TAKING OFF - Early Start-up Community

This post was first published in Money Magazine, Malta. Author Veronica Stivala. Photo credit: Screenshot from Money Magazine, photo Jelena Vilt. Interview on my thought of start-up ecosystem in Malta.

While still at an early stage, the start-up scene in Malta is brimming with energy. However, we need a steady growth of new projects, ANDY LINNAS, TakeOff Business Incubator manager, tells Veronica Stivala.                    

Compared to mature start-up ecosystems like London, the start-up scene in Malta is still at an early stage. Luckily, there is a lot of energy and interest in building a sustainable and competitive startup ecosystem on the island. Andy Linnas, TakeOff Business Incubator manager at the University of Malta, speaks very highly of some great projects that may become very successful. However, he says, he wishes he could see a steady growth of new projects as well. The solution he offers is that to keep growing, we need to either import start-ups or help to form and generate new teams and ideas.

This solution is one that is not easily solvable, Linnas admits, and one which he describes as a Catch 22 conundrum. While many stakeholders would like to see investment in the early stages of high-growth companies, they blame lack of capital as the reason why not enough good companies are being set up. On the other hand, if there is a lack of good quality companies, then there is no reason for smart syndicated capital to be set up, even with good incentives. The way around this, according to Linnas, is education: “More investment must be made in the early stages of entrepreneurship education, and at the ideation phase, coupled with flexible grants like the TakeOff Seed Fund Award so that we will eventually see more good quality projects formed. The rest of the infrastructure - including good mentors, investors, talent attracted to the island will then catch up.” This will take time, he says, and the longer we wait the more time it will take. “This means that what we need is action and patience.”

Linnas elaborates on his ideas on education: the Government is a key player and understanding start-ups is important in building a sustainable vision. “If Malta wants to stay ahead in the new knowledge economy, it has to start thinking and planning in terms of five-, 10- and 20-year perspectives,” he says. Linnas does not mince his words and states how, “There is no room for political games and all the fragmentation should be left behind”.

Next, he says, it is essential to understand the drivers of a high growth technology companies in order to offer start-ups as good legal, social and moral environment so that they will choose Malta. That means a shift of paradigms, the way business is perceived and done, as well as legal frameworks. 

Also important is that entrepreneurs think globally and do things in a professional manner. “In the start-up world, if you are working nine-to-five weekdays and staying local, you have lost the battle even before it has begun.”

Malta is lucky to have an environment that is conducive to a successful start-up scene. Star qualities include the fact that we speak English, have a British past, a Mediterranean climate, good logistics and connectivity to mainland and that life is relatively affordable. Linnas highlights the many very interesting and experienced expatriates on the island, who have extensive international networks and are open to help. Looking at the not so good aspects, Linnas is hopeful that the Maltese Government will update its legislation which will help make high-tech innovative companies even more attractive. Other key ingredients to success include the speeding up of the process to register a company and to set up a bank account. And finally, he says, running an extensive PR campaign to make it easy for local companies to attract international talent, is a must.

Speaking of working towards a successful start-up environment, we discuss the TakeOff Business Incubator. In short, this is an organisation that helps technology and knowledge-based entrepreneurs and start-ups transform their ideas and innovations into market- and investor-ready businesses. “Our role is to become an excellent platform for early stage entrepreneurs to take off. That means that we hope to be able to attract the right teams and provide them with help that is needed,” Linnas says, adding that they also are exposing entrepreneurs to international networks in order to make it easier for them to enter the foreign market or look for funding.

While the incubator is still in its infancy at just 18 months old, and it is still too early to call any of its cases a success, there are some which Linnas has his eye on. These are namely MightyBox, a digital online games company, Thought3D, a 3D printing company that has developed a glue that solves a big problem of the industry, and Oulala a fantasy football platform.

Looking to the future, Linnas lists three words that highlight 2016: events, investments and network. Firstly, he expects to have an even bigger Startup Weekend and Disrupt.Startup.Malta events. Linnas is also expecting the TakeOff Seed Fund Award to continue and that the finally long-promised investment tax scheme will kick in. He also believes that some good investments will soon evolve into more mature start-ups. “I would not be surprised if new smaller prototyping funds will be announced” he says. And finally he bets on the fact that Malta will slowly get onto the international map with some of its start-ups and generate a lot of interest from prominent experts in the field.

“There is a lot to do to fuel the growth of the Maltese ecosystem,” Linnas concludes. He is optimistic and really hopes the Maltese community will come together and find ways of backing development efforts led by community. “We have grown it thus far by bootstrapping, but now I see the need for small philanthropic investments to get some serious things done.”

Linnas adds how he is, "Thankful to the hardworking teams at TakeOff and University, to our gorvnemntal as well as private partners and allies who make it possible for TakeOff to grow at such a high pace. Without their support and trust it would be impossible to lay foundations to next generation enterprises." 

Recipe for success: Andy Linnas’s ingredients for a successful start-up

Vision

Understand the market and have a clear vision of the way the market could be disrupted. Offer a clear value proposition to clients 

Team

Your team must have an all-in start-up attitude, where people are comfortable with uncertainty and high risks, are willing to work extra hard, long hours and have an international worldview

Timing and luck

It’s hard to strategically plan for the right timing. Being in the right place and at the right time is more of a luck factor

Sales

Excellency is needed in selling the brand, team and product

Product

A product must be developed in an ever quicker and leaner manner with laser sharp focus on the must-have value, and not the nice to have features. The understanding of value can be learned only through interaction with customers, and not the boardroom

Funding

Access to sufficient funds, so the best talent who can execute the best plans can be hired is key. In Europe, funding will usually be available to experienced teams or once company has proven itself and is not as likely to need external money any more

Watch out for these common pitfalls

Legal

The company is not set up for scale and leaves many uncertainties, which is off-putting to investors. Company structure, employee contracts, option schemes, and so on have to be well managed.

Team

If the focus is on the product and execution, without a strong foundation in teamwork or understanding roles and expectations of each other, things will fail when the going gets tough.

Funding

Giving up too much equity too early or overvaluing your company may end up in down rounds which may kill the whole company.

Execution

Grand plans are not always easy to fulfill. If the team fails to deliver a good enough product or service and to target the first set of customers successively, the company will eventually fail