What growth has the local start-up scene experienced in recent years?

Andy Linnas: Malta has had a few successful digital start-up stories, however it lacked a sense of community and recognised support was little. The entrepreneurs disrupting industries or creating high growth businesses were fragmented with little meaningful conversations happening between peers.

Today we have many incubation and co-working spaces as well as seed funds and grants that are aimed specially to support start-ups. There are tax incentives being introduced to help first investments pick up and a series of inspirational events that give importance to the upcoming start-ups. The scene is today taking shape, with new start-ups emerging that are leaving their international mark.

How does this growth compare to that in other EU member states, and in the US?

Andy Linnas: In the grand scale Malta is a very small space and will not compare with EU or US cities.

But if we look at certain verticals and per capita, Malta would be leading in gaming start-ups and we will definitely place for fin-tech start-ups too. Even though Malta is not producing unicorns, the more mature start-ups are in a sustainably healthy state making both positive revenues and profits and growing sustainably.

What do start-ups add to an economy?

Simon Azzopardi: There are three core reasons why start-ups are important in an economy. First and foremost, start-ups will allow Malta to not just consume innovation but create it and be part of the fast paced changes every industry is experiencing. Businesses today need mad start-ups to think differently about the internet of things and artificial intelligence. Tomorrow, they will need start-ups for space tech or augmented reality.

Start-ups allow economies access to the technology that enables new business models and therefore new rates of growth.

Secondly, start-ups directly create job places and pay taxes. The jobs that are created are high value jobs in terms of both salary (and therefore implied tax) but also creative or mathematical input. Interestingly, start-ups attract such talent to the economy, and such talent is a vital backbone of every economy, even if they don’t know it yet.

Understanding the pace of change that technology is causing, and the fact that such change is only speeding up, will show the importance of giving local start-ups all the support and backing they need

Thirdly, indirectly, a start-up would create much more value than merely measurable jobs and taxes. Start-ups create an immeasurable yet vital impact on culture from an entrepreneurial and innovation perspective. This culture has a direct benefit on employers, investors and the future sustainability of the Maltese economy. It raises the overall value of the activity of a country, pushing for better education, better services and even an increasingly diverse entertainment scene.

Disruption: do traditional businesses still see this in a negative light?

Andy Linnas: Some do and some don’t. Regardless of their view, many traditional businesses will fail to adopt disruption, because it is a completely different culture than that required to come up with disruption. A traditional business is usually path dependent, slow, risk averse and politicised, which stalls the possibility to successfully innovate.

What, in your opinion, are the local start-up success stories?

Andy Linnas: Older cases like GFI certainly come to mind first. In the gaming industry we have companies like Betsson, which started in Sweden. The more current ones are Altaro and Hotjar.

We also have several up and coming digital businesses in 3D printing, healthcare, fin-tech, education and many other industries. However, these are all still in early stages.

Is there enough local support for start-ups?

Simon Azzopardi: Local support is certainly available, and this support is being more and more targeted and relevant to start-ups. Government is helping out with the synergy of the community and plugging local players into foreign communities. Private companies are talking about start-ups and actively reaching out to communities to support.

Andy Linnas is manager at Takeoff Business Incubator and Simon Azzopardi is founder of Now Digital Academy. They will speak at Zest, a two-day conference and networking event focused on breaking borders on June 27 and 28. Zest is being organised by the Malta Communications Authority, in collaboration with Takeoff Business Incubator. Times of Malta is media partner for Zest. For more information visit www.zest.org.mt

That said, more support is needed. The angel investor community needs to get organised, government needs to act quicker, and businesses need to understand that they too will be affected, and therefore should look to get involved.

The key challenges that start-ups face though is that local businesses get too little exposure, and are therefore not in touch with what is happening on the innovation front. Retailers don’t truly understand the impact of mobile commerce. Importers are not exposed to the effect 3D printing will have on distribution. And banks are not reacting to the mobile-app based bank. Understanding the pace of change that technology is causing, and the fact that such change is only speeding up, will show the importance of giving local start-ups all the support and backing they need.

What financing options do local start-ups have?

Simon Azzopardi: Start-ups in Malta have two options. The first one is government via grant-based funding through the support of entities like Malta Enterprise or Takeoff. The second is angel investment, of which a small and fragmented community exists locally.

Venture capital money is premature for the island. A quality start-up will attract venture capital money from anywhere in the world, and venture capitalists do not need to be based here for this to happen. What Malta does need is an active business angels network, a team of mentors and a government that supports investor and entrepreneur communities.

Banks are rarely a good fit for start-ups due to risk aversion so the key is for Malta to be a platform for digital business, attracting talent from the region including North Africa and across the Mediterranean, as well as investors that understand both the opportunity of investing in start-ups and the ethics required to do it right.

What will Zest bring to the local business community?

Simon Azzopardi: Zest is a fantastic opportunity for anyone interested in how the world is changing due to technology. The key point of discussion, themed ‘breaking borders’, discusses how professions, industries and countries have changed and will continue to change. For example, how are lawyers going to be affected by artificial intelligence in the immediate future? How has the skills matrix of a marketing professional changed over the last few years? How are borders of a country starting to blur with concepts like virtual residency? How is our relationship with our bank going to change when only a mobile app is their only presence? How do businesses manage corporate culture when entire teams work remotely from across the globe?

These questions are all challenging, albeit very current realities. Most importantly though, I would recommend Zest because it allows you to be part of the community that is trying to innovate, change and disrupt existing business models and industries on a global scale.