Startup Investor Manifesto aims to set the agenda
A group of Tech Entrepreneurs launched the Startup Investors Manifesto at the EBAN Conference in Dublin this week - you can find it here.... In the week of the Euro elections it is a pertinent reminder of the importance of entrepreneurship to all our futures.
The Manifesto is designed as a lobbying document and aimed solely and squarely at the various EU authorities. It follows on from the Startup Manifesto published a couple of years ago and like that document it is very much about startups in the tech sector. Initially it felt slightly odd reading it through. I am a startup investor and these people are lobbying on my behalf without me realising I was part of such a group. On the other hand, why shouldn’t the views of a vital and dynamic sector of the economy be strongly represented to Government and regulators?
One answer to this question might be that Government interference in highly competitive markets is not the best solution. I totally sympathise with this sentiment but it is not actually how free market economics operates. If you want to see a totally unregulated free market, go to Mogadishu ( which by the way is not quite as scary as you would think…) Free markets depend on an open but reliable and predictable regulatory framework to exist and grow. For example, the stock market changed utterly when joint stock companies became an authorised vehicle for business in the middle of the 19th century. It is therefore very important that Governments create the right platform for startups to thrive and for investors in those companies to deploy their capital. An important proviso. The market framework should keep distortion to an absolute minimum.
Does this manifesto propose measures which would help achieve that objective? Perhaps predictably it is a bit of a mixed bag. Some ideas are excellent, some are questionable and a couple of the proposals sound quite dangerous.
Overall, the main recommendations make sense but there are a couple of things in the detail that are major concerns. Firstly, the manifesto recommends a standard common definition of a business angel. Indeed in section 5.2 it actually says that this should be imposed. The whole point of angel investing is to encourage people with from every walk of life with the widest possible range of interests and agendas not to create a new defined (and no doubt regulated) class of investor. Secondly the detail goes quite a bit further than the broad agenda and starts to feel like quite a heavy hand and an element of protectionism ( the proposed transatlantic trade treaty is seen as a threat for example). Ultimately, if things go too far they risk strangling the very dynamism they are trying to encourage.
Enough of the negative. Broadly I would support this initiative. I would like to build on it and in the spirit of the entrepreneurial movement to see recommendations which encourage broader horizons in three main ways:
I wish the promoters of the Startup Investors Manifesto well in their attempt and I hope they can find a way to include the ideas and the support of the whole community.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.