Portugal drives forward with mobility tech

Portugal is enjoying a tech boom in various specialist areas including mobility tech, an area that has seen a flurry of foreign investment in recent years. Reflecting this boom, the country was ranked ninth out of 38 leading economies in the 2018 International Innovation Scorecard, conducted by the Consumer Technology Association.

In the 1990s, Portugal was known as a low-cost manufacturing location. Two decades on, it is home to cutting-edge R&D in deep tech. The country's rising added value is exemplified by German engineering and electronics company Bosch, which entered Braga in 1990 to assemble radios. In 2002, however, the facility pushed for innovation projects, and in 2010 began a partnership with Braga University, according to Carlos Ribas, Bosch’s Portuguese representative.

“The university became an extension of our plant. Since 2010, the growth in R&D has been tremendous, and the next phase of research will represent more than €100m into Bosch and our partner universities in Portugal,” he says.  

In 2015 the Braga plant employed 1700 people; today, a workforce of 3700 produces electronic products such as car navigation systems. German chancellor Angela Merkel opened the site’s Technology Centre in 2017, now home to several hundred researchers who work on sensors and software for automated vehicles. Bosch also has R&D sites in Aveiro and Ovar.

Veniam's fine mesh

Veniam provides another example of Portugal’s young but world-class start-up scene, especially in mobility tech. The company creates networks of interconnected vehicles via cloud computing that enables automobiles to self-update their software and transfer huge amounts of data. In Porto, Veniam has deployed the world’s largest mesh network of vehicles, connecting buses and other vehicles that act as internet hotspots for the public and gather terabytes of urban data for smart city applications. 

“Porto offers a living lab for testing our networks, due to its excellent [digital and transport] infrastructure and open-minded authorities. There’s a cluster of players making the city a focal point of innovation for the auto industry,” says João Barros, who founded Veniam with the creators of ZipCar. “Portugal’s start-up and tech scene is still very nascent, but Silicon Valley likes nascent, and venture capital in Silicon Valley, in general, has started investing more outside of the bubble in California, and this is providing good results. They’re seeing there’s talent everywhere.” 

Veniam also boasts commercial mesh networks in New York and Singapore, and the company’s team is equally international. “As an [American] engineer in deep tech, I was significantly impressed by the depth of knowledge in engineering in Portugal. Additionally, the country's English skills are tremendous and I have had no problems integrating,” says Jane Hoffer, chief business officer at Veniam.

Welcome to Portugal

The past two years have seen an impressive slew of foreign investment in mobility tech in Portugal, with the arrival of BMW, Mercedes and Volkswagen. BMW and Portuguese company Critical Software teamed up in 2018 to create Critical TechWorks, a 400-person company providing next-generation software systems at BMW.

Martin Zierheim, chief operating officer of Critical TechWorks, says: “The BMW group [is transitioning] into a mobility tech company. Everything is being disrupted by IT. In Germany it was really hard to find the people, so we looked for companies abroad and had 270 candidates. We wanted an area where IT competencies were growing and were state of the art. 

“I’ve felt welcome in Porto. The officials and city have really helped me, as has Aicep (the national trade and investment agency). Whenever we had questions it was always there to help us, especially with some legal issues.” 

Local partner Critical Software is a pioneer among Portugal’s hi-tech start-up community. Spinning off from the University of Coimbra more than two decades ago, the company sells cutting-edge safety test software for critical systems in sectors such as automotives, health and space, and to customers such as NASA.  

Opportunities abound

Through local talent such as Critical Software, Volkswagen also saw a tech opportunity in Portugal, and in 2018 opened its first software development centre outside Germany, in Lisbon. The 300-person team will build user-driver-centric software. Volkswagen has been in Portugal for more than 25 years, and its plant at Palmela boasts 5900 people.

Similarly, Mercedes-Benz established its first digital delivery hub outside Germany in Lisbon in 2018, Mercedes Benz.io, which is part of an effort to develop Mercedes from an automobile maker and into a leading provider of premium mobility services.

“I think Portugal’s market is still very good for [FDI]. The auto industry is quite interesting. The war for tech talent is worldwide, and there’s good availability in Portugal. Then there’s quality of life, English speakers, [political stability], etc,” says Alexandre Vaz, managing director of Mercedes-Benz.io. “I wouldn’t, however, give the argument of ‘low costs’. The market here is becoming more global, so wages will increase over time. [Moreover], Lisbon has completely changed over the past 10 years, in terms of nightlife and entertainment. The city is increasingly attractive to foreign people [and tourists].”

The price of popularity

With Portugal’s tourism and tech boom in full swing, the cost of rent in Lisbon and Porto has risen sharply in recent years. In the capital, rental prices hit an eight-year high in 2018, according to a report from Confidencial Imobiliário.

“Over the past five years, the transformation of Lisbon and the [tech] boom has been tremendous. [There’s a contest] for available offices that has [never] been witnessed before. New space that comes to the market is very often gone within a couple of days, costs by square metre are increasing constantly,” says João Delgado, head of communication and governmental affairs at Volkswagen Autoeuropa.

To make the most of this wave of investor interest, the Portuguese government has made significant efforts over the past decade to address the country’s ageing bureaucracy, as reflected in the World Bank’s 2018 Ease of Doing Business survey, which ranked Portugal 29th out of 190 countries. For example, attracting non-EU tech talent to Portugal has become easier thanks to the Startup Visa, which was recently complemented by the new Tech Visa. Initiatives such as these are supported by the Portugal Tech programme that has already spent €330m since its inception.

In terms of increasing local talent, the government has boosted universities’ annual capacity for IT-related courses – however the output is behind the needs of the market, according to Mr Delgado.

Portugal's task now is to retain its highly skilled talent and attract more foreign expertise. Achieving this should see the country remain among the European, and global, leaders in the tech stakes.