities. We are creating the conditions to keep these talents here and even attract others.”
The interplay of Israeli agility and Portuguese strategic approach offers fertile ground for synergy - especially in times where Israel is looking for friends in Europe. Its dynamic, direct style complements Portugal’s more relationship-driven, methodical business culture, as recent and previous history has shown. As time goes on, it might be wise for Startup Nation to consider a leap toward the EU’s rising star.
