EAE News
-
Experiencia EAE
Natalia Amat: “New financing methods now exceed traditional methods”
29 de November de 2019
EAE students gained an insight into concepts such as venture capital, crowdfunding cryptocurrencies and ICOs
New forms of financing are revolutionizing modern businesses. This was the focus of networking a conference organized jointly by ACCID, the Catalan Association of Accounting and Financial Control Teachers, and EAE Business School, in a session entitled “Financing new businesses in the age of technological disruption”.
Led by the UPF lecturer Natalia Amat, the session discussed new alternative forms of financing that are becoming increasingly popular. To illustrate, the lecturer emphasized that, in 2016, more than 7,750 businesses received 69.1 billion dollars in financing from venture capital companies. Within this framework, she explained that new financing methods, such as Initial Coin Offerings (ICOs), have now surpassed traditional methods.
With respect to venture capital, Natalia Amat explained that they finance startups and other businesses through investor contributions, with the investors receiving some of the company’s shares in return. “Therefore, they expect the business to grow significantly in the long term, even though it is a risky investment, but with an extremely high expected return”. As an example of this kind of financing, the lecturer mentioned Sequoia Capital, which specializes in financing technological startups.
To grab the attention of a venture capitalist, Natalia Amat recommended thinking of a good tagline that conveys the business idea very quickly, preparing materials to give a brief overview of the business model and explaining very clearly what you will do with the money.
Turning to crowdfunding, the expert defined the concept as small contributions from lots of investors, always based on an online platform. There are two types: Reward-based, when the investor receives a product/service, and equity-based, when the investor receives shares in the company. An example of a crowdfunding success story is Kickstarter and the Barcelona-based project Tropic Shoes, which produces trainers for travellers, holding the record as the shoe to receive most funding in the history of Kickstarter.
To get financing through crowdfunding, Natalia Amat firstly recommended selling the product or service through a story, creating powerful visual communication when preparing attractive and visual marketing material, communicating through social media and paying attention to customer feedback.
What are cryptocurrencies? They are digital assets used as an exchangeable good in financial transactions which are verified using advanced cryptographic technology, “with decentralized control based on Blockchain technology, which is extremely difficult to hack. The benefits of cryptocurrencies include the lack of intermediaries (peer-to-peer), low or zero commissions, and faster transactions”, she explained. She added that the first and most popular cryptocurrency is bitcoin, which was created in 2009, but there are many others.
With regard to ICOs, Natalia Amat explained that it is a financing alternative to options such as Venture Capital. “It enables smaller companies to get financing. As an example of an ICO, Natalia Amat discussed the 22x Fund, a group of American startups looking for financing in which each startup grants 10% of its equity, which goes towards created the new currency.
To conclude, the lecturer emphasized that, nowadays, there are more opportunities for creators of new businesses, “more options for investors, more ideas and projects that become companies and more innovation”.