Beyond Attractiveness Scores: Malta's path to private equity and venture capital success
Paul Rostkowski examines Malta's untapped potential in private equity (PE) and venture capital (VC). While known for its affordability and business-friendly environment, he argues that Malta must redefine itself through innovation, sustainability, and collaboration to emerge as a leading jurisdiction for transformative investment opportunities.
As a professional in the asset servicing industry, I have long contemplated Malta's potential to thrive as a private equity (PE) and venture capital (VC) hub. Over the years, I have attended numerous industry conferences, exchanging ideas with some of the industry's leading general partners (GPs) and limited partners (LPs). These experiences have underscored one truth: Malta has untapped potential. While this topic is broad and encompasses various facets, I will approach it from an asset management and asset servicing perspective for the sake of this article. While building a PE and VC ecosystem is an ambitious endeavour, I firmly believe Malta can continue positioning itself as a competitive and credible jurisdiction.
The latest EY Malta Attractiveness Survey revealed that only 54% of businesses consider Malta attractive for foreign direct investment—a five-point decline from the previous year, emphasising the need for strategic reform. While the jurisdiction has made strides in growing its PE and VC sectors, Malta is at a crossroads. To attract top-tier investment firms and funds, it must shift from being perceived as a small, cost-effective jurisdiction to one with a robust, interconnected, and scalable ecosystem.
PE and VC investments have become drivers of economic growth worldwide, supporting innovation, entrepreneurship, and job creation. With its strategic location, agile regulatory environment, and ease of doing business, Malta is well-placed to leverage these opportunities.
Malta's current appeal is often summarised as "cost-effective," "English-speaking," and "business-friendly." While these are undoubtedly strengths, they fail to provide the unique edge to set Malta apart in the competitive financial services landscape. Malta must shift its narrative from affordability to delivering actual value to attract top-tier private equity and venture capital firms. Instead of focusing on "what can go wrong," we should focus on "what can go right."
Shifting toward proactive value creation
In 'private equity' and 'venture capital', value creation is not just a post-transaction activity—it is the foundation of success. Malta should adopt this philosophy and embed value creation into its jurisdictional offerings.
By focusing on five transformative pillars—expertise and operational support, talent acquisition and retention, innovation, adaptability, and agility —Malta can redefine its role and thrive as a centre of excellence for private equity and venture capital.
To foster a thriving PE and VC sector, Malta must build on its expertise and operational capabilities. This involves strengthening support services such as asset managers, fund administration, legal advisory, and regulatory compliance—all critical areas in asset management. Skilled professionals and high-quality support services make a jurisdiction more attractive to investors. A suggestion could be developing specialised courses at the University of Malta or offering professional certifications in collaboration with international institutions and internship opportunities within local funds and financial firms to cultivate practical experience.
Talent is at the heart of private equity and venture capital. While Malta boasts a strong base of local talent, challenges remain. Attracting and retaining top-tier professionals is essential for the industry's success, especially as these professionals are the ones who drive investment and operational improvements. Creating programs that encourage talented Maltese students to pursue careers in finance, supplemented with incentives for international experts to work in Malta, could provide a strong foundation. We must ensure our workforce is globally competitive, with the skill sets required to excel in a dynamic, complex environment.
To future-proof our ecosystem, Malta must continue to embrace digital transformation. Innovation can be a differentiator that attracts modern, tech-driven funds. Integrating artificial intelligence, data analytics, and fintech into the PE and VC industries can help streamline operations and improve investment decisions. By continuing to position itself as a tech-friendly jurisdiction, Malta can attract investment firms that prioritise innovation. For instance, offering regulatory sandboxes could provide a controlled environment for firms to test new technologies without exposing them to unnecessary risks.
Source: eu-startups.com
Private equity investors increasingly prioritise ESG (environmental, social, and governance) factors when making investment decisions. Sustainability is not just a trend; it is a value that will drive investment flows in the future. Malta could establish sustainability incentives, such as tax breaks or grants, for funds prioritising ESG-compliant investments. Positioning Malta as an ESG-friendly jurisdiction could attract firms looking to manage "green" funds, thus aligning with global investment trends. For example, we could provide green incentives for fund managers: Tax breaks for funds that meet ESG criteria.
Malta's small size can be an advantage here. As a smaller jurisdiction, Malta has the ability to quickly adapt to new regulations, trends, and investor needs. By establishing a dynamic regulatory framework that evolves with industry needs, Malta can offer a responsive, adaptable environment that larger domiciles might struggle to replicate. Stakeholders could develop a fast-track PE and VC funds licensing process, ensuring compliance without unnecessary delays. Transparency and efficiency in regulatory approvals can become a cornerstone of Malta's value proposition.
Malta Private Equity Venture Capital Association launched. Photo Times of Malta
Expanding Malta's strategic identity in the private equity and venture capital market
What if Malta could transform itself into a true centre of excellence for niche private equity and venture capital funds, leading the way in healthcare innovation, creative media, decentralised finance, and sustainable infrastructure? Imagine a jurisdiction where cutting-edge healthcare technologies are developed, virtual reality industries thrive, and tokenised fund structures redefine financial systems.
With its strategic location, robust legal framework, and forward-thinking mindset, could Malta become the go-to destination for funds that shape the future of industries? By embracing these high-growth sectors and creating tailored incentives for funds specialising in biotech, creative economies, DeFi, and green tourism, Malta would not just attract capital—it would attract industry leaders, positioning itself as the epicentre of transformative investment. The question is not "Why Malta?" but rather, "Why not Malta?"
One of the most exciting trends in private equity is its democratisation. Traditionally, PE was accessible only to large institutional investors. Today, smaller investors are gaining access through platforms that offer lower entry points.
Malta could position itself as a leader in democratised private equity by:
Creating a regulatory framework for retail PE funds: Allowing smaller investors to participate while ensuring adequate protection.
Partnering with fintech platforms: Offering seamless onboarding for retail investors into PE and VC funds.
Educational campaigns: Raising awareness about the benefits and risks of private equity among retail investors.
A call to action
Building Malta's private equity and venture capital ecosystem is not a one-person or one-organisation effort—it requires collective action. Government, regulators, industry professionals, and academic institutions must share a shared vision. For example, the recent establishment of the Private Equity & Venture Capital Association – Malta (PEVCA) is a significant step forward, with its main objective to promote private investment on the island, including Malta as a destination for private equity and venture capital firms and funds. Organisations like FinanceMalta are pivotal in fostering this collaboration by acting as a bridge between the public and private sectors. Their initiatives to promote Malta internationally, provide networking opportunities, and create platforms for knowledge-sharing are invaluable.
Malta can potentially carve out a unique identity in the PE and VC world. By focusing on innovation, sustainability, and collaboration and leveraging its agility and talent, Malta can position itself as a competitive jurisdiction capable of attracting global players.
The question is no longer, "Can Malta compete?" but rather, "How far can Malta go?" The answer lies in our ability to think big, act strategically, and embrace our strengths. The time to act is now.
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