INTERVIEW: Fintech as a solution to the world’s biggest crisis

INTERVIEW: Fintech as a solution to the world’s biggest crisis
Entrepreneur, angel investor and Dragons Den star Baybars Altuntaş.
By Clare Nuttall in Bucharest February 6, 2018

How can new technologies help with arguably the biggest social crisis of our time? Entrepreneur, “dragon” — he starred on the Turkish version of “Dragon’s Den” — and angel investor Baybars Altuntaş has some answers. He believes that mobile technology and financial technology (fintech) can be harnessed to help refugees and migrants establish themselves in new countries, send money home to their families, and even go on to establish successful businesses. 

This is certainly a burning issue in Altuntaş’ home country Turkey, which currently hosts more than 3.7mn refugees, more than any other country in the world. This followed the exodus of millions of Syrians escaping the war in their country to Turkey, though as Altuntaş points out, migration is a global issue — “every country in the world has a refugee economy”, he stresses. 

The number of international migrants worldwide has increased dramatically in the last couple of years to reach 258mn in 2017, and included 25.9mn refugees and asylum seekers, according to UN data. 

Given the sheer scale of the phenomenon, it’s perhaps not surprising that Altuntaş picks this theme when asked which technologies he sees as having promise for the future in an interview with bne IntelliNews. Bringing together fintech and mobile technology could help solve some of the most pressing problems faced by refugees who don't have the documents they need to open bank accounts in their new countries. This means they face prohibitively expensive fees to send and receive money. 

“The big issue here is how we can benefit from fintech, how to convert mobile phones into banks to make it possible for refugees to send and receive money at minimal costs,” he says. The question will be discussed in depth at the upcoming annual congress of the World Business Angel Investors Forum (WBAF), an organisation chaired by Altuntaş. The Fintech Summit during the congress will focus on how to deal with issues of financial inclusion and ways to democratise access to finance. 

Enabling refugees and migrants to access banking services at a reasonable cost will help them to establish themselves in their new country, and therefore have implications beyond their communities in the longer-term. 

“For entrepreneurial stories to start, you have to take a risk, and refugees can do this more easily than others,” Altuntaş tells bne IntelliNews. “Their [host] economies should be aware they don’t have so much to lose so they can take more risks than other people — and go on to create more jobs for their economies.” He gives the example of the mass migration of Turkish Gastarbeiter to Germany some 40 years ago. “Today second generation Turks are now running a €10bn economy. They created jobs not only for Turks but also for Germans.” 

High-speed career 

Altuntaş himself founded his first business when he was still a university student, spotting a niche in the market to train would-be flight attendants and secure jobs with airlines for the course graduates. By the end of the year, he was being picked up from his dorm in a chauffeur-driven BMW — an abrupt turnaround in fortunes that later inspired the title of his bestselling autobiography “Off the Bus, Into a Supercar”. 

In 2010 when he was already one of Turkey’s most successful entrepreneurs, Altuntaş really shot into the limelight both at home and internationally after his audience with the then US president Barack Obama; he was the only entrepreneurship guru to have a personal meeting with the president at the Presidential Summit on Entrepreneurship.

This was another turning point for Altuntaş, as it led to the invitation to join the Turkish version of “Dragon’s Den”, and to a new role as an angel investor. As a “dragon”, Altuntaş started receiving hundreds of emails from entrepreneurs every day, and ended up investing his personal wealth in early stage companies.

This experience revealed the importance of angel investors for startups — not just as a source of finance but for know how and contacts as well — and he has became an activist and spokesperson for the angel investment community in Turkey and internationally. In addition to chairing WBAF, he founded and heads Links Angel BAN partners, Turkey’s largest consulting chain for entrepreneurs and companies, and is president of the Business Angels Association of Turkey (TBAA) and vice president of the European Trade Association for Business Angels, Seed Funds, and other Early Stage Market Players (EBAN). 

Globally angel investment has been growing; according to EBAN’s latest data €6.7bn was invested by 320,000 angel investors in Europe in 2016. Together with the $26bn invested in the US, this contributed to a global market size of early stage equity markets for startups of $50bn. 

Still, there is more to be done, believes Altuntaş. He points out that connecting angel investors to investors further along the chain such as venture capital and private equity funds, and government funding agencies, is just as vital as connecting entrepreneurs to potential sources of finance. 

“Access to finance is a topic for startups and entrepreneurs, but as a matter of fact access to finance is also an important issue for angel investors,” he says, explaining that entrepreneurs typically need a second round of funding within 24 months of their initial angel investment, and it’s usually up to their angel backers to help find it. Connecting angel investors to other financiers will be one of the main topics at the WBAF congress this year. “The goal of the event is to ease access to finance for angel investors and startups.” 

Another major issue on the agenda is the role of governments and public institutions in helping startups. 

“Converting public money to smart money in cooperation with angel investors is the main message we are going to convey. While public institutions generally enjoy donating finance to entrepreneurs and startups, they don’t always do this in a logical way,” argues Altuntaş. “Entrepreneurs in the 21st century need more than just finance.” He believes that by working with angel investors, governments can use their know-how and network free of charge, while angel investors with a knowledge of the particular technology can act as a “translator” between officials and entrepreneurs. 

The importance of the support given by angels — typically successful entrepreneurs now investing their own money in startups — in bridging the funding gap for early stage companies is already much better understood by governments than it used to be. Turkey, for example, allows angels to deduct 75% percent of their investments from their income tax. 

However, governments could still be better organised when it comes to helping startups, Altuntaş believes. He gives the example of Turkey, where there are no less than four state institutions supporting SMEs and entrepreneurs. “Government institutions should clarify which profile [of entrepreneur] they are addressing, and whether they want to support entrepreneurs directly or support the supporters of entrepreneurs,” he recommends. 

Taking stock

This is not to say there hasn’t been a lot of progress in the area of early stage financing. “A few years ago you couldn't find even one stock exchange in the world opening its doors to early stage entrepreneurs,” Altuntaş says. Now, he points to the change in the approach of stock exchanges in recent years, with several major exchanges including the London Stock Exchange (LSE) now working to include startups in search of early stage equity investment.

The Istanbul Stock Exchange too is trying to find a way to include more startups and scale-ups. Not only that, but Altuntas believes the exchange has the potential to serve as a hub for growth finance for Southeast Europe, a region he knows well thanks to his role as World Entrepreneurship Forum ambassador to Turkey and the Balkan countries. 

The region as a whole has a population of 60mn spread across 11 countries, compared to 80mn in Turkey alone, and Altuntas describes it as “very dynamic but a little bit financially lacking”. It may be very difficult for a company from Macedonia or Bulgaria to go to London to raise funds, but more practical to fly from Skopje or Sofia to Istanbul, he says. Having visited every country in Southeast Europe, he knows from experience that to fly from Istanbul to anywhere in the region takes 1.5 hours or under, compared to two hours from Istanbul to eastern Turkey — a short enough journey to make connecting countries from the region with Turkey as the financial centre a logical move. 

“When you bring [the populations of Turkey and Southeast Europe] together it makes 140mn, and the biggest stock exchange of the region is in Istanbul, so maybe it would be good to focus on how startups from the Balkans region can benefit more from the Istanbul stock exchange.”