The Future for Entrepreneurs

Beata Young was a panellist at the 10th FinanceMalta Annual Conference discussing ecosystem building for entrepreneurs through crowdfunding, private equity and venture capital.

It was a pleasure to be invited to speak about the options of funding at the recent FinanceMalta Annual Conference. My own experience has been as an entrepreneur in various fields as well as working with a number of groups in the start-up world. 

When I returned to Poland from London a number of years ago, it was glaringly obvious that there was a gaping need for a community to help create the environment for entrepreneurs to flourish. This resulted in “Mission ToRun Business” a play on words on the city “Torun” which once played host to a castle of the Teutonic knights and has a handy millennium of history visible around its UNESCO-protected historic walls. 

As is quite common in Poland, Mission ToRun has a catchment area in the local province which is the size of a country like Estonia (1.8 million inhabitants) which very few people have even heard of... unless they equate Torun with its most famous son, the heliocentric astronomer Nicolaus Copernicus. 

We built Mission ToRun over the span of four years to be a remarkable bridge between the community of entrepreneurs and startups around us. As a grassroots movement, our alumni have already spread across the world from Asia to the USA to, well, Malta...

The Malta end of the equation begins with my relocation here earlier this year. Along the way I was invited to the FinanceMalta conference where it was a pleasure to chat about the development of start-up communities and building entrepreneurship culture from the ground up. The dynamics are many and various but I see some clear strands that are advantageous to business in Malta. 

For one thing, it may not be especially codified for those lovers of business school methodologies but a quick trip to any locality across the island reveals an array of small businesses in retail and a thriving army of small service providers in many areas of the economy. 

Clearly the question is how do we make the next generation happen, all the while ensuring the start-up movement does not just become a minor clique within a few limited places?

It’s perhaps best to start with Ronald Reagan’s wondrous maxim on the scariest phrase in the English language “I’m from the government and I’m here to help!” Nothing can be worse for a genuine thriving entrepreneurial ethos than an overactive central government which over-regulates and thus prescribes against entrepreneurship, even where it may be well-meaning. Government support is a marvellous thing but the concept that there can be a top-down solution to entrepreneurship is surely mistaken. 

Equally, when it comes to financing, one of the key factors to recall is that “money isn’t everything.” True, it plays a vital role in oiling global commerce, but ultimately when building our grassroots start-up approach, it was much more important to have the right attitudes and ethos instilled in the start-up movement. In that way projects will emerge that can then use money wisely. Moreover, the classic ‘three Fs’ - Friends, Family & Fools - are a great starting point for the very earliest stage seed funding. 

As Brigitte Baumann noted during the workshop panel at the conference, “start-ups need wise money”. In terms of crowdfunding, we can relate to the wisdom of the crowd. Moreover, Malta has the benefit of a very close community who can support each other as six degrees of separation can probably often be reduced to two!

That said, we also need to see all the potential levers in the system being encouraged (current issues with taxation on investment rounds being a silly niggle to the system, for instance) and it is great that government is generally pro-business across party lines. At the same time, there must be availability of capital in all forms; to which end expanding crowdfunding is a key factor (to assist our ecosystem in Poland we built a community crowdfunding platform along the way).

Similarly, sensible incentives towards not just venture capital but also the creation of pathways to listed status for companies are key (and in the latter sense, the Prospects initiative of the Malta Stock Exchange is to be applauded).

The key message is that Malta can build its start-up ecosystem from the current base level. Moreover, the message needs to be maintained that starting a business is for everybody - male or female, young or old; it is important to avoid the fixation which has gripped many nations. Too many countries jump to pursuing those rare, almost mythical beasts, the billion-dollar unicorn!

Malta needs a practical, robust, broad start-up culture which helps all manner of ideas build into success stories. Many may not progress beyond tiny operations for a long time (if ever); however, SMEs play a major role in OECD economic growth and are the source of most new jobs. Over 95% of OECD enterprises are SMEs, which account for 60%-70% of employment in most countries.  

By building the base of know-how and refining investors to appreciate how they can garner returns (as opposed to gambling on a start-up for a billion dollar pay out), the ecosystem can be more balanced. 

Moreover, as the start-up expertise of the nation grows, the infrastructure will become attuned to dealing with an ever more entrepreneurial economy. Think of it in relation to the success which was marked by the 10th FinanceMalta conference itself. The Maltese financial centre was not built upon the arrival of the largest names in finance; rather the 400 people who filled the Hilton Conference Centre on the 18th May represented all manner of small, medium and occasionally, larger-sized financial entities. The Maltese financial cluster is one of great enterprise but not generally household names. 

Malta is beautifully sized for dynamism. The country is also perfectly placed to grow its nascent start-up culture and community which can generate jobs, develop skills and produce wealth at home as well as exporting the best of Malta to the outside world.

Beata Young is a serial entrepreneur who recently relocated to Malta. A founder of the Polish-based Mission ToRun startup community she has extensive experience working with women in IT and entrepreneurship.