How Malta Nurtures Start-ups Through Early Stage Crowdfunding
Labelled as “potentially the most disruptive of all the new models of finance” by Goldman Sachs, crowdfunding has now appeared on the radar of universities as well, including as a tool for generating financial support for start-up companies. How crowdfunding is adopted and integrated into campus systems does not follow one single path. In some cases, the university cooperates with a private crowdfunding platform to use their technology for delivering network services. In other cases, a local government organisation approaches a university to join forces and provide better community and funding support for student start-up initiatives.
The Malta Business Bureau (MBB) and the University of Malta (UM) are themselves active innovators in the crowdfunding field, who have together developed a strategic partnership in order to crowdfund and diversify access to finance for young entrepreneurs in Malta.
How it all got started
In 2013, Malta Business Bureau commissioned a scoping study that found local Start-ups were struggling for investment and were overly reliant on personal finance. One alternative canvassed was the use of crowdfunding to fuel start-ups and make up this early-stage funding shortfall. To explore this option, MBB contacted the University of Malta and were delighted to discover that, at the very same moment, the idea of crowdfunding was one of the major topics under discussion at the Centre for Entrepreneurship and Business Incubation (CEBI) within the university. This serendipitous common interest laid the foundation for the existing close collaboration between MBB, CEBI, and the University of Malta.
The platform to reward “small change”
In order to facilitate the collaboration, a joint foundation for the Promotion of Entrepreneurial Initiatives and its commercial arm PEI Ltd was established. Through this formal vehicle, the crowdfunding platform ZAAR was born. ZAAR, which means “small change” in the Maltese language, is the first rewards-based crowdfunding platform in Malta that seeks to promote entrepreneurship and provide financial support for both early stage and more mature Start-ups.
ZAAR was able to couple its activities with the established CEBI start-up incubator TAKEOFF, which already provided a fertile environment for students and professors alike to engage in entrepreneurial endeavors within and beyond UM. Through TAKEOFF, entrepreneurs receive business development support, networking opportunities, some initial financial support, and business mentorship. What is more, the offices, shared spaces and facilities at TAKEOFF offer a vibrant, creative environment, where entrepreneurs and innovators can collaborate. TAKEOFF was thus readymade for complementing with the ZAAR online fundraising platform.
With the emergence of ZAAR, entrepreneurs with Start-up ideas can now receive training in how to run an effective crowdfunding campaign. This is especially important due to the known links between effective publicity campaigns and crowdfunding success. Entrepreneurs can also receive specialized marketing advice regarding launching their Start-up through ZAAR, from the Grant Thornton consultancy firm that has come on board as a strategic partner.
The development of further mutual interests between MBB and CEBI at University of Malta has seen TAKEOFF cooperate with the Malta Chamber of Commerce, Enterprise and Industry, in order to access business angels. Additionally, CEBI has been keen to draw on the experience and expertise of MBB in accessing European funding.
Impact thus far
Although it is too early to judge the impact of the collaboration, there are certainly some very encouraging signs. For example, TAKEOFF has already incubated more than 30 companies, the majority of which are still in existence. Moreover, raising money through ZAAR is emerging as one of the core components of a developing entrepreneurial culture. The combination of the TAKEOFF incubator and the exposure students’ Start-up companies receive through ZAAR is contributing to a creative and positive business innovation ecosystem. What is certain is that the ongoing collaboration between the Malta Business Bureau and the University of Malta will continue to support the development and deepening of this entrepreneurial culture.
Want to learn more about the TAKEOFF-ZAAR case study? You can find the full report here
©all rights on images used in this article belong to the Malta Business Bureau and University of Malta.
Meet the authors
Habtamu Diriba is a graduate of the Erasmus Mundus Masters in Research and Innovation in Higher Education (MaRIHE). Before joining the MaRIHE programme, he has completed a two year graduate study in Business Administration (MBA) at Jimma University. His research interests mainly consist of topics relating to university entrepreneurship & innovation, higher education governance & policy, and internationalization. Habtamu has presented on multiple international conferences including winning the ‘Outstanding paper award’ at the 38th EAIR conference in Birmingham, UK.
Richard Woolley is a researcher at Ingenio (CSIC-UPV) at the Universitat Politècnica de València. He is currently collaborating with the TIK centre at the University of Oslo on the OSIRIS project, which is investigating the impact of science and research on society.
Hacer Tercanli is a recent graduate of an Erasmus Mundus Masters course, Research and Innovation in Higher Education (MARIHE), and since November 2016 a Project Officer at UIIN. Previously she has worked in public and private higher education institutions in Turkey and completed a Fulbright Master’s program in Applied Linguistics in the US. As part of her Erasmus Mundus Master Hacer studied in Austria, Finland, China and Germany. During her studies she has participated in HE development projects that involved mapping digital learning environments in Germany and facilitation of internationalization in Turkey. In addition, Hacer has also been involved in EU projects at the Science-to-Business Marketing Research Centre in Munster, Germany. Among her recent interests are university-industry cooperation and quality assurance in international joint degree programs.