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Baybars Altuntas

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Helping the Next Generation of Great Companies Move Forward

In light of a new partnership between the World Business Angel Forum and AsianEntrepreneur we are kicking off with an interview of founder and chairman Baybars Altuntas. A very successful entrepreneur, published author and celebrity in his home country of Turkey, Baybars is now committed helping the next generation of entrepreneurs connect with finance and scale around the globe.

In light of the WBAF partnership with AsianEntrepreneur, what is WBAF hoping to achieve in Asia?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 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.

“it is not invention but innovation that counts”

Ours is the age of the entrepreneur. (the buzz word of our century). The current, highlycompetitive 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 enough to create global success stories. The entrepreneur needs not simply finance, they need the best finance. WBAF’s partnership with AsianEntrepreneur aims to develop a set of skills for of Asian Entrepreneurs to access the best finance.

What presence do you currently have in Asia?

We have appointed Callum Laing as the WBAF High Commissioner in Singapore. We see Singapore as the innovation hub of Asia. We therefore have given special importance to Singapore. Additionally, WBAF has appointed High Commissioners for Hong Kong, Kazakhstan and Bangladesh.

What is the appeal of Asia and what do you think the future holds for investors in Asia?

Singapore, which was recently ranked as the 10th best startup ecosystem in the world by San Francisco-based research agency Compass, is employing resources – money and manpower –to further foster its booming startup scene.

Hong Kong has also seen a boost with this year’s government announcement of an Innovation and Technology Venture Fund worth a HK$2 billion ($256.7M USD). While still less than the Singaporean government’s investment in total, Hong Kong’s location and proximity to manufacturing hubs like Shenzhen mean that hardware startups are flocking from around the region (and the world) to set up offices on the island.

Both countries’ private sectors are also investing in the startups ecosystem with an increasing number of accelerators and incubators springing up. Banks, car manufacturers and even healthcare insurance companies have set up their own accelerator programs to tap into the talent in their particular industry.

Malaysia was the only country to host a Global Entrepreneurship Summit (GES) in Asia. It was an initiative of former US President Barack Obama.

On the other hand, small countries like Brunei have founded the Brunei Economic Development Board and one of the Board’s agenda items is to empower the entrepreneurial ecosystem of the country.

After checking each country’s entrepreneurial ecosystem in Asia, I see that challenges in Asia are a bit different to Europe and USA. USA has a good pre-start- up+ start-up +scale-

up +exit system. Europe is not good at scale-up and exit. Europe’s main problem is scale-up. Asia doesn’t have a scale-up problem but an exit problem. Asia has to focus on developing its own exit market within the continent. My personal summary of this is as follows:

  •       USA: pre-start- up+ start-up + scale-up+exit
  •       Asia: pre-start- up + start-up + scale-up
  •       Europe: pre-start- up + start-up
  •       Africa: pre-start- up

What is WBAF doing in the rest of the world?

As I said earlier, ‘’The entrepreneur needs not simply finance, they need the best finance.’’ So, 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 of these sources provide only money, nothing more.

The only true source of smart finance are angel investors. Angel investors, 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 Euros 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 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.

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 collaborations 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.

What is your background and why is this so important to you?

I am a former Senior Advisor of the Elite Programme of the London Stock Exchange Group (LSEG), star of the Turkish version of the television show Dragons’ Den, Chairman of the World Business Angels Investment Forum (WBAF), Vice President of the European Trade Association for Business Angels, Seed Funds, and Early Stage Market Players (EBAN), President of the Business Angels Association of Turkey (TBAA), the World Entrepreneurship Forum Ambassador to Turkey and the Balkan countries, and President of Deulcom International.

I am the recipient of the European Trade Association of Business Angels (EBAN) award for the Best Individual in Europe Globally, Engaging with the Global Entrepreneurial Ecosystem in 2014 (Ireland), 2015 (Netherlands), 2016 (Portugal) and 2017 (Spain). I am the only entrepreneur to be granted a personal audience with former President Obama at the Presidential Summit on Entrepreneurship in Washington, DC. I am the developer of the world-renowned entrepreneurship theory, the Altuntas Start-up Compass Theory, researched by Sheffield University and used in numerous MBA programmes. I am an advisory board member of the South East Europe Research Council in Greece and appointed as JCI Ambassador, following Ban Ki-moon, former Secretary General of the United Nations. I am regularly profiled by international media such as CNN International and Bloomberg.

Furthermore, I am a co-author of Planet Entrepreneur: The World Entrepreneurship Forums Guide to Business Success Around the World, published by Wiley (2013) and an author of Off the Bus, Into a Supercar! How I Became a Top TV Star and Celebrated Investor, published by Balboa Press (2014) and translated into Chinese, Croatian, Albanian, and Macedonian.

At the beginning of my entrepreneurial journey, the only criteria for success was the amount of downloads to my bank account. After you make your wealth, know-how and network; the criteria of success changes, in my case, from downloading to uploading the world! There are many ways of giving-back to the world. You can donate to the government, to the church, to the mosque. Or you can build a hospital and present it to the people for free use. My way of uploading the world is to donate my time and energy to ease access to finance for every entrepreneur in the world. So, WBAF activities are very important for me.

For readers of AsianEntrepreneur who are entrepreneurs seeking funding or would-be entrepreneurs wanting to take the leap, what advice do you have for them?

First of all, it’s important that entrepreneurs starting out are building a business that solves an existing problem and/or fills an existing gap. I say this because as simple as it may sound, an increasing number of young startups I’ve met don’t seem to consider whether there is a real need for their ideas. These are the ones who create a copy of something hoping to achieve the success that the creator of original idea did. That never works except in the very few cases where it is better than the original and/or adjusted better to a regional audience.

But in the digital age, I remind would-be entrepreneurs that there are no borders any more. So whether you find yourself in front of five sharks and a TV audience of millions, or with five minutes and an angel investor audience of one, a big part of their decision is going to be based on the quality of your presentation, and the people involved.

  1.  Prepare yourself, not just your idea. Angel investors invest first in the entrepreneur not in the business plan. It’s important that the investor and entrepreneur get along. They will want to see that you are fast, thoughtful, and efficient, , and can sustain the project through its conception and growth.
  2. Capture the essentials. Angel investors care more about the presentation than the business plan. Can you, in less than five minutes, explain the project, the return on investment and the growth strategy?
  3. Have a plan from day one. Angels are very interested in your exit strategy. Many investors tire after about seven years with a company and look around for new opportunities. So what is your exit strategy? Are you going to sell all your shares to a new entrepreneur? Go public with the company? Sell to venture capitalists? Franchise?
  4.  Do your investor research. You should find out as much as you can about your angel investor. Who has he or she invested in before? Have they been successful? How well do they know your industry? How much time can they devote to you and your idea?
  5.  Take care of due diligence upfront. It takes most investors 3 months to do due diligence on your idea. Make sure that it is not a waste of their time.
  6.  Negotiate a term sheet offer. Lack of experience can make this a very painful part of the whole project. You can go to the website of the WBAF (www.wbaforum.org) to learn more about it.
  7.  Learn the vocabulary—it’s all on the Internet!

I suggest preparing four different presentations for the potential investor:

  •       Business plan of no more than 50 pages
  •       Business plan condensed into PowerPoint presentation of no more than 20 slides
  •       This Powerpoint also condensed down to a 2-page brief
  •       A 5 minute elevator pitch

In Planet Entrepreneur published by the Wiley in New York, I gave a list of 8 things that would turn OFF your investor, and pointed out that only 25% of propositions make it past the first phase. So due diligence is key.

I would like to conclude this interview however, by saying, “It doesn’t matter if you are from the Americas, Europe, Asia, or Africa; the world is waiting for your good ideas.”

This article is part of the World Business Angel Forum media partnership with AsianEntrepreneur.org

If you would like more information about WBAF, please contact Callum Laing WBAF High Commissioner for Singapore. [email protected]

Investors

Are ICO’s the death of Angels?

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Killing Angels. Are Initial Coin Offerings (ICO’s) the death of early stage investing?

Imagine a startup that aims to build a decentralised cloud storage network, essentially disrupting platforms such as Dropbox and Box. The startup, not having a working product or any traction yet, decides to raise funding.  It does this very successfully raising $257 million. In the past year, this and stories like it have dominated the funding discussions thanks to Initial Coin Offerings (ICOs). Yet most traditional Venture Capitalists (VC’s) and Angels missed out on these ‘opportunities’ and have started questioning where their role sits moving forward.

At the annual World Business Angel Forum coming up in February, you can be sure that amongst the normal topics of macro trends, impact investing and philanthropy, that ICO’s are going to be the amongst the hottest conversations both at the conference and in the hallways and bars afterwards.

With ICO’s overtaking early stage Venture Capital it is a topic that everyone is keen to understand

As opposed to equity/debt financing, ICOs are events where a startup raises funding through issuing tokens to the public. These tokens do not represent a stake in the company; rather, it primarily serves either as a securities or utility token. Securities tokens attempt to provide investors with returns for holding them while utility tokens act as “gas” for using the system the startup builds. Either way, investors aim to profit off these tokens on the various crypto exchanges. According to data from ICObench, ICO proceeds increased 141-fold, from $9.7million in Feb 2017 to $1.3billion in Dec 2017.

With more than 180 new ICOs scheduled to launch in 2018  it is easy to see why it is dominating conversations.

Of course, it is not just just early stage investors that are watching this space closely,  governments too are beginning to notice. Late last year, South Korea joined China in banning all forms of ICOs.

But for every South Korea and China, there is Switzerland or Estonia, the former known as Crypto Valley for its political stability and support for ICOs , the latter recently announcing to launch est-coin in its bid to be the global ICO hub.

The question for investors and for governments is whether this is another unsustainable bubble or whether it is some much needed innovation in a sector screaming out to get more funding into the hands of those creating value.  The lack of regulation certainly presents potential investors with another risk factor.

For those looking for a safer way to get involved, one option might be funds such as Polychain Capital and Fenbushi Capital. They specialise in blockchain vertical only portfolios. These funds also do invest in pre-sales, enjoying discounts on token prices and occupying an advisory seat on a startup’s board. This in turn provides the startup with more credibility, boosting demand and eventually prices of the tokens. It doesn’t hurt to diversify into blockchain startups if it falls within an angel’s or a fund’s thesis.

Proper Governance Models; Angels and VCs may look to invest in startups before they raise ICOs once milestones are met or come in at a later stage post-ICO when traction is gained. Alternatively, funds may be locked up in a cold wallet and voted to be released as milestones are reached. This model has not been explored yet but it could offer stability and trust.  However, looking beyond the core business and seeing who is on the Board, or what partnerships are already in place is also very important.

Either way this is a fascinating time to be involved in the scene.  If you want to be involved in the conversation then it is well worth heading to Istanbul to join the World Business Angel Forum 2018

Where:  Istanbul, Turkey
When:  18 – 20th February 2018
How:  Tickets at http://wbaf2018.istanbul/

World Business Angel Forum is an official partner of AsianEntrepreneur and supports Entrepreneurs around the world.

This article is part of the World Business Angel Forum media partnership with AsianEntrepreneur.org

If you would like more information about WBAF, please contact Callum Laing WBAF High Commissioner for Singapore. [email protected]

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Investors

Stephen Fisher

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Stephen Fisher takes a non-traditional view on investment.

What’s your story?
I am currently Principal and CIO of First Degree Global Asset Management Pte Ltd in Singapore. Prior to that I worked for JP Morgan Asset Management for 18 years where I was Regional Head for Fixed Income Product Asia-Pacific. I completed a PhD in Finance in 1992 and have been in research and portfolio management ever since

What is your involvement with Investment?
Finance is in my blood. I started investing at the age of 7 years, spent my school vacations at the Stock Exchange trading for my personal account and decided to study the science of investing in order to know as much about the field as I could. I spent my time at JPMorgan Asset Management trying to introduce modern methods into a traditional investment process. In 2011, my partners and I decided to start our own firm to pursue a non-traditional strategy that is truly unique.

How did that come about?
Non-traditional investing is quantitatively rigorous and I have been researching what determines the ‘risk premium’ for 30 years. The Global Financial Crisis was misinterpreted by traditional investors as driven by default risk. Our non-traditional view focused on investors’ attitude towards taking risk – this is called ‘risk-aversion.’ Traditional investors during the GFC sold out cheaply since they feared economic collapse. Our non-traditional approach bought cheap assets instead by providing liquidity to an increasingly risk-averse market. Hindsight favours our interpretation.

We set up First Degree in 2011 to offer this strategy to the broader investment market.

What are some of the key things you have learnt about Investing?
The PhD taught me that most of what we observe in financial markets, perhaps 90%, we don’t really understand. I am constantly amused by the newspapers and commentators who try to explain every market move somehow rather than just admitting that ‘…we don’t know…’ Noise, or market randomness, is all around us which makes investing extremely difficult. The corollary is, that if you can find a systematic, structural pattern within the markets then you can make a lot of money.

What mistakes do you see less experienced investors making?
Inexperienced investors often think that investing is easy and just start buying or selling stuff without a plan. Would you build a house without a plan? Inexperienced investors have a gung-ho attitude that inevitably gets them into a small number of concentrated positions, taking unnecessary risks for no return.

By plan I mean you need to start with an overall strategic objective and then allow limited tactical deviations. The strategic allocation to the various asset classes is critical since this determines 95% of the long run return. Tactical trading attempts to identify ‘alpha’. Alpha is uncorrelated sources of return which are very difficult to find. I would recommend most investors not to try to make alpha.

Experienced investors understand that making alpha is hard, that it requires patience and a niche, and that every little basis point earned is sacred.

What mistakes do you see Entrepreneurs making?
Entrepreneurs underestimate the value of distribution. It’s one thing to have a great product but it’s another thing to find customers and sell it. Distribution strategies need to be factored in and pursued from day one. Generating cash asap will keep you in the game.

What’s the best piece of advice you ever received?
My first boss at JPMorgan in New York dispatched me off to Australia with the advice “…take a few risks.”

What advice would you give to those seeking funding?
Focus on what you have done rather than what you want to do. Proof statements are worth much more than business plans and wish-lists.

Who inspires you?
Shane Warne – the greatest spin bowler of all time and a radical, rebellious, anti-establishmentarian.

What have you just learnt recently that blew you away?
Apparently, the most commonly used technique in Artificial Intelligence is linear regression!!! This method has been around for centuries and it means I have been using AI all my life without even knowing it! It’s great to see that statistical methods are now achieving broad acceptance and adoption in our everyday life.

It also means that the term ‘Artificial Intelligence’ is a great misnomer – there is nothing ‘artificial’ nor ‘intelligent’ about linear regression (nor any of the other techniques used in AI). The AI-craze is largely marketing hype.

What business book do you recommend the most?
“A non-random walk down Wall Street” by Lo and MacKinlay is my favourite finance book since it sets out the foundations for active decision making. This is a modern response to Bert Malkiel’s “A random walk down Wall Street” that was critical of all active strategies. The point of Lo and MacKinlays’ work is that financial markets display a much richer statistical structure than the simple tests undertaken by the pioneers of modern finance would have us believe. This can be exploited for profit.

Shameless plug for your business/organisation:
First Degree Global Asset Management offers a truly unique, long-horizon investment strategy which has performed consistently for over 8 years. We exploit the well established phenomenon that forecasts power for the risk-premium using observable market variables is increasing in the time horizon.

First Degree also holds a Capital Markets Services licence issued by the Monetary Authority of Singapore and offers a licensing platform for fund managers who seek to locate their operations in Singapore.

How can people connect with you?
Website: www.firstdegree.asia
Email: [email protected]
Phone: +65 9841 2002

Social Media profiles?
My blog: http://www.firstdegree.asia/the-first-degree-view
Investing videos: https://www.youtube.com/channel/UCFsYzq3Oq9VYHr2-YI76W6Q
Google search “stephen fisher first degree”

This article is part of the World Business Angel Forum media partnership with AsianEntrepreneur.org

If you would like more information about WBAF, please contact Callum Laing WBAF High Commissioner for Singapore. [email protected]

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