Malta is shifting its economy to a knowledge-based one, with particular emphasis on value added. What does Malta need to sustain this shift and growth?
A knowledge-based economy requires structures that allow individuals, small and medium enterprises and large corporations to internalise knowledge, manage it and continuously update it, and then to use this knowledge to create and sell innovative products and services. This gives a nation a competitive advantage in a global, interconnected and rapidly changing market.
To support this, Malta needs to educate its citizens to be able to perform these functions competently. It also needs a strong technology platform to allow educated citizens to perform the required transactions rapidly and with a global scope. Today’s global information networks change rapidly, and slow and monolithic government structures must not be allowed to hamper growth.
Finally, we need a financial system which is itself knowledge-based and willing and able to support the changes needed to transition from a traditional to a knowledge-based economy.
To put all of this in place requires vision, coordination across all government, regulatory and business structures, and a strong willingness to succeed. Malta cannot get this wrong.
What role does the education system play in supporting a knowledge-based economy?
The education system has a central role to play. Crucially, Malta has to educate business people, entrepreneurs, workers, administrators, investors and regulators to become competent knowledge workers. In a knowledge-based economy, knowledge is a commodity to sell as well as a tool. Therefore the education system has to both imbibe our workforce with transactable knowledge, and enable it to sell knowledge-based products and services in a global market.
With what aims was the Centre for Entrepreneurship and Business Incubation set up and how are these aims being achieved?
The Centre for Entrepreneurship and Business Incubation was set up with the objective to stimulate and support the growth and development of entrepreneurship in science, technology, engineering, media and creative industries in Malta on practical, strategic, educational, and research levels. CEBI also aims to deliver a world-class, postgraduate education and training in entrepreneurship through a practical hands-on approach and to supply various faculties, institutes and centres at the University of Malta with entrepreneurship related teaching and advice at different academic levels.
CEBI’s objectives also include engaging in business incubation at the University of Malta, and oversee the running of a business incubator at the University of Malta in close liaison with the Office of Corporate Research and Knowledge Transfer and the Malta University Holding Company.
We also engage in generating and coordinating funding efforts related to entrepreneurship and business incubation, stimulate and engage in world-class, cutting-edge entrepreneurship and business incubation best-practices.
We also participate in local and international collaborations and research, funded and otherwise, with leading institutions in the field and contribute to the development of the local and international entrepreneurship and business incubation community through participation in networking events, conference organisation, chairing and reviewing committees of such conferences, journals and books.
In order to achieve its academic goals, CEBI and the Knowledge Transfer Office of the University of Malta secured European Social Funds to set up a Master programme in knowledge-based entrepreneurship. This has been very successful and in October we shall be running our third Master programme. Thus, we would have educated more than 60 knowledge-based entrepreneurs in little over two years.
The CEBI board has strategic oversight of Takeoff, the University of Malta business incubator. The business incubator has gone a long way to stimulate knowledge-based incubation in Malta. We currently have more than 15 companies being incubated and have set up a mentor network to aid our tenants.
Takeoff is also attracting venture capital operators. CEBI has been supported by the Ministry for the Economy, Investment and Small Business to set up the Takeoff Seed Fund Award, a €100,000 fund which has financed four proof-of-concept projects and seeded five entrepreneurial projects this year alone.
Is an entrepreneurial spirit a quality that one is born with or one which can be nurtured?
Humans are born predisposed to function better in certain areas, more than in others. This is an innate quality, part of our evolutionary DNA, I would say. However, time and again we see that we can train world-class athletes, educate first-class brains and even teach people how to think creatively and out of the box.
Entrepreneurial acumen is not common in our graduates, who are the motor of a knowledge-based economy
The environment in which one is born also plays a significant role in nurturing one’s innate entrepreneurial spirit. However, not all offspring of leading entrepreneurs turn out to be good entrepreneurs, although some turn out better. A properly tuned education system can provide students with an environment that contains the entrepreneurial nuances missing from their domestic surroundings, allowing them to develop a strong entrepreneurial spirit. Experience has shown that, like creative thinking for instance, an entrepreneurial spirit can be stimulated and nurtured. We can all become successful entrepreneurs.
What are the main challenges that local start-ups face?
We lack an ecosystem which is experienced in supporting knowledge-based start-ups. We lack the seed funding mechanisms required, business angels are very thin on the ground and venture capital support is virtually unheard of. It is up to government to help stimulate this financial support through tax incentives to seed investors, and grants similar to the groundbreaking Takeoff Seed Fund Award scheme catalysed by the Ministry for the Economy, Investment and Small Business earlier this year.
Another challenge is that entrepreneurial acumen is not common in our graduates, who are the motor of a knowledge-based economy. CEBI is educating graduates by providing them with a very hands-on Master programme in knowledge-based entrepreneurship and we have found that our students have indeed acquired the skills required to evaluate business opportunities and turn them into successful knowledge-based start-ups. Although the first crop of our students is still to graduate, we have a handful of projects which have already approached local and foreign business angels successfully.
Finance is a prime consideration for start-ups. Does CEBI support start-ups in sourcing funding potential locally and abroad?
I consider finance to be the main challenge in Malta. CEBI, the Knowledge Transfer Office and Takeoff have been successful in helping start-ups source start-up funds both locally and abroad. We are setting up a business angel network, successfully petitioning government to make seed funds available, and form part of lobby groups that are working with government to stimulate and catalyse knowledge-based start-ups through grants, funds and tax incentives.
CEBI collaborates with Oxford University in developing specialised training programmes. What are the main benefits of this collaboration?
ISIS Innovation Limited, the technology transfer arm of Oxford University, won the ESF tender to support the University of Malta in setting up its Knowledge Transfer Office, an incubator and a Master programme in knowledge-based entrepreneurship. Oxford University has a strong tradition in technology transfer, intellectual property commercialisation, educating entrepreneurs and incubating spin-out and start-up companies. Such knowledge and experience was not readily available in Malta and hence our collaboration with ISIS is crucial to the success of our entrepreneurial endeavours at the University of Malta.
A good idea is not enough. What does a start-up need to be market-ready?
This is what the Master in knowledge-based entrepreneurship teaches our students over a period of 13 months.
In brief, a start-up must understand the market in which it is to operate, intimately and as completely as possible. It has to understand its customers and their requirements, develop a unique proposition to give it a competitive advantage, understand its internal strengths and weaknesses, and the opportunities and threats posed by the external environment in which it is to operate, understand the financing game, know how to manage a start-up company, build a strong team of people who give the company the ability to execute its business plan, and be attractive to investors.
It is a complex toolset, but one that can be assimilated over time, for instance by following our Master programme or through experience, although this takes longer.
Dr Ing. Saviour Zammit is a senior lecturer in communications and computer engineering and is the director of the Centre for Entrepreneurship and Business Incubation at the University of Malta.