Chairman, World Business Angels Investment Forum (WBAF)
In the past, inventions were important for the economic development of societies. In the 21st century, however, it is not invention but innovation that counts. In those earlier times, entrepreneurial skills were not needed to get an invention to the market because customers were ready to buy anything new.
Entrepreneurs need much more than a clever idea to succeed – they need a complex set of skills and funding to develop, execute and succeed in taking their idea to market. The best form of early stage finance is when one combines money, know-how, mentorship and networking. This is smart finance and it gives entrepreneurs and SMEs a much better prospect of succeeding. For societies around the world to flourish economically we need more successful entrepreneurs and SMEs.
Consider the various sources of finance available to entrepreneurs: Beyond basic bootstrapping, there are corporate ventures, angel investors, crowdfunding platforms, accelerators, VCs, banks, public grants, co-investment funds, business plan competitions, technology transfer offices, family offices, private equity investors and stock exchanges. With the notable exception of angel investors, all these sources provide only money, nothing more.
The only true sources of smart finance are angel investors, who are able to influence a country’s economic development by providing more than just money to entrepreneurs and SMEs. They contribute their own know-how, provide mentorship, and share their own networks in contributing to the businesses they invest in. They are thus the main drivers of innovation and the natural leaders of the world’s early-stage investment markets.
“This is smart finance and
it gives entrepreneurs
and SMEs a much better
prospect of succeeding.”
In 2015, more than 300,000 angel investors invested more than $25 billion in start-ups in the US, and more than 310,000 angel investors invested more than 6 billion Euro in Europe. The estimated total global market size of angel investment is over $50 billion every year.
Governments around the world have understood the importance of angel investment for boosting their economies. During the Presidential Summit on Entrepreneurship in 2010, President Obama’s response to concerns I expressed about making available public grants for entrepreneurs was promising. In a special meeting with me, he agreed with and supported my position on the importance of angel investors in terms of converting public money into ‘smart money’, that is, cash that is invested by parties who are experienced, well-informed, and well connected.
Many governments, particularly in Europe, offer generous tax incentives for angel investors. The UK and Turkey have already passed angel investment legislation to support such a system. A number of Middle Eastern countries, particularly in the GCC, have discovered the angel investment system and are keen to pursue it because, among other key reasons, it is 100% compatible with Islamic investment principles. In fact, the Islamic Development Bank included angel investment on the list of recommendations proposed for consideration at its annual conference in Jakarta in May 2016.
In light of all these developments, the time has come to publish a magazine just for angel investors that will make it easier to share our knowhow with a worldwide readership. The ecosystem of angel investment needs such an outlet that creates a space for global discussion on issues that concern us all. We fully expect Angel Investor to become our flagship publication – one that will heighten awareness and address the myriad needs of the key players in earlyand post-early stage equity markets.
I am confident you will find the Angel Investor magazine a worthwhile endeavour!