The participants of the #IPS 2016 were especially interested in the last expert’s pot about funding possibilities and strategies. All the participants had many questions and curiosities related to the funding process, difficulties, dos and don’ts of funding an idea, both in general terms and related to their concrete projects. The experts described their experience and knowledge regarding a wide range of funding possibilities, from crowdfunding, to love money, to business angels and the role that the EU can play in helping young entrepreneurs.
The panel was recognized by the young audience as highly qualitative and bearer of important advice and suggestions; it was composed by Mrs. Maria Podlasek-Ziegler, Policy Officer at DG Education and Culture of the European Commission; Ms. Francesca Passeri, Junior Project Manager at the European Crowdfunding Network; Mr. Alexandre Bernardi, Business Developer Associate at Raizers and Mr. John Di Stefano, Founder of the Entrepreneur Academy.
The best option to fund a project depends mainly by the type of project idea one has and the phase in which the project is. At the initial bootstrap phase, all speakers agreed that bank loans and Love Money is the way to go: Love Money indicates the funds that can be raised from friends, family and close individuals; furthermore, it is also a test of the value and validity of the idea and the way to present it: if an entrepreneur can’t convince a friend of the quality of his/her project, he/she most surely won’t convince a stranger investor. In a latter phase of the project, when the activity has started and there is already a pool of customers and clients, a crowdfunding or a business angel can be a better solution. The rule of thumb, anyway, is to differentiate the funding portfolio as much as possible. Maria Podlasek-Ziegler underlined the importance of the EU tools for young entrepreneurs, who have the ideas and enthusiasm but lack experience and are prone to make mistakes, therefore economically vulnerable; the European Union has provided instruments, such as the Transnational Youth Intiative and the Erasmus+ for young entrepreneurs, who let young entrepreneurs develop their ideas in a safe environment when they can learn, make mistakes and create a network.
The ins and outs of turning to a business angels were examined by the panel; the focus has been more on the difficulties of resorting to a business angel: the competition is very high, with an average of 20 proposals per day an angel receives on his desk; the conditions are pretty harsh too, in terms of shares demanded by the business angel or by the simple fact that a business angel will tie the entrepreneur down with a contract which will, in fact, make the entrepreneur an employee. On the other hand, if the business is already up and running and has potential, a business angel could provide a large funding base to expand. Francesca Passeri underlined the presence of platforms which act as intermediators between an investor and one or more business angels, helping the entrepreneur to solidify and present its idea at best.
Regarding crowdfunding, all experts concurred that the most important thing to prepare is a solid communication campaign; Alexandre Bernardi underlined the importance of a varied communication approach (online, offline, video pitch, meeting potential investors); John Di Stefano remarked how crowdfunding platforms are a relatively easy way to obtain funding and especially are a valuable tool to check the market reactions to an idea. Francesca Passeri, who deals with crowdfunding on a daily basis, confirmed that one of the most common mistakes made is to focus only on the investors and forget the customers. In the end, the customers must be the main source of funding and revenue for a project; many entrepreneurs focus all their energy on the investors and have to start all over again with the customers to actually sell their product or service and make profit.
Regarding Incubators, Maria Podlasek-Ziegler confirmed the great interest and investment made by Member States on the topic and suggested various incubator networks when one can experiment and create. John di Stefano reminded the audience that an incubator is a costly activity and can be fruitful if well thought out: it is not productive to start an incubator to “see where this goes”, one has to have an idea of what he wants to achieve participating to the incubator program.
The most important lesson given by John di Stefano and agreed upon by all the experts is the importance of having always a clear distinction between You and Your Business. Investors, angels, banks and crowdfunders will invest on your business; the harsh truth is that no one cares about an entrepreneur’s struggles and no one will fund someone because of who he is. On the other hand, customers, partners and investors when met will look also at the person behind the business. A successful entrepreneur knows when to focus 100% on presenting his business and when to “sell” himself too.
As a concluding remark, all the speakers agreed on the fact that every funding opportunity has a certain component of risk; but then again, the business may fail, but not you. Do not be afraid to take risks if you believe 100% in your business idea!