In a past article we answered the question about why should governments run and fund early-stage startup projects. Summarising, we argued that as part of an overall strategy and policy of creating economic wealth and well-being, these governments would want to create a startup ecosystem to tap the business ideas and talent of tech entrepreneurs, and then inject them back into the economy at a higher premium.
Innovation flows more freely in such an ecosystem because the startup teams working on the ideas are unshackled by the burden of process and pre-existing customer legacies that larger organisations have to cope with. Hence they are able to focus exclusively on their innovation and, if necessary, even fail fast at a minimal viable cost as they learn and plough back the lessons learned into the ecosystem. Emblematic examples that come to mind are Startup Chile, Europe’s EIT-Digital, or our very own YouStartIT.
So the next obvious question to answer is: what has been achieved to date since launch of the MITA YouStartIT accelerator in late 2016?
Excluding pilot projects prior to the launch, and excluding the six startup projects forming part of the YouStartIT#5 edition that has just formally concluded, MITA has invested a total pre-seed of just over €0.5M in 22 tech startups. Out of these 16 are still working on their project, 14 of which have raised over €2M cumulatively, and in the majority of cases employ at least one founder full time on the project. Not bad for an early-stage accelerator. By finance raised, we mean sales, grants, and most importantly seed investment allowing the startup to proceed to the next stage of growth – the latter in fact constitutes more than half the €2M.
Among the startups accelerated at the MITA Innovation Hub, we can — without compromising any ongoing investor relationships — single out the following:
Earning the enviable ranking of No. 1 app in Malta, Freehour have recently conquered the huge Rome student population, achieving in just three months what they achieved in two years in Malta. An awesome achievement for CEO Zach Ciappara, who was only 18 when he first applied for YouStartIT in 2017.
Tarsos with their sensor-rich sock for the detection of early signs of ulceration in diabetics, have been awarded nearly €200,000 to further their research by the Malta Council for Science & Technology on top of the patent they have filed. Their future beckons for rapid commercialisation.
Wirestock with their tailor-made Blockchain solution serving a stock content industry currently worth €3 billion, have received an undisclosed six-digit seed investment from Hive Ventures, amongst others.
OpenPaymentsCloud, now rebranded to Weavr, developed an innovative, PSD2 compliant, payment solution for the fintech industry; they have recently raised an investment of €0.5M in London, and have already recruited five employees in Malta, benefiting also from Malta Enterprise funding.
Braintrip, with their deep tech solution for the early screening of dementia, will continue their research and quest for commercialisation of their idea, thanks to an additional €95,000 received from Rockstart Netherlands, €50,000 from EU’s SME Instrument and a generous loan from Malta Enterprise to be able to establish themselves locally.
CrypticLegends, have developed a crypto-collectible, character management game set in an ancient fantasy world, that gave us the privilege of our first startup to clinch a €100,000 seed from Blockchain use case investor Aeternity Ventures at our first Demo Day last March.
These are not necessarily the most significant as they exclude successes being hatched in YouStartIT#5 – which may take over a year to mature – and another startup, close to securing a substantial seed investment.
Importantly, all the startups are Malta-registered companies, with eight of them home grown. There’s more than one interpretation to explain the steep rise in finance raised shown in the graph. An obvious interpretation suggests we got better at scouting and recruiting the startups, better at strengthening the content and better at mentoring from one edition to the next. But another explanation indicates that startup projects take time to mature. If roughly half did “fail fast”, the other half took roughly 12 to 18 months to gain some traction. And this, in a context where YouStartIT has been around for less than three years.
Regretfully, a sour note emerged from this intense, crazy experience of designing and implementing Malta’s first accelerator: in the vast majority of cases, investments did not come from Maltese investors. Which makes transformation of Malta into a regional startup hub far more challenging, since investors are drawn to jurisdictions that can at least boast sufficient deal flow and critical mass in terms of startup projects. This is something that all stakeholders of the Maltese startup ecosystem, including government bodies, need to work on: by concentrating investments and initiatives in areas of strength and competence (e.g. fintech, regtech, traveltech, medtech), rather than spreading them widely and thinly in most sectors without achieving a critical mass in any of them. The latter is a key principle couched in the concept of Smart Specialisation being promoted by the EU to optimise regional funding.
Another aspect that should not be overlooked is the need to educate Maltese non-tech savvy investors on the existence of alternative or innovative ways to invest, and hopefully lure some of their appetite away from traditional brick-and-mortar, high social cost ventures such as real estate development, or corporate bonds and the like.
Nevertheless, apart from the quantitative goals achieved, there is one big success which the MIH team is extremely proud of: out of the six startups accelerated in YouStartIT#5, half of them were female-led: Leanda Keith (Secura), Zoe Gatt (Zink) and Cecilia Mzayek (Celuna), highly professional, talented, and all awesomely charismatic in their own way. Encouragingly, they will stand out as beacons and role models for Malta’s female tech entrepreneurs of the future — a measure that carries so much more value for society qualitatively.