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Every start-up business needs its angel

29 September 2015 / 10:09:09  GRReporter
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As far as I know, without pretending to be comprehensively informed, there are no Greek business angels to invest in Bulgaria. Surely, there are some individual attempts. The aim of an association such as ours is to unite all these people and to provide them with a platform where there is clear information on the part of those seeking to make investments and those seeking investment, and where they can exchange news, information, experience. I think a good environment will form that entrepreneurs and investors in the region can use. We will certainly invite business angels from Greece too, as we are invited to events in Greece. This process with the neighbouring countries will surely be active.

What are the most interesting sectors that attract most investment and that make the greatest profits?

The European statistics show that about 40% of investments are made in information technology, 10% in biotechnology and medicine, another 10% in the field of renewable and clean energy, and the remaining percentage is distributed between other sectors. We will not limit ourselves to a particular segment so as not to limit investors. Business angels themselves will shape their investment preferences and assess the ideas of local entrepreneurs that they like the most. I believe that we will not significantly differ from the statistical picture in Europe. If there are any differences, they will be small in range and the picture in Bulgaria will be very similar to that in Europe.

Each economic cycle has one or leading industry or another. Currently, and in the years to come, information technology will remain a leading industry because huge profits are made in it and so will medicine and energy, which are very large industries as well. But I repeat, we will not restrict investors as I am sure that there are good ideas in all the other traditional areas for Bulgaria in which economic benefits can be derived, and the specific industries can change for the better. Even the entire business model can change.

What is the scale of the companies that are interested in investment according to the markets targeted, namely the Bulgarian market, the Balkans, Europe or the world?

When an investor goes to an entrepreneur, he considers several things. Firstly, the product or service offered. At the management level, whether the company has previous experience, if it has the potential to handle a sharp growth rate. It is one thing to manage 2 people, another to manage 10 and quite different to manage 50 people or more. Next is whether you can deal with all the challenges outside the country in which you are operating. All these indicators have different weights for different investors. There is no limit if a business idea is targeted only to Bulgaria, because if an entrepreneurial idea or company can change an industry locally and if this is applicable in Bulgaria for some time, if it succeeds and shows that it works, then the idea can certainly be replicated not only in the Balkans but also in Europe and outside Europe. Bulgaria is a small market but that does not mean that it cannot be profitable and that investments cannot be targeted specifically at the local market. There are examples of large international companies that are developing an entirely local business aimed at the local market. But it all depends on what the investor imagines and on his knowledge of the particular market. Bulgarian companies acquired by international companies have shown that they can have a strong presence in the global business.

What happens if the investment fails? What is the percentage of successful start-ups?

On average, 1 in 10 companies is successful. This is a very low percentage. Usually investors rely on the fact that in the event of success, the profit from the successful company will cover the failed investments. Of course, if you ask me if one company will be successful when you invest in 10 companies, the answer is "No". Here is the catch of statistics. The right approach to this type of risk investment is the management of a portfolio of companies, where there is cooperation with other business angels and the risk is distributed.

Again on average, it becomes clear within 5-7 years whether an investment is successful and whether the investor is holding the investment i.e. he is not leaving the company. If the investment is successful, the investor sells his share and makes capital gains. This period is different in different industries. Information technology development is very fast and the period can be 2 years. In some successful cases, it may even be 1 year.

These risk investments are called "smart capital". The investor knows how long he will hold his investment in a company. This capital is not liquid, the investor cannot decide to leave the company tomorrow because the business is developing. The European Business Angels Network has come up with some ideas to overcome the disadvantages of this type of investment, namely to create a single capital market, a stock market but not for public companies, which will trade shares of companies and will increase the liquidity of this type of investment. If an investor has to rapidly leave an industry, he will be able to sell his investment. This is already laid out, all members of the European network are fighting to implement the idea. In Turkey, it is a fact, but the aim is to establish such a common market in Europe.

You are certified business valuator. Could you tell us more about that activity?

Tags: Business angelVenture capitalEntrepreneurAssociationProjectsEuropean Business Angels Network
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