Highlights

 

Video 1:

Early Stage Investment Markets

A comparative analysis between US and EU early stage investment markets
Speaker: Anthony Gardner, US Ambassador to EU, Belgium

Topics: Entrepreneurship, startups,scale ups, SMEs, angel investment,

Click for the article about the session

A growing trend in the 21st Century is the speed at which Start-Ups can achieve economies of scale and significant market share. Advances in technology, widespread access to information and social media have lowered the barriers to market entry and made it far simpler for new businesses to compete with entrenched players. Gone are the days when large corporations can afford to ignore new, small players. Often the competitiveness of Start-Ups and SMEs lies in their lower overheads and faster decision making processes.

Anthony Gardner, United States of America Ambassador to the European Union, highlighted at WBAF2016 the extent to which global job markets are reliant on small-and-medium-size enterprises. In 2015, SME’s created 85% of new jobs in Europe and 63% in the US. These are staggering percentages when one considers the amount of government, media and market attention is focused on large corporations. Small-and-medium-size enterprises drive change, progress, increase productivity and create jobs, they are, “the world’s vital force for the future”.

Several forecasts for Europe suggest the sizable impact and role the digital space is having, and will have, on Early Stage Investment Markets. App development in the European Union is expected to create three million jobs over 2016 – 2018; the European Union digital sector is anticipated to grow at seven times the Union’s overall Gross Domestic Product growth rate; and in the next five years the internet economy in G20 countries is expected to grow at 8% per annum.

However, Anthony Gardner warns that there is still work to be done to make start-ups and small-to-medium-size enterprises more successful. He contends that, “Europe does not have a start-up problem, it has a scale-up problem”. There should be a greater proportion of successful start-ups scaling up more rapidly. The European Commission needs to remain focused on facilitating entrepreneurship and creating Europe’s Digital Single Market – “The EU cannot afford fragmented regulation in 28 countries for digital products and services”. The US government and other US organisations continue to support in solving these and other related issues, largely by sharing the United States’ vast knowledge and experience concerning entrepreneurship and Early Stage Investment Markets with the Commission.

In May 2014, the President of the European Commission, Jean-Claude Juncker, stated, “the internet and digital communications can transform our economies as profoundly as the steam engine did in the 18th century or electricity did in the 19th century.” Anthony Gardner believes that the digital cloud, Internet of Things and big data can thrive in Europe – offering an opportunity for entrepreneurs, citizens and businesses to take full advantage of their potential. But to truly maximise these opportunities and be an innovation driver, rather than innovation observer, Europe needs to establish incentives for investment and scaling up.

Private capital needs to be harnessed, billions or Euros currently sitting in pension funds and on corporate balance sheets are waiting to be deployed if attractive frameworks can be enacted. While the US government believes government investment can play a small part to catalyse markets, this should not distract anyone from the more important task of improving the climate for private investors.

“Governments can best help by setting a regulatory framework in which innovation can thrive” – some of the ways Anthony Gardner says the US sees this improving in European Early Stage Investment Markets in future years will be through, easing access to debt and equity capital by small businesses; enhancing the liquidity of capital markets; amending bankruptcy codes to enable a second chance for honest entrepreneurs; and promoting pan-European funds and fund-of-funds.

The US wants to see entrepreneurship thrive around the world. Anthony Gardner explains why, “the world needs new ideas and people willing to take the risk to turn ideas into reality – to solve pressing social, economic and political challenges”. Sharing the successes of US technology hubs, Silicon Valley, universities, liquid capital markets and the American spirit of free enterprise is one of the ways the US seeks to improve entrepreneurship and Early Stage Investment markets. The philosophy that underlines this attitude is that the more open a country is to new ideas, the faster it will grow; the more stable it will be; and the better partner it can be to the United States.

As a former Private Equity investor, Anthony Gardner is a senior US diplomat with considerable marketplace insight contributing to – and watching closely – developments at the European Commission. He challenges all stakeholders in the Early Stage Investment Markets to take hold of “the opportunity and responsibility to push for positive regulatory changes; and, to convince the bureaucrats to unleash the market forces that will drive the growth, innovation and competitiveness upon which our future depends.”

For hundreds of years Istanbul has been at the heart of East-West relations – a place of trade, where ideologies collide and novel ideas can be stimulated. The World Business Angel Investment Forum will have a far reaching legacy if, by harnessing some of some of this energy, it contributes to advancing regulatory framework conversations for the Early Stage Investment Market.

 

Video 2:

Country Perspective: Turkey

Turkey’s engagements with global action plans on easing Access to finance

Speaker:Mehmet Simsek,  the Deputy Prime Minister, Republic of Turkey

Topics: Turkey – Tax Incentives – Crowdfunding – Angel Investment – SMEs – Future Plans

Click for the article about the session

Around the world, governments are embracing the role business angels, collective investing funds and crowdfunding can play in funding and supporting entrepreneurs. The United States’ long history of enabling entrepreneurship means it comes as no surprise that it is miles ahead of any other nation – an estimated 300,000 business angels invest over US$24 Billion per annum. The UK by contrast has only recently seen exponential growth in the number of business angels, now tallying over 18,000 – up from approximately 4,000 a decade ago. Can other countries emulate this rapid growth?

Early signs from Turkey suggest that this is certainly possible. Most countries face a much different reality to the US or UK, one where business angels are counted in tens or hundreds. Relying on organic growth of business angels is foolish given the importance for entrepreneurs to succeed. Since 2014 Turkey has taken steps to radically improve access to early stage financing. In so doing it has become a beacon of hope and important example to other nations of the role government can play in easing access to finance for SMEs and start-ups.

Turkey’s Deputy Prime Minister, HE Mehmet Simsek, shared an oft-overlooked, but vital component that spurred on this journey two years ago. The Turkish government recognised that access to early stage finance is critical for continued economic development and sustaining GDP growth of 5% in Turkey. Recognition and acknowledgement of this need by senior politicians is crucial to creating the political environment for policymakers and government officials to act.

Over the last two years the Turkish government has embarked on three major endeavours to ensure this political will is converted into meaningful improvements and real development – (1) tax incentives have been introduced to increase angel investing; (2) fund of funds structures have been introduced; and (3) legislation is underway to enable crowdfunding.

 

Tax Incentives

Accredited business angels in Turkey can now deduct 75% of the value of qualifying investments from their personal income tax. As a bonus, for investments into Start-Ups or SMEs that have research and development supported by the public sector, the entire investment amount can be deducted. These incentives mean that business angels can approach investments opportunities with a completely different view of the risk involved. Government has removed the risk of capital loss, making investments more attractive; stimulating growth in business angels and increasing the real number of investments per business angel. HE Mehmet Simsek announced that 353 business angels had already been accredited under this incentive programme by the start of WBAF 2016.

 

Fund of Funds

Building a diversified portfolio of investments is one of the keys to mitigating risk and increasing capital returns. As an individual business angel, family office or even a venture capital fund it can be challenging to review and select enough investments to establish a portfolio. Syndication between investors is an important tool to encourage more investment activity. To encourage syndication and collective investing Turkey has established fund of fund structures. These funds make it possible for government to deploy capital in partnership with private investors. In the past two years the Turkish government has contributed €120M through these funds with the intention of contributing an additional €84M by the end of 2016.

 

Crowdfunding

Globally, crowdfunding continues to grow and has done much to democratise early stage funding. Through crowdfunding it is possible for start-ups and SMEs to secure funds from a global audience. But crowdfunding comes in different shapes and sizes – the four principal forms are donations, products, debt and equity. The first two can, and have, flourished without enabling legislation. Debt-based crowdfunding can generally operate within the constraints of existing policies and legislation. Equity crowdfunding is more complicated. Investor protections are imperative and historical legislation governing public share offers tends to pre-date the internet as we know it today and social media. Equity crowdfunding though, is where real investment happens – to this end HE Mehmet Simsek shared how the Turkish parliament is working on legislation to enable equity crowdfunding in Turkey, putting Turkey at the forefront of nations unlocking equity crowdfunding.

 

Turkey currently ranks 8th in Europe for ease of access to financing, HE Mehmet Simsek made it clear that the Turkish government wants to break into the top three. With a diverse economy, solid economic growth, proactive government, appealing climate, attractive tax incentives, and enabling policies, local and global investors have many reasons to consider Turkey a serious contender for their investment. While some may be concerned and nervous about geopolitical risks in the region the Turkish government is clearly taking positive steps to make Turkey a stand out country for entrepreneurs and early stage investors. This alone warrants the attention of those wanting to start or invest in the next Uber, Skype or Facebook.

The real beneficiaries of the Turkish government’s actions are Turkey’s Start-Ups and SMEs as access to finance becomes more readily available. Phrases by HE Mehmet Simsek such as “Turkey is open for business” and “we want to lure investors to Turkey” should be music to the ears of Turkish entrepreneurs. Hopefully by WBAF2017 more countries will have followed Turkey’s lead.

 

Video 3 :

The role of secondary markets in the world early stage investment ecosystem

Intro Speech: Assoc. Prof. Mustafa Kemal Yilmaz, Chief Business Development Officer (CBO), Borsa İstanbul, Turkey

Panel Discussion: How can stock exchanges help to create exit strategies for business angels?

Moderator: Assoc. Prof. Mustafa Kemal Yilmaz, Chief Business Development Officer (CBO), Borsa İstanbul, Turkey

Speakers:  Aysegul Eksit, Vice Chairman, Capital Markets Board, Turkey – Carsten Borring, Head of Listings and Capital Market – NASDAQ, Denmark – Luca Peyrano, Head of Continental Europe, Primary Markets, London Stock Exchange Group, Italy – Peter Jungen, Emeritus President EBAN, Germany

Topics: Stock Exchanges – Private Markets for Starups – Filling Equity Gaps – Exits – IPOs – Secondary Markets

Click for the article about the session

“Stock exchanges can play a role, but beware of the fact that this has to be a completely different philosophical approach – for the simple reason that equity investors invest in businesses that are making money and Angel investors invest in businesses that are losing money”, this is the endorsement and warning that Peter Jungen, Emeritus President of EBAN, gives when considering the role stock exchanges could play in creating Angel investing secondary markets. At WBAF 2016, Jungen suggests that Venture Capital trends require Business Angels and markets to adapt.

 

Venture Capital has had a stellar time in recent years as the industry blossoms in China and India – nearing the peaks of 2000. One consequence has been that Venture Capital investments have become bigger and made at a later stage than previously, leaving Business Angels with the prospect of holding onto investments for longer periods, possibly up to eight or nine years before realising an exit. In this context there is need and incentive for alternative options for Business Angels to make full or partial exits. Greater liquidity means more Angels are able to make more investments – a critical driver for growth in early stage investment markets.

 

Stock exchanges can, and are, playing a role in creating exit options. Carsten Borring, Head of Listings and Capital Markets at NASDAQ Denmark, acknowledges that over the last twenty years most stock exchanges have raised the burden, and cost, of listing and compliance – to mitigate against fraud and mistakes. This has been good for risk management, but has made it increasingly difficult for small companies to be listed on stock exchanges – “so, now we need to look at things a little more pragmatically, we need to help SMEs get to the markets”. At the Nasdaq, Borring maintains they are actively being more visible to SMEs and working hard behind the scenes, “we have a strong passion in our DNA to help entrepreneurs, so that is what we are doing everyday”.
Aysegul Eksit, Vice Chairperson, Capital Markets Board (CMB) of Turkey, is confident that measures taken in Turkey are working in favour of making IPOs more accessible and attractive. Eksit urges all regulators to take the view that CMB holds, that their job is, “to address market failures efficiently” because, “as the regulator we want to see all exit options working.” In this vein, it should be of interest to many to see how Turkey’s recent change in regulations, allowing Business Angels special trading dispensations, fares over the coming years.

 

Representing one of the world’s leading stock exchanges, Luca Peyrano, Head of Continental Europe for Primary Markets at the London Stock Exchange (LSE), outlined a programme the LSE initiated to build relationships with SMEs at an earlier stage. Titled the ELITE programme, “it offers a blend of coaching, training, and market visibility” to SMEs that the world of stock exchanges more familiar and opens up networks. A separate initiative Peyrano highlights as relevant to exits is that, “our [LSE’s] listed corporates – not financial institutions – are being invited to take a closer look at early stage businesses as investment or co-investment opportunities, in order for these businesses to have a bigger brother.” And for the businesses’ Angels to have an exit.

 

Carsten Borring provides food for thought with this challenge, “I think there are many Business Angels and entrepreneurs who are missing the fact that we have markets like AIM, AltX and First North which are trying to offer this platform” – a trading platform for risk capital. Peter Jungen cautions though that, “Angel investing is an informal business, and if we do not leave it as an informal business – even in secondary markets – then it will stop. So, if we want to see more repeat Angel investing then we need to find ways to support the development of secondary markets without getting too close to the regulation of traditional stock markets.”

Associate Professor Mustafa Kemal Yilmaz, Chief Business Development Officer of Borsa Istanbul, uses the relatively new Private Market of Borsa Istanbul as an example of just this – a market with far lower compliance requirements, much more appropriate for, and accessible to, Business Angels and SMEs.

In summary, to help create exit options for Business Angels, stock exchanges can use their existing infrastructure to create markets similar to the Borsa Istanbul Private Market; they can be more visible to, and supportive of, SMEs through programmes such as LSE’s ELITE; they can match-make their listed corporates with potential investments or co-investments; and they can consider less burdensome listing and compliance requirements for start-ups and SMEs.

 

Video 4:

How can chambers of commerces take a more active role to help SMEs raise more fund to expand their businesses?

Panel Discussion: How can chambers of commerces use business angel investment system to support SMEs,entrepreneurs and startups?

Moderator: Anthony Parkes, Director, ICC, France

Speakers:  Abdul Malik Jabaar, President, The Middle East Trade Association for Business Angels, Jordan – Ismail Haznedar, JCI Global President, Turkey – Paulo Andrez, President Emeritus EBAN, Portugal – Rabih Sabra, the Director General of the Chamber of Commerce, Industry & Agriculture of Beirut & Mount Lebanon – Tomi Davies, President, The African Trade Association for Business Angels (ABAN), Nigeria

Topics: Chambers and Commerces – SME Finance – Raising Funds

Click for the article about the session

Anthony Parkes, Director of the International Chamber of Commerce, introduces Chambers of Commerce as, “one of the world’s oldest institutions and networks, present in every community around the world at local, regional, national, and transnational levels. Chambers create and foster economic development – helping to establish ecosystems that enable entrepreneurs and grow their businesses.” In order to achieve this, Chambers of Commerce have multi-faceted strategies and partner with other organisations. Growing Angel investing is a compelling strategy option for Chambers and existing Angel groups and systems offer excellent partnership opportunities.

Reflecting on the Middle East and North Africa (MENA) Region, Abdul Malik Jabaar, serial entrepreneur and President of the Middle East Trade Association for Business Angels (MBAN), identifies that MENA nations can be broadly divided into those with oil and those without; the rich and the poor respectively. Faced with the threatening problem of youth unemployment, MENA governments historically responded by increasing their public spending and giving billions of dollars to citizens to solve the problem, in a clearly inefficient way. However, it has only been the oil-rich countries that are capable of resolving their short-term problems in this manner. Poorer nations remained dependent on low levels of foreign direct investment for economic growth. Neither the situation in the poorer or richer countries is desirable in the long-term and the private sector has recognised the need for entrepreneurial intervention in recent years.

“Five years ago, terms such as ‘Business Angel’, ‘Accelerator’, and ‘Incubator’ were non-existent throughout most of the MENA region”, explains Jabaar. However, the situation at present is changing rapidly as governments and the private sector alike begin to understand the need for entrepreneurial stimulation and support. Initially, efforts were made to replicate Silicon Valley, but as people realised that what works in the US does not necessarily work in the Middle East, more promising initiatives are being borne out of the ashes of previous failures. Jabaar argues that current efforts are promising, but they are not nearly sufficient, and there remains massive scope for Chambers of Commerce to assume responsibility for driving growth of small businesses.

Ismail Haznedar, JCI (Junior Chamber International) Global President asserts that using the considerable resources, networks and spheres of influence that Chambers of Commerce have, many of “the challenges of successfully creating Business Angel Networks are easily overcome”. Leveraging this, in a manner which results in the creation of networks of people cognisant of the role that Business Angels ought to play, for the development and support of SME’s and young entrepreneurs as individuals, is a substantial contribution that Chambers of Commerce can make to global entrepreneurship and early stage investment.

Rabih Sabra, Director General of the Chamber of Commerce, Industry and Agriculture of Beirut and Mount Lebanon, shares from his own experience, that through Business Angel Networks, Chambers of Commerce are able to provide entrepreneurs and start-ups with the knowledge and finance to build successful businesses. “Legal advice on how to start businesses, market information, business and trade statistics, mentorship, access to international markets and capacity building are only a handful of the bountiful benefits that Business Angels are able to offer SMEs,” even more so when Business Angel Networks are plugged into larger institutions such as Chambers of Commerce.

Tomi Davies, President of the African Business Angel Network, advocates that Business Angel Networks are a compelling fit within the context of Chambers of Commerce. Fundamentally Chambers are about supporting the entrepreneurial spirt which manifests itself in start-ups. Davies encourages Chambers to use their existing networks to grow Angel Investing, “at the end of the day, people make businesses; it is not businesses that make people”.

Chambers of Commerce are already, and should increasingly, rise to the challenge of creating vibrant Business Angel Networks. Chambers with active Business Angels have the potential for major local impact, but, going beyond the local impact, when aggregated globally, growing these co-operative partnerships can be a significant boost for widespread economic growth.

 

Video 5:

What are the roles of banks in the global early stage investment markets?

Intro Speech: Peter E. Braun, EBAN Board Member, Switzerland

Panel Discussion:  How can banks create more liquidity for early stage markets by leading business angel networks?

Moderator: Peter E. Braun, EBAN Board Member, Switzerland

Speakers: Charlotte Ruhe, Director, Small Business Support, EBRD, UK –  Ivar Siimar, President, Estonian Business Angels, Estonia – Prof Savas Alpay, Chief Economist, Islamic Development Bank, Saudi Arabia – Selma Prodanovic, Co-founder, Austrian Angel Investors Association, Austria

Topics: Banks – SME Finance – Business Angel Networks – Risk Mitigation

Click for the article about the session

Traditionally banks and other financial institutions have operated in later stage investment markets, where the risk profile of start-up enterprises improve based on an established and successful track record. However, Peter Braun, President Emeritus of the European Business Angel Network, holds the view that “investment at this late stage is often too late in the contemporary start-up ecosystem, as the average life-cycle of a new venture from Idea to IPO has accelerated significantly in recent years”. The threat is that “these rapid growth start-ups are beginning to disrupt the traditional late stage investment model”, meaning that investments in large established enterprises are no longer ‘risk-free’. Because of this, Professor Savas Alpay, Chief Economist of the Islamic Development Bank in Saudi Arabia, argues that “banks and other financial institutions can no longer afford to ignore what start-ups are doing all around the world”.

A knee-jerk reaction would be to assume that banks and other financial institutions should consider investing at an earlier-stage. However, Charlotte Ruhe, Director of Small Business Support at European Bank for Reconstruction and Development, elucidates, “it is impractical for banks and other financial institutions to seek involvement in the direct financing of start-ups at an earlier stage, as the risk factor is typically too great for the average depositor”. If early stage direct investment is not a good option, then the question needs to be asked – how else can banks and other financial institutions create liquidity and better manage disruption in the global early stage investment market? One answer from WBAF 2016 is for banks to lead, and partner with, global business angel networks.

Selma Prodanovic, co-founder of the Austrian Angel Investors Association, supports the view that banks should not be investing in high risk start-ups, but “they can implement many other things in the later stage or support the ecosystem”. One suggestion she makes is that local banks work more closely with their local angels and start-ups. This way start-ups benefit by having access to a bank’s global networks and the bank benefits when a start-up does well.

EBAN President Peter Braun predicts that “with the involvement of large organisations and financial institutions, the angel investment ecosystem would likely experience significant growth”. He raises the concern that senior management at banks have often spent most of their careers working to secure these positions and the idea of supporting disruptive businesses is counter-cultural. Ivar Siimar, President of the Estonia Business Angel Network, feels that one of the simplest ways to improve this mindset is for more CEOs and business leaders to participate in business angel events, giving them a chance to better understand start-up culture.

Indeed, for banks and other financial institutions there are a number of synergies and benefits to leading and partnering with global business angel networks. Professor Savas Alpay, for example, suggests that “perhaps the most obvious benefit and synergy for banks is being able to offer high net worth clients a unique and exciting addition to their investment portfolio”. Further to this Selma Prodanovic, suggests that “in the case of cross-border or first-time investments, partnerships with established angel investor networks can decrease the risk of an investment, as members are able to offer local knowledge and expertise in specific industries and locations”.

Despite a clear need for action, the level of involvement of banks and other financial institutions in the global early stage investment markets remains limited. Peter Braun argues that “a big part of the problem is the hierarchical culture of most financial institutions, whereby middle and upper-level management has become increasingly risk-averse in fear of losing their jobs”. However, “the speed of disruption at the moment is flabbergasting – banks cannot afford to ignore what start-ups are doing all around the world.” In light of this, to conclude the discussion surrounding ‘the role of banks in early stage investment markets’ at WBAF 2016, Peter Braun issues a strong warning to banks, “as representatives of large organisations, they need to attack themselves, otherwise they will be attacked in terms of change and disruption”.

 

Practical ways that banks and other financial institutions can add significant value to Business Angel Networks:

  • supporting and funding angel network operations (for example, sponsoring administrative costs or providing meeting spaces);
  • introducing high net worth clients to the network;
  • supporting and lobbying government for policy improvements; and
  • endorsing and promoting the concept of angel investing in their region.

 

Video 6:

How can business angels, governments and private institutions cooperate to raise more funds for startups?

Keynote Speech: Ali Arslan, Director General of Financial Sector Relations & Exchange, The Undersecretariat of Treasury of Turkish Republic, Turkey

Panel Discussion: The role of angel investors in co-investment funds for early stage investment markets

Moderator: Milena Harito, Minister of State for Public Administration and Innovation, Albania

Speakers: Balazs Hendrich, Consul General of Hungary – Dimitris Tsingos, Co-president of Helenic Business Angels, Greece – Michal Cieminski, President, Polish Business Angels, Poland – Ricardo Luz, EBAN Board Member & IFD Board Member, Portugal – Michael Culligan, National Director, Irish Business Angels Network (HBAN), Ireland

Topics:

Click for the article about the session

Co-investment funds between Business Angels and public or private institutions are an attractive way to channel additional funding into early stage investment markets. Through this mechanism, Business Angels reduce their capital risk and the funding partner is able to leverage the investing skills and activity of Angels – effectively replacing the need for a costly fund management team.

Credible accreditation of Business Angels and or Angel networks is an important enabler to start co-investment funds. Ali Arslan, Director General of Financial Sector Relations and Exchange, Undersecretariat of Treasury of Turkey, shares the role a government can play in this, “we started accrediting Business Angel networks … and licencing Business Angels to Angel networks.” Ricardo Luiz, EBAN Board Member, points out that the flip-side of this is that Angels need to play a role in formalising these networks as “professional organisations” to make it easier to trust and work with them.

Building a culture of syndication, means that Angels can conduct many more investments than they would as individuals and become more accustomed to co-investing; making the concept and roll-out of co-investment funds simpler. Michael Culligan, National Director of the Irish Business Angels Network, highlights this value of syndication and spreading the load of leading an investment, but he also unpacks a principle that has proven fruitful in Ireland – “address the market in verticals”. By this he means establishing Angel groups that are sector-specific. This allows experience, networks and skill sets to be lined up far more effectively with start-ups from the same sector. Business Angels operating in clear verticals make it far more attractive for public and private money from that vertical to establish co-investment funds.

For many markets where Angel investing is still fairly new, it is important for local Business Angels to reach out to more experienced international Angels to assist in the process of building a deeper understanding of how to exit deals. Successful exits are a key indicator for co-investment fund principals that their fund has achieved success and should be continued.

Michael Culligan believes a further role that Angels can play in co-investment funds is in the realm of commercialisation of research and development coming out of universities. Business Angels are perfectly placed to assist with commercialisation so building relationships into these institutions is valuable.

At the end of the day though, the greatest role Business Angels can play in co-investment funds is simply to become better and better Business Angels. The better a Business Angel is at picking, supporting and exiting investments, the more attractive co-investment funds will become.

 

Video 7:

Re-defining public and private partnerships to fund innovation

Intro Speech:  Recep Bicer, Chair, Small and Medium Enterprises Development Organisation, Republic of Turkey

Panel Discussion:  High stakes for business angels: Science based high risk / high gain projects

Moderator: Gokce Tabak, COO, Istanbul Technical University Technopark & Acceleration Center, Turkey

Speakers: Tuba Terekli, Director of Riyad Acceleration Center, Saudi Arabia – Yousef Hamidaddin, CEO, Oasis500, Jordan – Axel Kalinowski, Manager, Continental Europe, London Stock Exchange, UK

Topics:

Click for the article about the session

Business Angels face a dilemma when investing – on one end of the investment spectrum lie lower-risk, shorter-term investments with more clearly defined exit strategies. On the opposite end of the spectrum lie higher-risk, longer-term investments with less certain exit strategies. The potential returns are often far better for the latter, but many Business Angels learn the hard way that in the pursuit of bigger returns they may fail to find an exit. Gokce Tabak, COO of Istanbul Technical University Technopark and Acceleration Centre observes that when Business Angels fail to cash out, “they can get cold feet to invest again.” This serves neither Business Angels nor entrepreneurs well, meaning there is real value in considering any steps that can be taken to improve the success rate of high risk-high return deals. At WBAF 2016, Gokce Tabak pushes for insights from three distinguished individuals on the improvement mechanisms they have seen or would like to see in this regard.

Tuba Terekli, Co-Founder and CEO of Qotuf in Saudi Arabia, highlights the positive impact of enabling legislation. While she has seen improvement in many areas of the entrepreneurial ecosystem in Saudi Arabia over the past five years, she wants the legislative framework for companies to not only be based on established companies. She is positive that there is better understanding of the early stage investment space as, “more people now understand that start-ups are companies in the making”.

Entrepreneurial prospects can suffer when eager start-ups are unwilling to properly consider the needs of investors, or similarly, when investors are unwilling to offer support and experience in addition to funds. To adjust this requires shifting mind-sets and raising awareness of healthy entrepreneur-investor expectations. Yousef Hamidaddin, the CEO of Oasis500, a Jordanian based accelerator for the MENA region working extensively in the tech and creative space, suggests that reframing the way we think about risk is a vital first step to solving the problem at hand. He proposes that business actors take ‘measured risks’, which is “less about looking to mitigate risk and more about accepting and embracing risk instead”. For Business Angels, it is important to ensure potential investments have been taken through a structured fault process; that the aspirations and plans of the entrepreneur closely match the ambitions of the investors; and that through this there is a healthy appreciation and acceptance that there are very real risks to the business. This approach means that both parties enter into the relationship with mutual understanding of the business goals and risks involved.

Axel Kalinowski, Manager for Continental Europe at the London Stock Exchange, approaches this dilemma question from a very different angle as a representative of a traditional capital market. In the United Kingdom there are an increasing number of businesses and early stage investment funds able to make use of the LSE’s Alternative Investment Market (AIM) to raise capital at a far earlier stage than would historically have occurred. While this may place pressure on Angels as a competitive source for capital it does have a number of benefits as well. For starters, start-ups benefit from access to London’s “very sophisticated institutional investors coming in at a very early stage”. These institutional investors have often developed through the commercialisation of academic research – as there is more desire to commercialise technological advances so there are more investment opportunities. Organisations such as the IP Group, which works with 11 universities around the UK and is valued at over £1 billion, list themselves on the public market to raise money that they can in turn invest into innovations in biotechnology, nanotechnology, clean energy, and other similar science based projects. Such organisations are gaining traction and becoming increasingly prevalent, making these an attractive alternative for start-ups in search of funding. Business Angels will need to be creative

The way forward for Business Angels must surely be to take on more risk in markets that are better enabled through legislation, where entrepreneurs have a greater appreciation for the need to exit and where opportunities to sell out via traditional capital markets exist.

 

Video 8:

Firechat: Learnings from the super angels: Super angels and their succesful exits

Moderator: Dr Recep Bildik, Director, Borsa İstanbul Private Market, Turkey

Speakers:  Ari Korhonen, EBAN Vice President, Finland – Kaushal Chokshi, Founder and President at Scaale Group of Companies, USA – Vitaliy Polekhin, Russian Angel of The Year 2015, Russia

Topics: Super Angels – Serial Entrepreneurs – Early Eaxits

 
Video 9:

Tokens, trading, and liquidity for all: a vision for early-stage investments in the blockchain era
Speaker: Villu Arak, Cofounder, Funderbeam, Estonia

Topics:Innovative financial instruments

  • Mon Sep 19
  • |

’Today, stock exchanges throughout the world are more keen to open their doors to SMEs’’


Luca Peyrano, CEO of ELITE - London Stock Exchange Group

London Stock Exchange Group proposes a unique programme, ELITE, an integrated service designed to help SMEs prepare and structure for the next stage of growth through access to long term financing opportunities.It targets SMEs with a sound business model, clear growth strategy and a desire to obtain funding in the near future. It now accounts for more than 200 companies of different sizes and sectors, more than 150 partners and more than 70 long term. Enjoy the exclusive interview with Luca Peyrano, Head of Primary Markets Continental Europe, London Stock Exchange Group

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