THE MALTA START-UP SCENE: UNCERTAIN OUTCOME, A WORTHY INVESTMENT

Adrian Galea

It’s a few years that Malta is progressively making efforts to attract new businesses and start-ups. For example, one of the latest initiatives is the introduction of a start-up visa, included in Budget 2022. To better understand the real opportunities that the island has to offer and to explore the local scene, Federica Tadiello spoke to Adrian Galea, a passionate and savvy manager who knows the local start-up ecosystem very well and who critically thinks that Malta has still a lot to do to attract talents and gain a privileged position in the European landscape. However, the good news is that it looks like there is a vibrant community of entrepreneurs with compelling stories to tell. 

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Would you please introduce yourself and what you do?

I am the administrator and moderator of Malta Startup Space, a Facebook group that keeps its members updated about events and transactions concerning Malta connected start-ups and entrepreneurs. The group and page have a simple mission, that is, to showcase the Malta start-up ecosystem. Every quarter, I issue a newsletter with the most noteworthy transactions linked with the Malta start-up ecosystem. I have been pleasantly surprised that it is relatively easy to find good stories to tell.

Further to this, I earn my living as a portfolio and finance manager for venture capital funds and high net worth individuals who seek to build and manage portfolios of early-stage start-ups. In particular, I am part of the team of BITKRAFT Ventures, a US-based venture capital firm with $500 million assets under management for digital games, esports, crypto games and interactive media.

Can you give us a general overview of the Maltese start-up scene? How does Malta position itself in the European landscape?

I usually refer to the Malta start-up scene as one that is “non-systemic”. I mean that there are no best practices or norms in place for a start-up to go from idea stage to MVP, to incorporation, to finding investors and scaling. Critically, I think we lack people in ecosystem support organisations who have hands-on experience in scaling large international start-ups. The tricky question is how do we attract such talent to choose Malta as a location to build their initiatives when Malta has little to no success stories to reference. 

There are promising initiatives in place. For example, TakeOff at the University of Malta has a well-organised setup with experienced operators. StartInMalta, operated by Malta Enterprise, handles government-led support schemes. In addition, there are privately led initiatives like Business Angels Malta (BAM) Pitchora that are a first attempt to match private businesses with start-ups.

We do have a few success stories, Hotjar and Altaro being the easiest to reference. With a strong Malta connection, these start-ups boast international relevance so that success can be achieved with the right skillset and mix of talent. However, I attribute their success to the merit of the founders and the individuals involved rather than the ecosystem from which they emerged. 

Overall, I think Malta’s appeal remains intrinsically linked to it being an island for sun, fun and heritage, English speaking and in the crossroads of the EU and the MENA region. 

“Start-ups require great founders above all else, and if taken seriously, they can change the world we live in for the better.”

Talking about the entrepreneurship and talents on the island, what do you think are the most exciting start-ups to keep an eye on?

The next generation seems to be led by Weaver, a fintech start-up, eCabs, a transport and mobility start-up, and EBO, an AI start-up. Other compelling start-ups have received support from Malta Enterprise in regulatory, AI, gaming and cannabis sectors, but I know too little about these companies for the moment. I am also sure several fintech start-ups have applied for MFSA licensing and keep Malta as their HQ, but there is little to no information about them. However, as I mentioned earlier, the good thing is that new stories emerge with each passing calendar quarter.

In Malta Startup Space, we also like to celebrate Malta connected initiatives, such as Peak, a Berlin-based blockchain initiative led by a Maltese founder, Flash, an offshore energy initiative in the Netherlands and Smart Assets, a $1 billion valued fintech based in the US founded by a Maltese national. It is critical to count these as community members as the amount of knowledge, contacts and experience they can give back to the next generation is immeasurable. Furthermore, I keep in contact with Maltese technical professionals who are early employees at start-ups doing great things across Europe and in Dubai and the US.

What are the opportunities for those who are trying to set up their start-up in Malta? What does the island have to offer in this sense? And what is your opinion about them?

Unfortunately, I don’t have a comforting answer here. I relocated to Madrid because the opportunity to advance my career in start-ups and venture capital was more promising if I moved to one of the leading innovation hubs in Europe. To give an example as to why I recently attended a conference in Berlin. During my return flight, I happened to be seated next to a lawyer who focuses on venture capital and, in front of us, eavesdropping on our conversation, a start-up founder. We spent the entirety of the flight discussing the fundraising landscape in Europe. Those encounters do not happen in Malta.

A solution is to engineer those situations with strategic events. For example, I am part of the Silicon Valletta community, which organises casual get-togethers for tech entrepreneurs in Malta. Also, back in the day, Malta held an annual start-up event called Zest. It was a celebration of start-ups and innovation, and I thoroughly enjoyed each edition. Its successor became the Malta Blockchain Summit which was very business and regulation focussed and not for me. Hopefully, pandemic permitting, we can bring back high-quality start-up focussed events. Malta Startup Space’s goal is to keep the community connected between meetups and events. It’s basically your daily dose of start-up friendliness.

Another promising novelty I follow closely is the digital nomad trend. Malta’s initiative here is the Nomad Residency Scheme. I hope this will attract digital and tech talent to Malta, who over time will build relationships with other Malta-based founders from which promising start-ups will emerge. I recommend that people interested in this space attend the meetups organised on the island around digital nomads.

Finally, the more promising start-ups that pitch to me are high-ranking executives from successful international businesses located in Malta. The sectors are usually fintech, iGaming, marketing and tech, wherein these emerging founders would have witnessed first-hand how the companies they were employed at grew to international relevance. Thus, they spot an opportunity to build their start-up and use their connections over time to make in-roads. I nicknamed these “2nd Generation” founders, and these individuals, I believe, hold the best promise for future success connected to Malta.

Do you think that Malta can become, in some years, a start-up-friendly place such as Berlin or Estonia? 

Potential and hope are the last to die, so yes! And given Malta’s dependence on tourism, financial services (now greylisted) and real estate, tech entrepreneurship is an apparent nominee for a future building block for a much-needed diversification of Malta’s economy.

The European start-up ecosystem, with few exceptions, is government-centric and dependent. Venture capital funds across Europe have EU and government bodies as their anchor investor, and many start-ups are competing for EU institution-led government grants and schemes. 

forbes.com/sites/haduong/2020/07/30/structural-problems-in-the-european-venture-capital-lp-landscape-and-why-it-matters/?sh=22d04ea067d4

Europe is far from the American capitalist model, with less than 15% of the global share of VC coming from Europe.

news.crunchbase.com/news/european-vc-report-2020-strong-fourth-quarter-closes-out-2020/

Some say this may be a good thing because although fewer start-ups emerge, the ones that do, tend to be more capital efficient and have more robust unit economics. Still, the spirit of true “venture” is grossly diminished when it comes to the funding landscape in Europe.

Malta seems to mimic the same lethargic symptoms that the rest of Europe suffers from. What Maltese founders sorely lack is a sense of competitiveness at an international scale. Many of the proposals I review copy innovative ideas witnessed overseas not yet present in Malta. Whereas this may make for a good lifestyle business, it does not have the hallmarks of an international disruptor. 

A suggestion here is that Malta Enterprise grants could be awarded on a semi-annual basis to the top 10% ranked applicants. This will create a sense of competition instead of the sense of entitlement some local start-ups seem to demonstrate. 

Recently, it has been announced that the American TV show “Shark Tank” will have its Maltese version. What are your thoughts about it?

Unfortunately, I have a boring answer to this. I do not know enough about this news story, I have not met with anyone involved, and I do not want to indulge in speculation. However, I wish the producers, whoever they may be, good luck and “break a leg”, as they say in showbiz, and I hope the investor panel will be smart, witty, and entertaining to put on a good show.

What I will say is that I have invested in building a successful career for myself in start-ups and venture capital, and I hope my journey will inspire others to follow suit, whether as professionals in the field or as entrepreneurs. Likewise, Malta Startup Space showcases success stories as they emerge, reinforcing that start-ups can be a compelling and exciting career path. 

In general, I’d like to know what motivates you in your job and why you decided to work with start-ups? Why are you so passionate about them?

Eight years ago, I left my job at a corporate firm with a career path in place to join a start-up in Hamrun in a shared corner office. In my first week on the job, I travelled to Switzerland to attend an event held at a global top-ranking university organised by the start-up I had just joined. I met business leaders, university professors and start-up founders that day. Three pitches took place, one was by a female founder dressed in an exoskeleton suit, the other was for a drone that could bounce off the walls of the lecture room at full speed and keep operating as though nothing happened, and the third was by a university professor who pitched light-based sensors for autonomous vehicles because two years earlier a family member perished in a traffic accident.

Great start-ups are being built by founders with a career of excellence behind them in engineering, healthcare, scientific research, finance or tech. The system in which they previously operated is restrictive for true innovation, so they break the status quo and forge a path for themselves. Start-ups require great founders above all else, and if taken seriously, they can change the world we live in for the better. That’s the opportunity that inspires me every day.

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