5 minute read

BUILDING BLOCKS

It’s still 7am when Mikayel Khachatryan, founder of Wirestock, starts his work day in one of the office buildings of SmartCity Malta. His Armenia-based co-founders are already two hours ahead of him, waiting for a call to coordinate the tasks for the day. Wirestock is a one-stop shop platform for stock photographers, using Blockchain for content authentication. It is one of a cohort of five start-ups selected to participate in the YouStartIT acceleration programme, run by the MITA Innovation Hub. The programme offers a grant of €30,000, all equity-free. The main attraction is clearly the fact that Malta has been dubbed the Blockchain Island.

The Malta Information Technology Agency (MITA) recently concluded its fourth edition of the acceleration programme, targeting startup projects based on emerging technologies such as Blockchain, AI, IoT or Big Data. The programme is open to a global community of digital entrepreneurs, willing to launch their products from Malta, as long as they already have a properly tested and scalable value proposition with a solid team behind it. There is nothing less than hard work waiting for them in Malta. On conclusion of the four-month long programme, the start-ups will have gone through countless meetings and workshops with mentors, advisors and consulting companies, always refining their business model, pitches and presentations to reach market readiness.

A Temporary Shop

In parallel with that, the start-ups need to fulfil a mini CSR function, that of giving back to the community that is funding them. Through this function, called the Social Impact Agenda, the start-ups are asked to be proactive by organising several activities, such as workshops, meet-ups or lectures, giving as much as possible knowledge and inspiration to local founders and tech enthusiasts. The activities are designed in such a way to push the founders to step out of their comfort zones, and even face rejection if need be. After all that is the life of the entrepreneur.

The YouStartIT programme is the first and so far, the only, government-backed initiative of this kind in Malta. It has been created to support national policy on digital innovation and emerging technologies, and therefore create synergies between foreign and local tech talent and entrepreneurship.

YouStartIT is currently going through its fifth edition. The five start-up projects that graduated from the fourth edition were selected from among over 170 applications received from more than 40 countries including Malta. A part of this interest needs to be attributed to the momentum Malta has managed to build as a Blockchain-friendly jurisdiction. “You want to be where the big players are,” argues Mikayel, referring to Blockchain giants like Binance and OKEx who made their famous move to Malta last year.

Wirestock 

“Working with Blockchain is so exciting. It brings hope for the future and there are so many new business models to be discovered. So, for this to happen successfully, you need to network and compare notes with lots of like-minded people and peers facing similar situations. To grow a business like mine, it helps to be part of a community that’s moving in the same direction.”

The growing strength of the Maltese community is not necessarily coming from the angle of tech competence. It is its diversity which makes it unique.

Nemanja Avramović, founder of Cryptic Legends, another of YouStartIT participants, who is from Serbia, said: “We’ve been exposed to several people with different business and legal backgrounds. They helped us cover areas vital to our project. These ranged from incorporation and IP regulation, business modeling and communication, accountancy and taxation.”

Nemanja Avramović - Cryptic Legends (left)

It is a collectable hero management game, using Blockchain to store its characters as non-fungible tokens, so they can be used on the open market and eventually in other independent games. “Most of the people we spoke to had already been exposed to Blockchain due to the great buzz in Malta about the topic,” Avramović added. This network keeps growing with the number of specialists relocating to Malta and the small size of the country makes them quickly interconnected. Local and foreign mentors are key assets of the YouStartIT programme, and they can be influential in brainstorming ideas, structuring the next phases of development or suggesting the most optimal solutions. As in a classic, mentor-driven startup programme, they are directly involved, and sometimes even drive some of the programme activities.

What makes Malta unique and attractive for early stage start-up founders is, paradoxically, its small size. “Here we managed to achieve more objectives, with a much faster pace, than we would have in our home country,” stated Jurij Dreo, founder of BrainTrip, a Slovenian start-up developing a small, lightweight, head-wearable device that can monitor the electrical activity of a wearer’s brain. This device allows wearers to interpret data from their activities and therefore address issues ranging from mental focus to addictive behaviours. For most projects, Malta is an ideal test bed, since it offers faster access to various customer segments and feedback. This allows several iterations of the developed solution to be tested before eventually launching to international markets.

DEALING WITH BUREAUCRACY HAS BEEN A MAJOR DISTRACTOR IN PURSUING OUR BUSINESS IN MALTA, BUT IT HAS TO BE DONE AS IT IS PART OF THE LIFE OF AN ENTREPRENEUR

The life of an entrepreneur is not all roses of course. All the start-ups must register themselves as a company, which is mandatory to participate in YouStartIT. Grants are paid out only after incorporation is complete, and if the start-up has performed well and attained its project objectives agreed beforehand with the MITA team managing the accelerator. The process of company formation itself can be quite cumbersome if the team still doesn’t have a clear vision of the management and control it wants to exercise on the company, and how it wants to distribute its shares. Something which Pierfrancesco Onis, founder of ATemporaryShop, knows well. This Italian start-up created a platform that matches shop owners with empty shelves available, with artisans and other makers of hand-made products such as clothes. The purpose is to offer these makers a physical space to showcase their products and in so doing greatly extending their market using a hassle-free transaction system. “Dealing with bureaucracy has been a major distractor in pursuing our business in Malta, but it has to be done as it is part of the life of an entrepreneur,” says Pier.

Alex Borg, MIH manager 

To pursue its initial market presence, any new, digital venture must focus on rapid experimentation, market testing and often several iterations of the product. From a foreign founder’s perspective, this is quite a challenge because not only the culture is different, but also the legislation. While Malta is fast becoming a very technology friendly destination, there still are a few challenges to be addressed. Among them are a more streamlined process for the opening of bank accounts for foreign founders, opportunities for further funding through angel investment, and the need for a startup visa, like other countries such as Italy, Canada and the Netherlands. Fortunately, these issues seemed to have been picked up in the highlevel policy document, ‘Towards a National AI Strategy’, recently issued for public consultation by the Parliamentary Secretary for Financial Services, Digital Economy and Innovation.

If small players are being attracted to Malta’s innovation-friendly legislation in a bid to contribute to the socio-economic shift towards an innovation economy, it is in Malta’s interest to give sufficient reason to the Mikayels, Nemanjas, Jurijs and Piers not only to start their businesses in Malta, but also to stay, flourish and scale up. M