Portuguese Golden Visa Venture Capital Investment Funds
The hospitality venture capital (VC) funds and other VC funds are viable pathways for obtaining a Golden Visa in Portugal. These funds are generally perceived as safe investment options since they are regulated by the Portuguese Securities Market Commission (CMVM) and are audited by independent third parties annually. Additionaly, these funds are professionally managed, which means that investors are not involved in day-to-day management.
However, investing in venture capital funds, does come with certain disadvantages. Investors have less control over their investment, as fund managers make the investment decisions. There is also a minimum locking period for the funds, typically aligned with the Golden Visa´s requirements. Earnings are shared between investors and managers, who receive fees for managing the funds.
A key consideration for potential investors is the sustainability and impact of their investment. Some funds are focused on sustainable investing, integrating environmental, social and governance (ESG) considerations into their strategies, which aligns with global sustainable investment trends.
To be eligible for the Golden Visa through investment funds, you must invest a minimum of €500.000 and hold your investment for at least five years. The funds can be diversidied across different sectors, including healhcare, technology and agriculture, among other type of companies. This diversification is a notable advantage of VC funds, potentially offering higher yields and capital gains compared to other Golden Visa investment routes. It is also possible to split the invest of €500.000 into several investment funds.
There are two kinds of investment funds. Open investment funds which do not have a locking period and closed funds which do.
Investment funds that invest mainly in Portuguese companies granted 352 golden visas in 2023 through the investment of more than €125.000.000 by foreign investors.
The Portuguese Parliament passed the “More Housing” legislative package in 2023, initiating a reform on the eligibility of investments for Golden Visas. The legislation stipulates that these investments “cannot be intended, directly or indirectly, for real estate investments”.
Traditionally, hospitality venture capital funds are structured around the exploration and management of property assets, positioning them primarily in the realm of real estate activities. Given the ambiguities present in the law enacted the previous year, it appears that such funds would circumvent the restrictions against being categorized as real estate investments.
This ambiguity has sparked debate among property developers and legal experts regarding the qualifications of hospitality venture capital funds under the new law. Some lawyers, adopting a more cautious approach, are guiding their clients towards funds devoid of any ties to real estate. In contrast, others are leveraging the law’s indistinctness to continue directing investments into the hospitality sector.
The law’s underlying purpose, to restrict Golden Visa investments from influencing real estate directly or indirectly, aims to mitigate market speculation and the consequent escalation of property prices. This escalation is currently impacting the quality of life in Portugal, influencing housing affordability for its citizens.
Furthermore, certain hospitality venture capital funds have introduced buy-back options for shares after a set period, an offering that could potentially alter the foundational risk-based nature of venture capital investments. The inclusion of a buy-back feature might strip these funds of their inherent risk element, a defining characteristic of venture capital.
It remains premature to affirm the efficacy of hospitality investment funds, as investors are still awaiting their residence permits, a process delayed by the backlog at AIMA (Portuguese Immigration and Borders Service).
