Round table n°2: Access to smart finance – a review

On tuesday, 21st of May, we gathered in Copenhagen for our second round table (of four) to discuss the question of „Access to smart finance – how can investors be better investors for the creative industries?“

Against the grey sky and the rain drizzles, CKO – our co-hosts for this event – had arranged the meeting to take place at Artlab, a colourful venue and institution for the professionalisation of artists and creatives, located right at the big lakes of the city. 

We had invited different specialists from Denmark (CKO and Refleks), Sweden (Media Evolution), Italy (Arts4Business Institute, Trentino School of Management) and Germany (see below) in order to get as broad a perspective on the topic as possible. After a short round of presentation, we had three spontaneous mini-presentations/experience recounts by Daniel Kerber, founder of morethanshelters (mobile shelter concept realized with a number of different approaches to investment), Markus Presch from the Thuringian Agency for the creative industries (THAK), on a study conducted by the Thuringian structure bank and the derived actions, as well as Florian Knetsch from Prognos, who conducted a study for the German Ministry of Economy with a focus on fields of interaction of creative business and other fields of economy (linked below).

Søren Würtz (CKO)

Søren Würtz (CKO)

After these short impulses we jumped right into the presentation of the study prepared by CKO especially for C2C. Søren Würtz, chief consultant within CKO, had conducted a dozen of interviews with all kinds of investors (all but private banks and not donors) from 5 countries across Europe, who are already acting “smartly” in the field of CCI. The approach – a clever twist – was to ask these investors how, in their view, the others were acting “stupid” and which mistakes they frequently make.

But what is smart financing? The opposite of stupid, which is only looking to yesterday and generalizing economic logic that cannot be applied to all branches of economy, as the “rules” are changing, not only in society, but also in economy. Estimating next year’s revenue by looking at last year’s revenue might not always be the best method when it comes to innovative and creative companies …

In order to be a smart investor, you need to dare to jump low, start with small steps, test with low-cost market analysis, fail and re-try, build up while doing and working with 2 months-plans instead of 3-years-plans (which always bear more risk …)

And why should investors invest in the CCI? Because they are growing and are better off today than many other companies, even after the crisis (for example in the music industry). This reality challenges the general assumption of CCI businesses as being flaky and risky …

Here is a list of initiatives to take as suggested during the interviews

  • awareness-rising and knowledge transfer ((e.g. in get-together-meetings with creatives and investors) 
  • investors’ academies (e.g. seminars in which special CCI knowledge is transmitted)
  • bundling of CCI companies into a portfolio (which might make it more attractive to invest)
  • more cases (as a base for decision making, an ersatz for statistics and numbers)
  • new pitching design
  • grave to cradle / the life cycle approach (which means that the knowledge of young creative entrepreneurs should be used already today, before they „retire“ from their businesses and become business angels and consultants or even smart investors themselves)
  • Euro-Hollywood“ (creating clusters/working group of specialists on one particular field, e.g. film, games, music etc.)
  • a new valuation tool
  • move more investors into incubators

In two groups, the round table participants decided on a) the impact of each proposed initiative (high or low), b) the difficulty level of their implication.

Results from group 1

Highly effective and easy to implement:

  • Awareness-rising
  • Bundling of CCI companies
  • More cases (all linked together)

Highly effective but hard to implement:

  • Euro-Hollywood, because in many subsectors clusters already exist as very closed entities
  • Investors’ academies + More investors into incubators, because investors “don’t like to be tought” … and because “the investors” are a very heterogeneous group in themselves, of which some might be open to the new experiences and other not so much …
  • A new valuation tool, because it is not clear what it could be, although it would definitely be very important, in order to generate the much needed „hard facts“

Less effective and middle-hard to implement:

The new design of pitching sessions, because one pitching session only reaches a limited number of people which makes the process time consuming and thus not so highly effective.

Results from group 2

The second group did not use the given matrix, but built on a time-frame order of the proposed initiatives, departing from

  1. the basis: the generation of more cases in order to raise awareness. This lies at the very beginning of it all, as we are in a situation today, where we need to convince the first movers to open the door …
  2. step: bundling of CCI companies, leading to the development of the following tools:
  • more investors to incubators,
  • investors’ academies, (the two first ones being quite easy to implement as they demand no commitment from the investors.)
  • new design of pitching sessions,
  • Euro-Hollywood.

After you have these tools, at one point you need arguments in order to get the commitment from the investors. This leads to the necessary development of the valuation tool (highest impact and hardest to implement, but a highly desirable goal and useful tool).

We finished the afternoon with a lot of food for thought in our minds and will go on investigating and working on these questions during the barcamp in September!

Many thanks to CKO and all participants for their valuable input!

Links for further reading:

 

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