February 17, 2022
It has been 20 years since BANC, the first network of business angels in Spain, was created. How has this sector evolved during this time?
It has changed a lot and has evolved like everything else. Previously, no one recognized the activity as such, even though participating in new business projects is the basis of the capitalist system. Today, fortunately, there is an entire ecosystem revolving around start-ups and financing, and this ecosystem generates as many jobs as SEAT or any other iconic industrial giant in the region – which, by the way, is seeing more and better start-ups and fewer iconic industrial giants. Someone should take note.
In the specific field of networks, a few of us started with a somewhat prosaic approach to private investment and today – fortunately for entrepreneurs and the entire ecosystem – there is a myriad of institutions dedicated to financing Early Stage projects, specialized in different stages, financing instruments, and sectors. The sector is extremely more dynamic, varied, and also demanding. There is more competitiveness in the field of private investment, and this has fed back into having better projects and more financing as well.
Who are BANC’s investors? How many are there? What type of projects do they look for to invest in? What amounts do they invest? What else do they contribute?
BANC has an extensive base of businessmen and businesswomen behind it, who seek new opportunities to incorporate innovation into their own business structures. I am talking about entrepreneurs in textiles, the social and health sector, agri-food, companies from the chemical guild, or the metallurgy sector. We also have profiles with a financial character but with smaller investment tickets.
BANC’s investor profile has been closely linked to that of its founders since its inception. On one hand, the Autoocupació Foundation, which capitalized on all the entrepreneurial talent in the territory, and on the other hand, the CECOT employers’ association, which linked a large part of the industrial business fabric outside Barcelona – Vallesos, Bages, Igualada, Maresme – This latter is the investment paradigm of BANC.
Initially, businessmen and businesswomen were captivated by participating in projects in unknown sectors with an approach that was much more financial than entrepreneurial – given that known sectors had less glamour and also lower expectations of profitability. They could contribute €400K or €500K to a project in a sector they didn’t know, hoping it would become a unicorn. Unfortunately, quite a few were left waiting. Except for a few limited successes, this strategy proved to be extremely risky and the setbacks were significant. Entrepreneurs began to commit smaller tickets in sectors they knew and usually accompanied other entrepreneur friends to spread the risk.
Today, the entrepreneur who invests in BANC projects seeks to incorporate a new product into their portfolio, attack a new segment, reach markets they don’t feel capable of reaching, or start with a client/supplier commercial relationship (more flexible than a capital contribution) that is beneficial for both parties in the short term and allows them to get to know the potential of the entrepreneurial project in question.
After a few months, the parties may decide to strengthen the link through an equity stake. These approaches are very sector-specific and start with smaller entry tickets. €100K is a typical investment volume at BANC.
What type of entrepreneurs seek financing through the network? What amounts do they need?
All of them. All entrepreneurs seek financing through the network because they are, by definition, highly proactive people who look for financing under every rock, although it is true that we move in financing bands ranging from €25K to €250K, in very early stages and in sectors with large but not exorbitant growth, and this already leaves out relevant elements of the local “startup” ecosystem.
We are neither a venture capital agent nor a “rich capital” agent; we don’t reject or only want the best, brightest, and most glamorous high-growth projects in the Meta Universe. We are above all a financing search instrument for entrepreneurs who are starting out and need an initial boost. We have a social character and a vocation for service in that we will not reject any project due to its low expected profitability or lack of apparent financial appeal. We are a network of private investors with business motivations rather than financial ones; we are more concerned with the creation of added value, innovation as a factor of business competitiveness, and job creation as a source of wealth, rather than repeated 20% growth over 10 years.
The segment of entrepreneurs with the greatest capacity to raise financing are those with a project with growth potential in sectors or activities that appeal to the local industry: agri-food, social-health – medical devices, Internet of Things, renewables, textiles, business services… The closer to the market – metrics – the better, and the promoter or promoters must have contributed some initial capital, in addition to hours of work and absolute dedication.
Beyond the search for a Business Angel, what other services does BANC offer to entrepreneurs?
Our financing search activity is framed more within a strategic scope than an operational milestone with a short-term deadline.
If someone asks us for €300K within 4 weeks, it is more than likely that we cannot help them and we will tell them so. If an entrepreneur needs support and strategy to structure their liabilities and grow their assets, if they are open to raising various forms of financing in the different stages the project experiences, that’s where we come in. I’m talking about private Business Angel financing, but also innovation grants such as ENISA, ACCIO, ICF, Microcredits; I’m talking about obtaining financing with a dedicated operator, but also a talented low-cost workforce, subsidized training for their workers, mentoring and support programs, or commercial partnerships with established companies that support the burden of a pilot test.
For example, for people starting out without the capacity to provide collateral, we have significant experience in helping them find up to €25K to get started. This initial micro-financing provides resources for the initial startup, allows for the generation of first metrics, and enables them to face subsequent investor search processes with a bit of breathing room and pause. In the end, you shouldn’t look for financing in general, and investors in particular, when you need them, but much earlier.
Autoocupació’s claim is “I am what I want to be.” And you, are you?
When I was little, I was once asked: “Do you believe in God? And why?”. I’m still thinking about the answer.
I have a much better time than a bad time doing what I do and in fact, yes, I have a good time, a very good time, but as in all areas of life, there are extremely good moments, many good moments, and some like the 12-month Euribor today: low, low.
I think I will agree with many people who deal with entrepreneurs: no matter how much forced entrepreneurship there may be – especially after difficult times like the pandemic – entrepreneurship always involves a powerful vocational and emotional factor: it’s difficult to be an entrepreneur with little desire to be one.
And this vocational and emotional factor is contagious and is transferred every day and every minute, especially when we talk about “gestation” stages and financing issues. Not that my eyes well up with emotion when we are jointly preparing a 5-year forecast for a new inbound marketing model, but after 8 meetings, many questions and a few open answers, and sincere and complicit communication with an entrepreneur who, more than a project, is explaining a life expectation to you, it becomes difficult not to empathize with their success or failure, especially if their perception of vital success or failure depends on €50K.
Regarding whether I am what I want to be, I am clear that I fight every day to try to be so and that BANC is still not by any means what I want it to be. The day it is, the work will already be done. There is much left to do.
