18 Key Findings at the European Business Angels Investment Forum
The first European Business Angels Investment Forum was held at the Shangri-La Bosphorus, Hayrettin İskelesi Sk İstanbul,Turkey in December. It was organised by EBAN, Business Angels Association - Turkey (TBAA), Borsa İstanbul, and Forbes I Para Conferences.
With the theme, 'Access to Finance from Start-up to Scale-up to Exits', the forum was attended by 284 Angels from 36 countries, university officials and professors, bankers, company officers and crowd funding platforms' owners.
It is important that we recognise the importance of angel investments in supporting startups. Some European Governments know the importance of angel investment in funding startups and early stage businesses in Europe, so they provide tax incentives to individuals that back small businesses as well.
EBAN President Candace Johnson remarked about the concluded forum, "In Istanbul our TBAA colleagues bridged the gap between Stock Market Exchanges and Business Angels with a most thoughtful, insightful Investors Forum in one of the most beautiful cities in the world, majestically presented to all present with midnight tours and local culture. Istanbul was also the perfect place for our new MBAN Colleagues to come together and have a special Middle East Forum where 4 world-class entrepreneurs were showcased to investors from around Europe, the Middle East and the world."
TBAA President Baybars Altuntas says "The forum attendees learned the intricacies of the Turkish ecosystem. It recently passed the Angel Investment Law within a year; legislated the highest tax incentive in the world in 9 months, and involved its Exchange as an exit strategy for early stage investments." He further adds, "The Forum also brought together the key stakeholders of the equity market; analysed the challenges and advantages in angels' investing; and find out what more can be done in connecting the early stage market ecosystem. We also deliberated if there is still a need to change regulatory and fiscal rulings. We also defined how angel investors should approach the public markets."
"It has been the greatest privilege for EBAN to work with the newly established MBAN and ABAN entities this last six months and we are so looking forward to a glorious 2015 where cross-border engagement will give way to cross-continent engagement and wonderful global EMEA Success Stories," Candace Johnson added. (Candace Johnson pictured speaking at the EBAN Congress in Dublin last year)
All 18 key findings in the forum will be officially declared at the Special European Business Angels Forum session to be held at the World Entrepreneurship Forum in November 2015 in China.
The key findings are:
- A reliable local ecosystem is essential for cross-border angel investments. Stock markets can create a platform where angels and startups can meet and negotiate.
- Open a Private Market for startups and entrepreneurs. In this market, they have to register as stock exchanges, be accredited angel investors and access financing in a secure environment.
- Mentorship programs, independent audit firms and other service providers must be present in this reliable local ecosystem.
- Develop co-investment funds. Banks, as public entities, should invest together with angels, in startup investments. A certain percent of the profits, say 1 percent, should go to the co-investment fund.
- Private investors should be allowed to make co-investments with public funds.
- With European Union funds, policy makers should undergo training on how to's, and the advantages/disadvantages of co-investment funds. Policymakers must be trained to show the best practices, pros-cons and how-tos of co-investment funds. EU should finance these training, best practices and how to's.
- While pitching to angels, startups should demonstrate their products. Crowdfunders should be considered as mini- business angels, and thus accepted as seed funding structure around the globe.
- Stock exchanges and crowdfunders complement each other, rather than compete.
- At the start of any entrepreneurial journey, the first to support the startups are the crowdfunders, and the last help will be from stock exchanges. Thus, there is a need to create information drive among the key stakeholders - and guide the entrepreneurs on where to go for financing.
- Aside from money, the startups need know-how, mentoring and networking. The public can provide the financing, but the rest comes from business angels. A cooperation between the two should be fostered, the public money should be converted to smart money.
- An accreditation scheme should be established to qualify angel investors, and thus be recognised by public authorities.
- Legislate a law that will set the same minimum amount for qualified angels to invest in startups.
- Turkey has a very dynamic and fresh angel investment ecosystem. Within the next few years, the ecosystem will be able to provide successful exits for startups.
- The Business Angel Networks in Turkey should be able to connect with the global angel investment market to facilitate exit strategies. There is a need to follow global events and create links with key players.
- Business Angels of Turkey see foreign angels as their 'mentors.' Thus, there is a need for policy makers to provide more incentives to foreign investors that work with Turkish angels.
- Acceleration centres should be established, and be accepted as institutional angel investors.
- These acceleration centres will check professionally all startup applications for financing, if they are already investment ready. If and when angels receive requests for funds, they will first forward these to acceleration centres for verification.
- When the acceleration centres are established, then the startups should not go to angel investor directly, but to the said centre first. Startups should have to understand that acceleration centres are highways of access to smart money.
This article first appeared in the Huffington Post blog and was written by David Drake. David is an early-stage equity expert and the founder and chairman of New York-based Victoria Global with divisions LDJ Capital, a family office and private equity advisory firm, and The Soho Loft Media Group, a global financial media company involved in Corporate Communications, Publications and Conferences. You can reach him directly at David@LDJCapital.com.