In the past, inventions were important for the economic development of societies. In the 21stcentury, 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 it was a seller’s economy, where customers were ready to buy anything new. Times have changed, and the rules of the game have changed.Today’s inventors need more than just a clever idea. They need a complex set of skills to move their innovative idea into the market and to ensure it succeeds.
Ours is the age of the entrepreneur (the buzz word of our century). The current, highly competitive economic environment means that scaling up businesses demands special skills of entrepreneurs, who are obliged to secure financing as quickly as possible.Yet finance alone is not sufficient to create global success stories. The entrepreneur needs not simply finance, but the best finance.
What is ‘the best finance’?
The best finance is a miracle that happens when one is able to combine money, know-how, mentorship and networking. This is perhaps better termed smart finance.
Consider the various sources of finance available to entrepreneurs: Beyond basic bootstrapping, there are corporate ventures, angel investors, crowd funding platforms, accelerators, VC s, 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.
In 2015, more than 300,000 angel investors invested more than $25 billion in startups 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. Angel investors support entrepreneurs in starting up, and they support SMEs as they scale up their businesses, creating hundreds of thousands of new jobs worldwide every year.
It is rewarding to see that 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 to ‘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 East 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.
The World Business Angels Investment Forum invites all governments and policymakers to take advantage of the know-how, mentorship, and networking of qualified angel investors and to convert public money to smart money by establishing close collaboration between public institutions and private resources such as business angel networks, corporate ventures and VCs.
As a global organisation, the World Business Angels Investment Forum is bringing together key players of the equity markets to discuss the benefits and challenges of achieving successful growth for businesses and to explore additional possibilities for empowering the world economy.
In the wake of the global economic crisis, it was far from easy to reach out for any kind of finance, smart or otherwise.The World Business Angels Investment Forum focuses on developing innovative financial instruments for entrepreneurs and SMEs as a part of its global agenda.
To focus on the ‘smart’ factor in innovation in the context of entrepreneurial ecosystems, the World Business Angels Investment Forum directs its attention to developing smart investors, smart finance, smart exits,and smart entrepreneurs, startups and SMEs.
By working together across borders, with a common vision, and with these smart dynamics in mind, we are well placed to bring about positive change in the global economy.
As the Chair of the World Business Angels Investment Forum, I invite you to join our global efforts to ease access to smart finance to create more jobs and more social justice worldwide. Your efforts to convert the world economy to a smart economy in cooperation with the World Business Angels Investment Forum will be highly valued.
Chair, World Business Angels Investment Forum