Materializing Innovation

Risk Financing for Entrepreneurship

“Finding liquidity” The Economist’s Credit Risk Management

Conference 

Dimitris TsigosFounder & CEO

StartTech Ventureswww.linkedin.com/in/tsigos Athens, November 9th 2012

“Significant shortening of risk financing for

entrepreneurship in Greece”

Is it really about Greece?

USE(!) Vs USA

• The EU27 GDP is higher than the US GDP

• http://europa.eu/about-eu/facts-figures/economy/index_en.htm

• Angel investments (2009)– EU27: ~ 4B$– USA : ~18B$– Source: EBAN, www.eban.org

It’s not about Greece.

It’s about OLD Europe

How does an old person behave?

• Conservative• Slow moving

• Does it look like the ideal ground for “Risk Financing for Entrepreneurship”?

Need to develop the “Culture of Failure” in

EuropeTurning Europe YOUNG again!•Education•Legislation

The Silicon Paranoia

• “Silicon Roundabout”, UK http://www.siliconroundabout.org.uk

• “Silicon Beach”, Australia http://siliconbeachaustralia.org

• The “Greek Silicon Valley”– “Acropolis Technology Park”– “Alexander Innovation Zone”– a.s.o….

Stop insanity now!

• There’s only one Silicon Valley• It’s NOT an “one size fits all”!• Looking for the “European Facebook”

or the “European Google” is a kind of provinciality

• Europe does not deserve it

The Silicon Valley model is NOT a panacea!

We need authentic growth models for start-up entrepreneurship

(including of course risk financing) in Europe

USE Vs USA

• EU: The “grow-sustainably” model– Invest in unique

teams– Focus to usefulness– Invest less, support

more– Higher percentage

of successes– Higher return on

average

• USA: The “fail fast” model– Investing in unique

ideas– Focus to excitement– Tons of funding, high

expectations– Very low percentage

of successes– Very high returns (?)

From Pyramids to Pancakes

• Josephine Green: “From command and control to a truly flat world of collaboration!” http://www.pyramids2pancakes.com

• We Europeans must champion the pancake model versus the pyramid one

• In other words:– Europe’s strategy should NOT be about

domination, but it is about sustainability

The “Entrepreneurial Ecosystem”

• A European approach challenging the Silicon Valley model

• Key assumption: Access to market is more important than access to capital

• Group of non-competing start-ups• Enjoying economies of scale• Without losing flexibility, strong entrepreneurial

drive• Evolved in the journey from the first student start-

up in Greece to a Seed Fund, an Incubator and a Business Angel Network

• http://en.wikipedia.org/wiki/Entrepreneurial_ecosystem

Who can fund entrepreneurship?

• Financial Institutions

• Governments

• Individual Investors

• Corporate Investors

Extreme necessity for incentives for individuals and corporate investors in promoting angel / seed investments in Europe

• From “SME support” to “Start-up support”• Tax start-ups like individuals:

–Lower tax income – lower taxes

Governments

• Please, stop subsidies NOW!• Subsidies kill entrepreneurship• Looking for Customers is wiser than

looking for the right supplier invoices!• New instruments

– Business plan competitions– Soft-loans – State-backed Funds

Conclusions?

• Angel investments & corporate venturing can drive risk financing for entrepreneurship in Europe

• A plethora of successful examples already exists

• Extreme necessity for structural changes in the legal & tax framework as well as in the education & research fronts– Bridge innovation/research with market needs– Create start-up-friendly environment

Thank you