Following the merger of IDCEE, Ukraine’s leading tech event, with U-Start, Stefano Guidotti explains the recent trends in family office investment strategies and their growing interest in startups across the globe.
The Italian businessman also shares his vision of the Ukrainian tech scene and the way it can be connected to global investment flows.
Your idea is essentially to link family offices with startups. Please explain.
U-Start positions itself as a vehicle that channels family offices and high-net-worth individuals and their assets towards the tech industry and startup world. In other words, we support family offices in understanding and allocating their availability in startups. We do that through our advisory and consultancy on how to build a strategy for a portfolio of investments in the digital and tech space.
We also organize conferences as a tool that allows family offices to have direct entry to the places where we scout for startups. The two are very synergetic, providing investors with a real picture and strategic view on what it means to invest in this space, who are the players there, etc.
U-start is still a very young, but already international company. Please tell us a bit about this development.
I founded U-Start in 2012 in Italy – a country which, regardless of the financial crisis, remains one of the main centers for family offices and has a huge presence of families that due to their entrepreneurial history are very strong financially. They are now focusing on the tech and digital space. By networking with some of these families, we understood the knowledge gap that they had in terms of available tools to channel their resources into this space.
U-Start was also going global from day one. Within two months from when we started, we opened in South Africa and Brazil. Those places have the same kind of structure – big families and concentrated wealth now looking for other ways to allocate their funds with the aim of diversifying risks, and also growing an ecosystem. It is also a key point of our global positioning – to enter the ecosystems that are growing quickly and have great potential going forward. That’s why we’re also interested in Ukraine, as well as Central and Eastern Europe in general.
When and why did family offices start investing in startups in today’s sense of the term?
If we go back a little bit to the history of VCs, their first backers before pension funds and endowments were families. Then, families de-focused from VC in the 2000s, during the dot.com bubble – a period in the history of the tech business that everybody tries to forget. Lately, due to the cycles of the financial markets, family offices have started re-focusing on the VC space.
They’ve also evolved over time: while a few years ago they usually used managers to allocate their investments in the VC space, lately they have started to invest directly more and more, building up small teams instead of externalizing them in VCs. Or at least coupling the two: have direct allocation, plus allocation in VCs. They’ve understood that direct investments have different dynamics and different goals from VCs. Direct allocation can have a more strategic goal, and be linked up to the family businesses or their goals and tastes.
From Milan, to Cape Town, to Sao Paolo, to Istanbul, U-Start conferences aim to match family offices with tech startups.
Are European family offices interested in emerging markets?
Today, talent is everywhere, and opportunities are everywhere. So, focusing on just two or three places in the world that everybody knows, like the Bay Area, Berlin or Tel Aviv, means limiting your options. In addition, there is huge growth in markets or specific verticals in the emerging and growing economies, rather than in mature countries. And this creates an opportunity to develop a portfolio that is diversified, leveraging the opportunities that are still there in mainland Europe and the USA, but also in the growing markets. South Africa, Brazil, Turkey and now Central and Eastern Europe have similar dynamics in terms of the availability of tech talent and growing internal markets, and also a series A gap that creates interesting opportunities for investors to deploy their capital there.
What has aroused your interest in the Ukrainian market?
We understand pretty well that Ukraine has huge opportunities. There are top-level engineers and developers, and huge availability of intellectual capital, besides the opportunities that Ukrainian startups already represent. The current situation is not an issue for us, because we look to the mid- and long-term, and not just to tomorrow.
I would say that the Ukrainian startup scene looks hectic and fast-growing – but still lacks international exposure.
Nevertheless, I am convinced that the situation will develop positively in the future. We see Ukraine as a key part at the global picture that we are drawing. Ukrainian speakers will participate in our events starting from the next conference, which is in Cape Town in late November.
This year, U-start was very present at IDCEE. Which results did you expect, and did you reach them?
First of all, many of our clients came to IDCEE. We organized a panel on family offices, with a goal to let both investors and entrepreneurs understand what family offices are, because their mindset is different compared to VCs.
A few weeks after the event, it is still early to say whether some Ukrainian startups will get investments from family offices of the U-start network. But some negotiations did start, concerning three companies.
The U-Start booth at IDCEE 2014 attracted numerous startups and investors. On this picture, Ukrainian startup Jobmetoo discusses disability and social responsibility issues.
How will IDCEE evolve in the future within this alliance with U-Start?
We are joining teams. We as U-Start are benefiting from the experience of IDCEE as a world-class event, while the IDCEE team will be involved in the organization of the U-Start conferences around the world. As of today, U-Start’s global presence includes Lugano, Milan, Cape Town, Sao Paolo, Santiago de Chile, Mexico City and Istanbul. We will bring these conferences to the level that IDCEE has reached.
Meanwhile, IDCEE – rebranded to “U-Start CEE” starting from next year – will allow us to expand in Central and Eastern Europe.
Importantly, IDCEE will capitalize on our global presence. [IDCEE founder] Viktoriya Tigipko and I have agreed that the whole IDCEE network will be focused on U-Start clients. They will be coming to IDCEE every year, and thus startups will get direct access to potential investors. Raising money from a family office or private investor is much easier than from a venture capitalist.
