Impact investing in Portugal - the role of startups in the ecosystem

Abstract

This research delves into the emerging landscape of Impact Investing in Portugal, using a combination of literature review and expert interviews. It addresses the challenges of defining and measuring impact while mapping the Portuguese ecosystem, where a variety of players contribute uniquely to its composition. For instance, impact startups ensure alignment between their financial and social objectives by the usage of the Lock Step model and by securing patient capital through a mix of funding sources. In parallel, impact incubators focus exclusively on supporting impact projects, leveraging specialized expertise, workshops, and networks within the impact ecosystem to provide distinctive support. Impact VCs exclusively invest in Lock Step models and incorporate impact-linked remuneration mechanisms. Foundations, as financially dependent entities, explore venture philanthropy to address budget constraints and enhance their impact, bringing a better reputation for their parent companies. Furthermore, public funds, relying on governmental resources, play a crucial role in fostering the impact investment landscape by bridging the gap left by private investors, who are often dissuaded by the unique risk-return profiles of these projects.