We talked about the role and management of shareholders in the fintech industry together with our mentor Giulio Montoli, head of LVenture Group‘s Acceleration Program. There are 3 main mistakes to avoid: do you already know what they are? Read it on and find out!
What are the priorities a startup must keep in mind when managing its shareholders?
It depends a lot on the type of shareholder. Whether it is an actively managed fund or not, whether it is a professional private individual or not, whether it is a syndicate and of what entity. There are many types of investors and each has a different approach. A general rule that can apply to all is trying to get the best in terms of value added by “smart” investors and contain the “dumb” investors as much as possible.
Three mistakes not to make?
- Treating investors as “milking cows” by calling them out only when you need funds
- Do not define action perimeters before the investment. It is very important to define with transparency the type of contribution is expected from an investor in order to avoid unpleasant surprises.
- To insert in the board (or in important positions) people with experience of traditional enterprise but not in management of investment in startups.
Do you think the fintech sector has special characteristics in terms of shareholders?
The only difference is the more frequent presence of industrial investors in the captables of companies. This is good, from a certain point of view, because it means more skills and ability to bring value to the business. At the same time, it can be a threat to the decision-making independence of the founder team because there can be a misalignment between the industrial interests of the investor and those of the startup.
Taking advantage of your role as head of acceleration program I want to ask you if the role of acceleration programs is changing in your opinion?
The business model of an accelerator is very complex and cash intensive, which was not taken into account in many business plans. In recent years there has been a natural consolidation of the market: many companies have withdrawn from this last or have completely changed model. Today, the number of accelerators that are really active in the field of investments have been reduced, but those remaining have expanded. The interpretation we give to our work varies from player to player: we have chosen not to bind ourselves to a particular verticalisation in terms of investment but to focus on the quality of the offer in terms of the network and skills of the management team. Other players have moved with vertical programs on certain industries acting as sponsors. Personally, I don’t think the direction of the investments should be decided top-down or at a table.
Let’s end with your opinion on the Italian fintech ecosystem: how is it evolving?
The Italian ecosystem of startups has always been characterized by a heavy under-capitalization of even the best realities. Fintech startups generally work with very low margins or with negative unit economics in the early stages of life and growth: to support similar business models, investments which until a few years ago were almost impossible to obtain in our country. Today things are changing a bit both thanks to the interest of companies and because the availability of capital for startups is increasing. In my opinion, there are still gaps in the various stages of funding but I am very optimistic about the future. We also have a better offer today that can support Fintech startups in the early stages of development.