Innovation & Growth
Building the Strength and Resilience of Tech Startups
Archimede Mulas - Founder at Collective Equity Ownership (CEO)
Patrick Low - Former Chief Economist of the World Trade Organization (WTO)
June 2020
Patrick Low - Former Chief Economist of the World Trade Organization (WTO)
June 2020
As economies advance, growth depends less on additions of capital and labour to the economic mix and more on increases in productivity. Productivity is the child of innovation. All companies can potentially innovate, whether large or small. But some innovations contribute greater benefits beyond their bottom line than do others.
Some cutting-edge companies are born to challenge the status quo through disruptive innovations, such as TransferWise and Revolut. Others, such as Patagonia or BMW rely upon internal R&D departments. Innovation is driven by people with ideas. In start-ups and scale-ups, the founders are the courageous individuals who have taken upon themselves the responsibility of fomenting change – change that can lead to global paradigm shifts. Developments towards autonomous vehicles, mobile and open banking, drone imaging in construction, and artificial intelligence in drug discovery are just a few examples.
In start-ups and scale-ups, the founders are the courageous individuals who have taken upon themselves the responsibility of fomenting change – change that can lead to global paradigm shifts.
Even at the best of times, any commercial undertaking faces uncertainties it is powerless to influence. Successful entrepreneurs, however, know how to turn that uncertainty into a risk calculus that can be influenced by smart decision-making. We must also acknowledge the value added by angel investors and venture capitalists who use their wealth of experience to support and sometimes to contribute to this decision-making. At the same time, networks of founders, and those who have walked in their shoes, offer value through ideas that can spread benefits far and wide.
In 2019 TransferWise announced a historic secondary transaction worth $292m of shares held by existing shareholders. It was a strong indication of the importance of secondary investors to sustain the high growth of private tech companies. As reported by the Financial Times, part of this sale involved the two co-founders, who sold less than one-fifth of their holdings. Following this transaction both co-founders remained at the helm of the tech unicorn. Nonetheless, they also became active angel investors, revealing that diversification is an element that founders want.
Companies such as SpaceX and Amazon, led by Elon Musk and Jeff Bezos, have created industries around them.
These innovative entrepreneurs that are mapping out new territories with fresh ideas have an opportunity to manage some of their risk and receive liquidity through the services of Collective Equity Ownership (CEO). Founders can use up to 10% of their own equity and pool it together with other founders, while benefiting in the process from a modest cash injection upfront. By diversifying their portfolios in this way, founders also benefit from liquidity events arising from buyouts or IPOs that occur among the companies in the pool. The opportunity provided by the CEO offering creates a synergistic community of people who support each other’s growth, and underlying company’s success. This risk-management offering makes it easier for founders to remain focused and clear-minded as they run their companies.
Successful start-ups whose driving motivation is innovation generally make a more valuable contribution to economies and societies than do less innovative enterprises. Not only do they provide the well understood benefits of growth and jobs, but also the additional contributions arising from new knowledge, models and techniques for doing business. The benefits of such contributions spread beyond the enterprises themselves. Companies such as SpaceX and Amazon, led by Elon Musk and Jeff Bezos, have created industries around them. In the face of the dislocation and widespread deprivation provoked by the COVID-19 pandemic, the success of such enterprises is more vital still.
Successful start-ups whose driving motivation is innovation generally make a more valuable contribution to economies and societies than do less innovative enterprises. Not only do they provide the well understood benefits of growth and jobs, but also the additional contributions arising from new knowledge, models and techniques for doing business. The benefits of such contributions spread beyond the enterprises themselves. Companies such as SpaceX and Amazon, led by Elon Musk and Jeff Bezos, have created industries around them. In the face of the dislocation and widespread deprivation provoked by the COVID-19 pandemic, the success of such enterprises is more vital still.
The scope for disproportional socioeconomic contributions of cutting-edge tech startups is recognised by some governments who offer a variety of supports to such enterprises
The scope for disproportional socioeconomic contributions of cutting-edge tech startups is recognised by some governments who offer a variety of supports to such enterprises. What Collective Equity Ownership offers is an opportunity for the founders of such companies to help themselves on a pathway to success.
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Patrick Low is a former Chief Economist at the World Trade Organization (WTO) and Adjunct Professor of Economics at the Graduate Institute of International Studies (Geneva) and the University of Hong Kong. Patrick also served as WTO Director-General Mike Moore's Chief of Staff. |
Collective Equity Ownership (CEO) is the provider of an exchange fund in the UK. CEO allows shareholders of venture-backed tech companies in the UK, to pool some of their shares together with shareholders of other companies. In return shareholders can participate in liquidity events of each other's companies on top of their own