The outbreak of COVID-19, and the restrictive measures imposed by the government, affected all economic areas. Startups are no exception and in general have had a strong break in their performance.
To minimize the mortality of startups, by their nature highly vulnerable to risk, especially those with innovative business models, several support measures have been created:
Innovative and Specific Measures for Startups:
StartupRH Covid19
This measure aims to support early stage startups (founded less than 5 years ago), with an incentive equivalent to a minimum wage per employee, up to 10 employees, and aims to mitigate the immediate lack of liquidity, particularly with respect to operating expenses with Human Resources.
For Startups to be able to resort to this support, they must guarantee the maintenance of jobs in 2020, and they may not have already used the lay-off regime.
Startup Voucher Extension
Targeted to entities with active Startup Vouchers, which are extended for three months, in the amount of 2075 euros per entrepreneur. To resort to this support measure, it is sufficient that the startup already has a Startup voucher assigned.
The Startup Voucher is a measure that drives projects of young entrepreneurs, and is embodied in various support instruments, during the process in which the projects pass from idea to reality.
This measure arises as a way of making up for the immediate lack of liquidity on the part of start-ups, particularly regarding operational expenses and the fulfilment of long-term responsibilities.
Incubation ticket COVID19
Supports startups under 5 years old, providing a simplified incentive of EUR 1,500 in incubation services (which include rents, telecommunications, and other aspects). This support takes the form of a 100% non-refundable incentive.
These services will be provided by accredited incubators belonging to the National Network of Incubators.
In order to access this support, in addition to the proper records of all entities concerned, it is also necessary that no workers are made redundant in 2020.
“Mezzanine” funding for Startups Covid19
It is aimed at high-potential start-ups that have benefited from investments by Business Angels, venture capital investors or other partners, or have benefited from incentive schemes and have undergone technology transfer processes.
This measure intends to inject liquidity into these companies, through debt instruments (loans) convertible into share capital after 12 months and applying a discount rate that avoids the dilution of promoters.
This line aims to mitigate the effects of the Covid-19 pandemic by supporting start-ups that are positively signaled by certified incubators and that present a plan to maintain their business and a recovery of their business in the post-crisis period.
To be able to make use of this support, Startups must:
- Keep all the employees in 2020
- Be registered at StartupHub
- Present a statement proving the negative impacts of the pandemic on their economic activity
- Have had previous funding
- Have been involved in technology transfer processes
- Preferably, have business that involves circular economy or energy efficiency
- Have a mentor assigned to monitor the company’s activity, for a maximum period of 12 months (this cost is included in the investment)
- Operate the financing line through Portugal Ventures
Launch of the instrument Covid19 – Portugal Ventures
It facilitates the reinforcement of the liquidity of the startups, in cooperation with already existing shareholders who hold at least 30% of the capital, through the Operation Follow-Ons of Portugal Ventures, for investments in strartups, with an amount of investments (tickets) from EUR 50,000.
This measure, aimed at startups in all sectors, is financed by the Development Finance Institution (IFD); Portugal Ventures; and Imprensa Nacional Casa da Moeda.
Measures already existing and adapted to startups:
200M Fund
This fund, which already existed before the crisis we are going through, makes it possible to provide technological start-ups with greater investment capacity, in late seed and Series A and B phases. It consists of a co-investment between qualified private investors and the 200M Fund, allowing rounds of 10 million euros or more.
This measure allows significant capitalization of companies, to support them in this phase of uncertainty, and boost growth after COVID-19.
To join this measure, startups should only be based in Portugal and have qualified and experienced private investors interest to invest in their capital, in at least EUR 500,000.
Co-investment Fund for Social Innovation
It aims to provide the social impact startups with greater investment capacity, in late seed and Series A and B phases.
It is, essentially, a co-investment, between private investors and the Fund for Social Innovation (a public instrument aimed at boosting social impact investment in Portugal). The minimum public investment will be EUR 50,000 and the maximum EUR 2.5 million.
This measure will allow for a significant capitalization of companies with strong social impact, supporting them during the crisis and boosting their post-COVID-19 growth.
