13 MARCH 2002
Economic Services Minister Josef Bonnici addresses the Business Angel Networks Awareness Seminar, organised jointly by METCO and IPSE
Entrepreneurship can be described as the process by which resources and skills are harnessed to exploit a particular business opportunity. Malta is not lacking in entrepreneurial spirit. We know this from the vast scale of commercial and industrial activity around us. In Malta, entrepreneurship abounds despite various constraints. For example, in a small domestic market, it is difficult to reach large production runs. To name just a few other obstacles, shipping costs are relatively high for any business that exports its goods or uses imported raw materials. And that includes practically every business. There is also a lack of venture capital.
The ingredients of entrepreneurship include commercial initiative, risk-taking, creativity and innovation. As I have mentioned, among these four, commercial initiative is very abundant locally. Although the other characteristics are perhaps not quite as evident, they too will flourish further in a more nurturing environment, particularly as the institutional infrastructure develops in line with the needs and opportunities of a post-protectionist economy.
Would-be entrepreneurs have to gear up to a competitive and challenging business environment. This is particularly true of the early days of the business venture when it is most vulnerable. The innate drive and vision to propel oneself in a business environment is essential, but it is equally important to have the mechanisms that provide a supportive environment.
A critical component of this supportive framework is the Business Angel Network. Business angels are private investors who provide their time, skills and expertise as well as funding support to a budding enterprise. Mentoring angels are the subject of todays proceedings, including information of the experience in other countries, particularly Italy. This information is particularly essential as we start out to develop this important source of mentoring and funding.
For the entrepreneur to connect with a business angel in an ad hoc manner is easy or successful. That is why we need a formal network, linking experienced entrepreneurs and financial backers to entrepreneurs who are short on the experience or funds needed to turn their concepts, ideas or breakthroughs into a business success.
Innovation often shows up in small business settings, and given the limitations under which a small business operates, many innovative ideas and technologies fall by the wayside. Connecting these innovations to business angels is a formidable way to bring these ideas to fruition.
We find instances of individuals who want to buy a stake in somebody elses brilliant idea, providing not just funds but also guidance and co-operation in the emergence and growth of the business.
We have instances of business with surplus funds that they seek to invest in another company, with which they are willing to share not just funds but also other resources.
There are consultants who want to go beyond a fee for service and want to reap a bigger reward from their own service. They then added incentive to provide quality advice.
The two sponsoring agencies (METCO and IPSE) are equally motivated to help in building the mechanisms that will get together a venture with the necessary capital and expertise. METCO has many small- and medium enterprises among its clients, and is closely familiar with the difficulties these businesses have in penetrating export markets and, more generally, in turning a profit.
In its drive to promote domestic entrepreneurship, the Euro Info Centre - which for the past 8 years has been hosted at METCO - has undertook this initiative together with IPSE. It seeks greater awareness on a national level and in the business community of the provision to SMEs of better access to finance and expertise.
Malta's Euro Info Centre is also part of the international Euro Info Centre Network, which is supported by the European Commission in Brussels. As part of its portfolio EIC Malta was encouraged by this EIC Network and also by the European Business Angels Network [also in Brussels] to co-organise this information event. Funding for this event was also made possible through Malta's EIC. In fact one must publicly acknowledge and thank these two networks for making the funding of this important event possible.
IPSE views the promotion of entrepreneurship as an integral part of its mission. It provides various programmes that foster a stronger entrepreneurial culture.
At the enterprise level, IPSE offers assistance to start-up operations through counselling and financial assistance, including an attractive Loan Guarantee Scheme that facilitates the enterprises access to capital. The availability of different stages of capital financing for the right ventures is still underdeveloped in Malta and enterprises still depend predominantly on the entrepreneurs own funds and on bank finance.
IPSE networks with professional bodies and organisations that assist the promotion of entrepreneurship through education and other means. These include among others Young Enterprise, ETC, the University, the Federation of Industry, the Chamber of Commerce, the Malta Development Corporation, as well as the new vocational college, MCAST.
The Business Incubation Centre, also set up by IPSE, provides a range of business facilities to start-up enterprises in various sectors, such as information and communication technologies, renewable energy resources, biotechnology, and so on.
A Business Angel programme provides the machinery for active private-sector promotion of business initiative. In such a programme, the role of the public sector is entirely as facilitator, while the key participants the Angels and the client company are all private sector actors. The Business Angels programme will fill an important void, complementing existing public sector services, in this context provided mainly by IPSE and METCO.