Interview with Paolo Anselmo
President of IBAN

1. You must be delighted that the EASY Project has hosted an event in Milan. Please could you tell us why you offered to host an event in your country?

Yes we were delighted to hold the first Easy Investment Forum of 2008 on 25th and 26th February in Milan, especially as it was such a successful event. 22 companies came from across Europe to present their own entrepreneurial projects at our pitching session and more than 150 real investors came to see them!
We decided to host an EASY event in Italy because our country, and in particular Milan, because the informal venture capital market here has been growing faster than in other European countries in recent years. As IBAN, in fact, we have just closed a survey, undertaken in co-operation with Bocconi University, where we collect all possible information about Business Angels’ activity in 2007. As a result we have identified that the Italian market, in comparison to 2006 data, has increased by more than 50% - with a total amount invested of 20 million euros. Of course we can’t compare these numbers to UK or US levels, but we are still very proud of this, because we see day by day that the business community is appreciating our efforts to spread the word about the opportunities given by having a risk capital culture. They especially appreciate the role early stage informal investors play in this area. So we thought that Milan, with its entrepreneurial and international culture, was the best Italian candidate to host such an important event as an Easy Investment Forum.


2. What do you hope the outcomes will be from the event?

Of course I hope that the Easy Forum has been an important meeting point for all entrepreneurs and investors. These kinds of events, in my opinion, play a key role in encouraging networking and the exchange of business opportunities among European Business Angels. I hope, after this important event, several deals can be closed as soon as possible, but also that the market in angel finance for SMEs in their early stage phase has grown. If we can achieve this we will have moved towards reducing the so called “equity gap” in Europe.

3. What have you learnt from being involved in the EASY Project that will help to promote investment into Italy from business angels abroad?

To be involved, as partner, in the EASY Project has, without any doubt, added value to us because we have benefited from sharing the experience of other business angel networks. We have also gained from the economic toolkit and investment readiness programmes that are part of EASY. We have now been able to adopt a common format for investment readiness which will be very useful for entrepreneurs in presenting their projects and it will help to focus their on all key aspects of the angel financing activity, including sector focus, the business’s concept model, and market, customers, competitors and, crucially, the importance of an exit strategy. The creation of a stronger networking platform for Business Angels has also been of vital importance in promoting Italy as a source of high quality deals.


4. What do Italian angels tell you about their views of investing outside Italy?

Historically we firmly believed that business angels, above all in Italy, preferred to invest in the region where they lived because they liked a hands on approach - with the chance to be in touch with entrepreneur every day or every week, if necessary. But in these last few years, in particular with reference to “new comer” business angels, we have found that many of them are interested considering cross-border investments. What I have found is that the most important thing that a business angel considers when investing abroad is the presence or not of one or more angels located in the same country of the entrepreneur, who is/are investing in the same project. If a company has a local angel investing in the business it gives credibility to the proposition for foreign angels and it also helps to build a trusted environment around the investment.


5. How many angels do you have in Italy, what are they like and what do they invest in? (Do you have many expert British or other angels?)

IBAN associates directly more than 100 active business angels and it represents, from an institutional point of view, all the informal venture capital investors in Italy. Of course we know that the number of active Business Angels we have identified is the tip of the iceberg as so many business angels operate alone or in small groups not affiliated to ourselves. Our business angels are not typical. We are different from the US as many of our angels our aged 40-45 not the more typical 55-60 years old. They often have considerable international experience having worked abroad. However they are still, 97% male! One of the most interesting things though is that Italian business angels are particularly interested in seed and start-up companies engaged in ICT and manufacturing sectors. They do not seem to be seeking later stage deals. One sign that our market is beginning to mature is that over the last year we have seen more and more business angel clubs starting, typically with 20-30 angels who syndicate deals amongst themselves.


6. What support could Italian angels offer angels based overseas who would like to invest in Italy?

As I said before, an Italian Business Angel can give more credibility to the project in which a foreign investor would like to invest. In addition out angels will know and understand the internal market, Italian legislation, standard business practices and the banking system. Clearly Italian angels can help with building the company’s domestic market and they can also help with further fundraisings and scouting for management talent.

7. Please tell us a bit about the entrepreneurial spirit in Italy and also how the angel community interacts with the venture capital community.

We have a strong entrepreneurial spirit coming, in particular, from universities and incubators. The main problem is that a lot of entrepreneurs with an excellent idea from a technical point of view don’t have a good perception of the commercial marketplace. Nor do they know how to transfer the technological innovation into a business.

This problem is particularly acute during the early stage phases and, many times, an excellent project aborts for these reasons. Our task, especially as IBAN, is to qualify and better promote the match between supply and demand by helping entrepreneurs to present themselves better to business angels and vice versa. We particularly focus on issues such as communications and the economic opportunity.

The interaction of the angel community with the venture capital one here in Italy is really good. We do not have disconnect between the two groups because, very often, when a Business Angel decides to exit from an investment, the principal exit is a secondary buy out backed by a venture capital fund. The relationship is also very close because the angel financing tends to come in the round just before the venture capitalists want to invest, so many venture capitalists are looking at deals where business angels have already invested. I have to remark that IBAN is formally linked with AIFI (The Italian formal venture capital and private equity association) and we often co-operate when it comes to presenting papers to political and economical Institutions in order to focus their attention on venture capital and promoting the development of SMEs


8. Please tell us something about the tax and economic climate in Italy and what makes it attractive for investment from abroad.

The important thing to remember about the Italian economy is that it is not homogeneous. There are, in fact, many differences and therefore economy patterns across the different Italian regions. What we can say though is that the lifeblood of Italian growth throughout the country is in and will continue to be in the hands of SMEs. Life is still difficult for SMEs in Italy and this has a knock-on effect on the economy, especially if the SMEs are too small to be sustainable. We need these companies to be able to internationalise their activities when the time is right.

The Italians are full of ideas, but the business culture is not as strong as in some other countries and we find that lots of ideas do not have a business structured around them. As a result it is difficult for them to find suitable finance to grow. Even for informal investors the risks in these businesses are too high. For this reason I am delighted to announce that IBAN will be the promoter of the first Italian co-investment fund ( IAF – Italian Angel Fund) with focus on seed and start-up companies that are only angel-backed. Through this mechanism we can not only provide financial support but also wider support for Italian high growth potential SMEs.

When it comes to tax Italy does not have the best tax breaks for investors, but companies’ taxation and in particular capital gain taxation, the situation is much better. For example capital gains are only taxed at 12,5% . We are not happy with the tax situation for investors and believe more work must be done to improve this.

9. Finally on a personal note, what is your own background and how did you get involved in angel investing?

I have worked in the angel world for many years and since 1999, I have been responsible for general management of the IBAN Presidency. I am member of EBAN’s (European Business Angel Network) Executive Committee and INSME’s President.

My degree was in aeronautical engineering and I worked for 15 years in TT activities where I gained wide experience in managing international networks. During my career, I have also built a background in understanding public policy issues around supporting for SMEs. Amongst other things I have specialized in the creation and development of new technology-based firms: consultancy, seed and venture financing schemes and even new measures for spin-off promotion.

Why am I so passionate about this market? Well, from my earliest understanding of angel investing I have thought that it is a good way to diversify your assets with the opportunity for strong capital gains. So, why not?!
Personally, I am first of all an entrepreneur but also a Business Angel with 2 unsuccessful investments and 3 other being developed.