Re-inventing ‘money’ to boost innovation globally
In my opening speech at the World Business Angels Investment Forum’s 2018 World Congress in Istanbul, I asked a simple question: Is Turkey the right address for this particular group of investors coming from all over the world?
The answer to that question is hidden in the historical contribution of Anatolia to the world’s entrepreneurial journey. Money is, of course, the most important element of this journey. It was in present-day Manisa, a city in western Anatolia, that coins were introduced as early as 700 BC in the gold-wealthy Lydian empire.
If we are going to talk about “money,” then it is not an exaggeration to say Turkey is the most suitable place to host the “kings of money” for brainstorming about how we can connect the world’s “money owners” with entrepreneurs who need finance to develop their businesses.
Even though new forms of money such crypto currencies have entered the economic system, nothing has changed in terms of money since it was invented. The needs of entrepreneurs, however, have changed.
Until the 1950s, inventing was very important. Virtually any invention had customers ready to consume it. Inventors did not need a set of skills to get their inventions to the market as consumable products because customers were ready to consume anything new.
But today this is no longer the case.
An invention is meaningful only if it is innovative. My simple definition of an innovative product is one that can be successfully marketed and sold. If you can create a demand for your invention in the market, then your product will be received as “innovative.” If not, then it is merely an “invention.” In order for inventors to be perceived as contributors to society, they have to innovate, which puts them in the scope of policymakers and public managers because innovation creates new jobs and new sources of revenue for societies. Inventions cannot accomplish that.
Inventors are not known for their business acumen. We need catalyzers that are able to develop ways to interpret inventions in an innovative way. Without catalyzers, inventions would be doomed to the status of artifacts in a museum. Without innovation, people would not be able to improve their standard of living, and governments would not be able to generate new sources of revenue or create new jobs.
Entrepreneurs are the catalyzers. Former U.S. President Barack Obama made this abundantly clear when he referred to the 21st century as the century of entrepreneurs. But 21st-century entrepreneurs face an important challenge: Access to finance.
The total amount of money in circulation today is around $8 trillion. But today’s entrepreneur needs not only finance to secure success in their endeavors; they also need know-how, networking and mentorship. It is now time to clarify the needs of 21st century entrepreneurs: What they need is not just money, but “smart money.”
Smart money is the result of combining traditional money with know-how, networking and mentorship.
Governments print “money.” But who prints “smart money”?
There are 10 basic sources of financing for entrepreneurs, from start-up to scale-up to exit: Bootstrappers, crowdfunding platforms, business plan competitions, banks, angel investors, VCs, co-investment funds, public grants and funds, family offices, private equity funds and stock exchanges.
But only one of these is able to produce smart money: Angel investors.
From the time it was invented thousands of years ago, money has not changed, but the entrepreneur profile has changed radically. We therefore have to re-invent money for them to boost innovation globally.