News Focus
How do Spain and Portugal’s “business angel markets” compare with the biggest in Europe?
According to EBAN, the European Trade Association for Business Angels, the UK was the number one ranked “business angel market” in Europe in
2015 with a total of €96 million of business angel investment. However, both Spain and Portugal were among the top 10 countries in Europe for total
investment by business angels. Spain was second with €55 million, while Portugal was ranked eighth with €23.4 million.
Number of
business Number of Number of Total BA
angel
BAs
investments investment
networks
2015 (€m)
(BANs)
Yearon-year
change
Total BA
investment
2014 (€m)
Yearon-year
change
Average
Average
Total BA investment
investment
investment per
BA 2015 per BAN
2013 (€m)
(€)
2015 (€m)
EBAN
Ranking
Country
1
UK
44
4,738
567
96
10%
87
3%
84.4
20, 262
2.18
2
Spain
52
2,732
232
55
5%
52.6
-9%
57.6
20, 132
1.06
9
Portugal
17
624
58
23.4
-16%
27.85
102%
13.8
37, 500
1.38
there are doubts about the viability
of law firms in Spain becoming
shareholders in spin-off businesses
providing support for small
businesses in the mould of, for
example, Riverview Law, of which
DLA Piper is a shareholder. “There’s
a risk of not focusing on what
you’re doing,” says Casals. “Baker
& McKenzie doesn’t set up spin-offs
for conflict reasons: if you become
a shareholder in the project, you
could come into conflict with other
shareholders and then you’re right
in the middle of it.”
The start-up sector is having
a significant role in shaping the
dynamics of the legal market.
Alejandro Touriño, managing
partner at Ecija says: “We are now
seeing some very interesting law
firms only acting for the start-up
ecosystem, that is entrepreneurs,
venture capitalists, accelerators and
so on.” He adds that, regarding the
opportunity for law firms to create
spin-off businesses, “I am not sure
this is the right option”.
Touriño says that, while there are
not many business angels in Spain,
there are some wealthy individuals
investing in successful start-ups.
“Spain is not the best country in
Europe for entrepreneurs,” he says.
“But every day we see more and
more amazing projects that are
starting their internationalisation
process and others that obtain
amazing funds.” Touriño argues
that such an environment is good for
creating a “business angel culture”.
Portugal: Start-ups creating jobs
The start-up sector in Portugal
is creating many opportunities
www.iberianlawyer.com
for law firms, according to PLMJ
partner Daniel Reis. “The startup community in Portugal, and
particularly in Lisbon, is currently
experiencing great dynamism and
exponential growth, which means
lots of companies are seeking
legal advice,” he adds. Reis cites
data that shows between 2007 and
2014, start-ups were responsible
for 18 per cent of all jobs created
in Portugal. “Although companies
operating for more than 20 years
continue to represent a large part of
our economy, recent studies have
shown that they now represent less
than a quarter of the Portuguese
business sector.”
Indeed, legal advice for startups is a rapidly growing area,
according to MLGTS associate
Luís Roquette Geraldes. “We’re
working with accelerators and
we’re working with a lot of startups in the biotech, medtech and
fintech sectors as well as consumer
marketplaces,” he adds. Roquette
Geraldes says the work includes
advising on funding rounds,
employment advice, and advice on
licensing in the medtech sector, for
example. He acknowledges that the
firm may initially lose money when
advising start-ups in the early
stages of their development as
some legal work is “done for free”,
but adds: “We offer a lot in terms
of scalability, we can reach 150
jurisdictions through our network,
which is invaluable for a scalable
tech company, for example.”
Pbbr partner Alexandre
Jardim says that, while start-up
projects entail risk, there are fee
arrangements that “accommodate
that risk”. He adds that these
entail “lower fees in an initial
phase that may be recovered later,
being conditional upon investment
rounds or exit by acquisition by a
bigger player”. Jardim adds: “In
the event of an exit, if the buyer
wants a change of legal services to
the buyer’s law firm, the client will
be aware that it is not advisable,
because it risks conflicts of interest
in the future.”
While there is a business angel
culture in Portugal, according to
Vieira de Almeida partner Fernando
Resina da Silva, he adds that it still
has significant untapped potential.
“It is an activity that requires
advertising and promotion – the
same goes for crowdfunding, which
is an interesting way to fund startups that is still little known by the
sector or by prospective investors
among the general public.” CCA
Ontier partner Fernanda Lomenso
says incentives - such as tax benefits
- should be put in place in Portugal
to encourage more potential
business angels.
Lawyers have an important role
to play in connecting start-ups with
what could potentially be important
members of their wider network,
says Jorge Silva Martins, of counsel
at ABBC. “You [lawyers] have to be
the connector between your start-up
and the rest of the network, such as
venture capitalists and incubators,”
he says. Silva Martins also
anticipates a legal revolution in the
start-up community: “In two years,
all start-ups will have a chief legal
officer – start-ups will acknowledge
it will be crucial to have a lawyer at
the start.”
September / October 2016 • IBERIAN LAWYER • 19