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Every month, I receive dozens of financing questions or requests that are more or less detailed. Almost all have something interesting in them. However, as my time and financial resources are limited, the ideas that I plan to use are only a few every year. I am not the only professional investor who has in mind a set of criteria according to which we validate an idea. Following is a list proposed by me. When making it, I have tried to be as objective as possible.

What?

• Start off with the essence, define the idea in a sentence. Do you know what USP or Unique Selling Proposition is? It is a concept from advertising and refers to the sole benefit proposed by your product. Maybe, you know that I have invested in Vector Watch and together with the other investors I have enjoyed its success, when it was sold to the famous Fitbit. From the very beginning, Vector Watch is a smartwatch different from the rest, whose battery lasts for one month. This is the starting idea and it is clear, even though there are several other aspects to add afterwards.
• What is your business plan? How do you monetize? This article does not aim at giving you tips on how to make a business plan. What you should note, however, is that an excellent idea, without the steps leading to it putting into practice is as good as null. Gutenberg invented the printing press by putting together already existing innovations. The printing press was taken over from the vineyard people, whereas the print with block molds had already existed in China for over 1000 years. And still, he revolutionized the world as he was intelligent enough to put all these together and turn them into a functional technology.
• What is your market? Good start-ups mean creative, or even disruptive ideas, but they do not work by themselves. Vector Watch was an innovation on the smartwatch market and Gutenberg’s printing press replaced the medieval manuscripts, so they turned up in an existing background. Show your financer in what area of products or services you fit. They will all the more appreciate your innovation.
• Growth opportunities/strategies/exit. If you don’t know yet that angel investors provide financing in order to get benefits at a later date, you should read business literature seriously. Your business may turn, logically, into a listed company and it may skyrocket by the subsequent contribution of an investment fund or it may be sold to a market giant. This evolution is also dictated by its nature and also by your personal preferences. Where do you see yourself in 10-year time? As CEO and minority shareholder of the company created by you, as Steve Jobs? Or maybe developing a quite different business? Relying on your exit money to invest in other people’s businesses, therefore acting as an angel yourself? You should answer all these questions and then send your answers also to possible investors.

How?

• Clearly state to your investor what/how much you. Of course, the answer to the question “How much?” is the most important. Shyness has no place here, the well-grounded figures are strictly necessary, even if you won’t start with them, but with the idea. However, the financing pace/calendar is also important: if need be, a professional investor may rely not only on their money, but they will also know how to attract other resources.
• Do your homework. It’s not necessary to suffocate with data the potential financers from the very beginning. However, if you have manage to arise interest by the initial presentation, you must be ready to answer any question. If you don’t have the answer in your mind, you can resort to notes, telephone, laptop. If you nevertheless happen to not know the answer, don’t try to mislead your interlocutor with phrases such as “We’ll see”. Not knowing a minor aspect is pardonable, but superficiality isn’t.
• You will always need an attractive Powerpoint presentation, even if it is an informal pitch meant to arise interest. Assuming that you have managed to arise interest from the very beginning, the presentation is the second stage. However, be careful, as there are two types of presentations: those meant to be designed, which come as a completion of speech discourse and the self-standing ones, which are meant to be sent by e-mail. Ideally, you should prepare both versions.

Where?

• Personal recommendations. These are certainly the most effective, although in Romania we tend to pay too much heed to them. Two things are worth mentioning here. Firstly, it is most serious if you disappoint the author of the recommendations. If you do that, no one will take it out on you directly, but your failure risks to be mentioned in the private talks between people who matter. If, on the other hand, you manage to make your potential partner enthusiastic about your project, it is a success: your personal recommendations might turn into endorsement. If you can turn a financer or a famous partner into an endorser, that is quite an achievement for you.
• Industry events. The same as, in our country, personal recommendations are overrated, events are underrated. You have often heard that, at specialized conferences, it is the networking that matters, not the presentations. If you invest a few thousand euros in the participation in an event of the Mobile World Congress class, you will head home with a few dozen of business cards. If you manage these contacts well, some of them might become your business partners or financers. The thing is that events are very useful for a first contact, which you then need to cultivate by other means.
• Online, in 1:1 conversations. By “1:1 conversations” I mean whatever can be conveyed via social networks or e-mail. LinkedIn is very appropriate for this purpose, as long as you know whom you are addressing and what you are asking. Don’t be shy, but avoid suffocating your potential partners with generalities, standard messages, so called spam. Of course, those who make their e-mail addresses public do that because they are open to proposals. If the e-mail is written well, it will receive an answer, especially from the potential foreign partners – even if it is a negative one.
• Online, by public financing requests, such as Kickstarter or Patreon. It may seem that the crowdfunding platforms are meant for charity or cultural projects, financed with little by many, but this is not exactly so. A successful campaign on a platform of this kind is a good argument for a more significant investor. Even more, even as part of these campaigns, sometimes there is significant financing from individual investors, besides the “little” financing from “many”.

When?

The question does not refer to the time of day or the year when you make the proposal, but to the degree of maturity of your idea. Writing this article, I have started from the idea that you have incorporated a startup, in other words, you have the capacity of founder and entrepreneur. Well, in order to attract an investment, you must have already proven your reliability to a certain extent. This means a functional business, even if of a small scope and without profit. Professional investors are attracted by more than plans on paper. As long as they will entrust you with their money, they expect guarantees that you will know what to do with it and the safest guarantee is that you have already achieved something with your own forces.

My first investment in real estate dates back to 2012. I then purchased 50% of a building located on Bulevardul Buzesti in Bucharest with the intention of reselling at a higher price after two or three years. Maybe because I have entered this market after the boom and recession in Romania, to me real estate is no easy business where you can strike gold immediately. However, that is exactly why the satisfaction of making money is far greater. I shall give an example so that you may understand how the market works. I have recently sold a 3000-sq.m. asset, with a Return on Investment of 95%. How did I make that profit? It was a so called distressed asset. It carried debts and it lacked tenants. I made it work through reorganization, which include an aggressive commission for the agents who brought me tenants. The buyer is a well-known investment fund.

1. Never buy a turn-key building

It might seem cool to buy an attractive property, pay for it and resell it in a short while for good profit. However, the real estate business does not work like that. At least not after 2012, when I entered this market. My guideline is never buy a property that looks great from the start. In other words, a beautiful office building, well finished and full of tenants is not the most attractive investment, because you will pay somebody else’s profit - or the work done by that business, instead of booking earnings in your own P&L. On the contrary, if your intuition tells you that a non-renovated and unoccupied Cinderella will be an attractive princess in one or two years, then you have what it takes for real estate. However, there is something else you will need: work.

2. How to make profit

It is just work that makes business something else and not what the communists said business was: some sort of sweet idleness and exploitation. If you buy a property in a poor condition, you will have to invest in it. It took me two years to bring that 3000-sq.m. building where I wanted it to be: housing quality tenants, good internal organization and cost effectiveness. It is only then that the property becomes attractive to, for instance, an investment fund.

3. If you want to be an investor, buy with the bank

I cannot disclose the amounts, but for the property I am talking about the financing was only 35% from own sources. The rest of 65% I got from a bank. If you are worried about the interests, you should know that in such a business they are covered by the profit. Keep your eyes on the costs, as they say, and you will see that it adds up. It is true, in order to obtain loans, you need a track record of professional investor. You can’t simply walk into a bank without collateral. The amounts you need have at least six figures. Also, improving a property requires specialized teams, from builders to lawyers. That is why real estate is a self-standing business.

3. Can you buy just any wreck? No. Then, what really matters? Location, Location, Location!

This is how the real estate developers in the USA call it. Anyhow, the place where a building is located is the one that makes the difference between a wreck pure and simple and an asset with amazing prospects. Any city has so called top locations, which will remain as such, simply because you can no longer build on them. If you know how to spot them, all you need is the money to start off, which is, as I said, quite a lot in real estate.

4. Conclusion

From my point of view, real estate is a business involving a lower risk than others, but it requires time and energy. Maybe I am lucky enough to have become a businessman after the real estate boom in Romania. However, this is exactly why I like to build on long term and it seems to me I still have a lot to learn.

I happen to travel a lot and I mainly do it for business. As this is a business blog, I assume you might be interested in tips on the economic environment of the places I reach. For starters, I believe that Dubai is not only a tourist destination, but also a business one. Here are at least three reasons for this:

1. Legally: you can do business without any local partners

They say that anywhere you go to do business in a foreign country you need a local partner with connections and understanding of the market specificity. In the Arab countries, this not only goes without saying, but it has become law, as companies cannot be incorporated unless in partnership with citizens of those countries, which is not quite desirable. In Dubai, however – and in the United Arab Emirates, in general – this obligation has been recently cancelled. It has ceased to exist in the case of the companies having their registered offices in the so called free zones. If you are interested, you may see a list here. The benefit of the so called free zones is that they include business facilities especially designed for the foreign investors, from the ease of incorporating a company to the benefits regarding the recruitment of local personnel, the legal services and others. English and general business knowledge will do.

2. Financially: the taxes are low

This is a well-known fact: in the Emirates, taxes mean the 5% income tax and the 0% tax on dividends. It is true that they are considering introducing a tax on dividends, but for the time being taxation is low.

3. Operationally: the real estate market is dramatically collapsing, but…

If you are interested in the real estate business, you might have heard that the real estate market in Dubai is collapsing. This is somehow true, but lately the collapse has stagnated. The crisis is less and less severe, which suggests a future recovery might be underway. In other words, from my point of view and from the point of view of others, such crisis is a good opportunity for purchases. That is to say that the real estate market in Dubai looks like the Romanian one during 2010-2011, the period when we were all recovering from the real estate boom in the first part of the years ‘00. There are reasons to buy, as we have pointed out and, if this is so, you should wait until such time as the assets recover. An interesting feature of Dubai is that, as a rule, tenancies are signed for one year and the rent is paid in advance. In other words, if you have invested in a building, you may now proceed to make it cost effective. A building with firm tenancy agreements is worth by far more than an empty building. From my point of view, these three are reasons enough to consider Dubai very attractive. To start with, an analysis of the real estate market in Dubai can be read here in English.

The GDPR provisions, the General Data Protection Regulation regarding the personal data of the EU internet users came into effect on 25 May 2018. The main changes have to do with the access to and transfer of personal data, which will be more transparent, if the users so require. We have approached in detail what these provisions involve in the previously published article here and here.  As the exhaustive implementation of the new norms requires a complex system of unifying the internal applications and a well-defined strategy, many companies, both in Romania and in other countries, are still conducting GDPR campaigns. As all of us have probably noticed, the first step has been that all the institutions and companies have informed their clients in respect of the GDPR compliance, making the necessary changes to the legal documents, such as the confidentiality policy. The National Authority for the Supervision of Personal Data Processing (ANSPDCP) is in charge of the implementation of the new provisions. Its site, available at dataprotection.ro, includes a lot of information and normative acts regarding GDPR. Apart from that, following are a few efficient strategies that a lot of enterprises have already applied, both in Romania and in the EU member countries or in the USA.   

1. Resorting to a Specialized Legal Organization

Although the provisions of GDPR are effective and applicable to all companies, it is possible that a certain company should be subject to stricter rules or to a set of supplementary rules, according to the number of personal data processed or to the business profile. For this very reason, it is of essence that such companies should resort to a specialized firm and, in most cases, appoint an internal expert to supervise these processes. Currently, many companies in Romania have recruited or started to recruit for a position recently created on the employers market, namely Data Protection Officer.

2. Transparent Communication with the Employees

It is not only the legal or the marketing department that must be up to date with all the provisions of GDPR, but, in principle, all the other departments, in order to ensure a good operation of an inter-functional and agile team. In order for the employees to clearly understand the implications of these new regulations, it is recommended that these provisions should be made known and also that the information should be verified through inter-active activities or tests. As this European Directive introduces many new regulations, each company should establish a system under which the employees constantly revise the information acquired.

3. Correct Organization of Data

According to the new provisions, certain personal data (for instance information regarding religious faith, sexual orientation or biometric information) have a special classification and require a matching processing phase. Therefore, it is important that each company should organize the data of their users according to the purpose and sensitivity of such data. If the business specializes in data processing, then it would be advisable to appoint officers to separately supervise the existent data. Although this might seem a discouraging practice, as it requires a long time, in the long run this approach will allow a greater flexibility in processing and accessing data. The second part of the article is available here.

This is the second part of my presentation of the GDPR (General Data Protection Regulation), adopted by the EU on 24 May 2018. You can read the first part here. No matter the size of the companies, small, medium or big, the new provisions shall apply to all the institutions and companies that process personal information of the consumers in the EU. According to a survey conducted by MKOR Consulting, more than one third of the Romanian companies were not familiar with GDPR at the beginning of the year. On the other hand, however, almost two thirds of the Romanian companies had already updated their internal processes or were in the process of updating with GDPR before the deadline. According to the size of the company, the budgets allocated to the implementation of the new provisions vary from EUR 1,000 to EUR 10,000. According to the new GDPR provisions, many marketing strategies, such as the use of cookies (codified texts withholding the users’ preferences for a certain website) or pre-checked cases allowing the receipt of promotional materials will have to be adapted to observe the privacy and confidentiality of the consumers. Another major implication is that enterprises will have to use SSL certificates (protocols encrypting the exchange of data via the Internet) to increase consumer security in the online environment when they enter personal information on the company website. Also, certain aggressive methods of direct marketing, such as the abusive sending of newsletters or text messages without the users’ prior consent, may generate legal problems to the company, besides affecting the brand image. Therefore, personalized adverts will become less accessible marketing actions given the increase in the budget necessary to their implementation; however, on the other hand, the quality of the personalized messages will considerably increase and will become a premium category for many traders. Increasing data security will also require renewing or changing the data storage infrastructure, which will lead to increasing user costs. The relation between marketing and data security will substantially determine the evolution of the budgets and the traders will have to come up with innovative ideas of promotion and to adapt to the new requirements.

What Needs to Be Done?

Of course, these provisions have crucial implications to Romanian companies, especially startups, which, the same as their EU counterparts, are not fully prepared to get in line with GDPR. Although this new law, which is one of the most important decisions by the European Parliament over the last 20 years, does not stand for a radical change in respect of consumer protection, fact is that its implementation will require many resources, both financial and human.

GDPR - General Data Protection Regulation – is an initiative proposed by the EU in 2012 to replace the 1995 Data Protection Directive, that came into effect on 25 May 2018. These new regulations reflect the need for protection in respect of the personal data of the EU individuals, against the background of skyrocketing growth of the digital technology consumption. The events such as the 2015 viral campaigns or, more recently, the scandals involving Facebook have created an opinion trend in favor of this kind of regulations.   How can Romanian companies get in line with these new GDPR regulations? Firstly, it is important to understand clearly what these new laws involve, as they will affect not only the businesses in the European Union, but also the ones outside it.

Brief Description

In order to facilitate a detailed explanation of these provisions, we’ll refer to terms such as:

• Personal Data - include, without limitation, confidential and personal information, such as first names/last names, physical or email addresses, identification documents, payment means, localization data, political opinions, religious or philosophical beliefs or data related to the physical looks of a person.
• Data Processing – includes, without limitation, collection, storage, consulting, changing, using or sending, as well as deletion and destruction of the personal data mentioned above.
• Data Encryption – Represents the process of securing the sending of confidential information between institutions or companies and citizens, using advanced encryption technologies (mathematical algorithms).

The GDPR initiative is meant to offer increased transparency and security in the process of data processing and encryption for the EU citizens in the online environment. The regulations require the companies that provide services to individuals in the European Union to inform the consumers in respect of the personal data processing methods and the purpose for which such data will be used. At the same time, this initiative brings about value and credibility to a brand, considering the extent to which the present day consumer appreciates the confidentiality of its actions in the online environment. Very many big companies, even some startups, had complied with these regulations long before they became effective. Nowadays, however, the EU will make sure that all the companies will implement, in a transparent manner and in full, these provisions, which will improve the relations between consumers and suppliers. We all know Apple’s Safari 10, the new version of web navigator, was a big success in 2017. It offers the possibility of blocking the unwanted personal data monitoring and also other facilities as the automatic starting of the video content on the page, which may be classified as aggressive marketing.

The New Provisions and Their Importance

The new provisions should not alarm any operator (private legal entity), as they have been prepared not only to the benefit of the users, but to the benefit of companies or other organizations. The provisions have been developed based on Directive 95/46/EC, which was abrogated once the new GDPR has come into effect. It’s true that these provisions will substantially affect the marketing and operational strategies of all. Following is a summary of the provisions:

• Any entity that processes the consumer data in the EU, including third parties, may be liable to prosecution if these provisions are infringed.
• When an individual does not want their data to be processed by an operator (company/institute), the information must be destroyed, on condition that there are no reasonable grounds to keep it.
• If they process on a wide scale confidential information for a big number of consumers, the operators are obligated to designate an expert in personal data management (small and medium size companies are exempted from these provisions if the data processing is not an essential part of the their business).
• The operators are obligated to report to the national supervisory authorities any serious violation of these new regulations immediately.
• Parental consent is necessary for the children under a certain age to be able to use social networks (the age criterion varies from 13 to 16 years, according to the specific laws of each country).
• Individuals are entitled to the portability of their data, which allows for the easy and convenient transfer of their personal information when they change services between suppliers.

Of course, the law provides for more than just that and any company dealing with businesses in the tech-online class should seek for the advice of a specialized law firm. To many companies that have already developed online marketing strategies in keeping with the old regulations, the new law does not necessarily bring about major unforeseen aspects. You can find some considerations on the impact GDPR will have on Romanian companies here.