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After an extraordinary 2019 for the financial markets, many global companies had set unrealistic profit targets, with growth that would be hard to sustain.

Let’s not forget that, for the first time in history, the US technology sector recorded market capitalization that exceeded 1 trillion dollars. In such conditions of exacerbated optimism, it’s only natural to expect to see spectacular falls on the international stock exchanges this year. The bar was raised too high in 2019.

• Dow Jones 30 – a historical maximum of 28,500 points

• S&P 500 to 3200 points

• NASDAQ 100 to 9750 points

These were the optimistic figures when 2019 ended. Everyone, including most financial analysts, was expecting 2020 full of new records.

Only this time, the targets couldn’t be reached – the economy, like history, has a tendency to repeat itself. The longest bull market in history (from 2008 until a few days ago) has been ravaged by the Coronavirus pandemic and, as many can state, popped the business bubble in which we used to live.

THE HISTORY OF GLOBAL CRISIS

The history of global crises is spectacular but also cyclical, as in the most recent past we have the great oil crisis in the 70s, the infamous Black Friday of the 80s, a second oil crisis in the early 90s, the dot-com bubble of the 2000s and, more recently, the financial-real estate crisis from 2008.

We can see that roughly every 10 years, the capital markets go through a reestablishment process, resetting their values – an event which we’re in the middle of right now. 

* Since 1945, American blue-chip companies have experienced at least 25 years at an all-time high, 24 years within 10% of an all-time high,  and only 22 years in a declining market (bear market) *

The first signs of weakness started showing up at the end of 2019 – an important factor is one of the stars of the gig economy, WeWork, which was preparing for its primary listing. 

In less than a month, from an alleged market capitalization of about $ 47 billion, the company dropped to less than $ 10 billion, canceled listing plans, fired much of the workforce, and even removed its CEO from the company’s management, being rescued from bankruptcy only by one of the banking groups in the shareholding board. 

In the case of WeWork, the reason for the fall was the circumspection that investors began to have in the quality and stability of the company. But the WeWork case is not unique.

WHAT'S NEXT?

Phase 1 - FEAR

As in 2008, the capital markets and investors initially reacted emotionally, triggering what is called a sell-off panic. Right now, we have a reaction based on instinct, market expectations being that global stock exchanges will reach a general decrease of up to 20%.

After more than a decade of "pampering", a period when money was extremely cheap, friendly lending and market conditions were all favoring growth, the reality is coming down.

Many businesses will have their skills tested, (just as a heavy sea shapes a sailor’s skills, only a real market, built on healthy fundamentals, will train enduring entrepreneurs).

At the moment, the general feeling is one of uncertainty, nobody knowing what to expect, with postponed investments, and expansion and development plans put back in the drawer - all eyes are focused on the state, central banks, and global vectors.

Phase 2 - THE FUNDAMENTALS

After the first wave of decline, we’ll see the markets adapting to new conditions – this being the turning point that can make the difference in a medium to long timeframe between the economies that are recovering - and will even prosper in the post-Coronavirus era - and those that will slow down the economic recovery.

There are two extremely important evaluations:

• Operational evaluation - production and sales figures will be put together (phones sold by Apple, electric cars produced by Tesla, etc.) 
• Financial evaluation - financial reports that measure the returns of market shares, revenues, income, profits

I am afraid that once all the above figures reach the market, a second wave of the crisis will start, the one in which the global stock market decreases will rise by another 25-30%.

Overall, on the 2 stages described above, the world expects impairments of up to 50% (eg. DJIA going below 12,000 points).

Businesses are people-based, and when those people lose their jobs, we will start seeing the real dimensions of the crisis. That's why I always pay attention to the labor market figures (the famous US Jobless Claims report hit a record high last week, with about 3.3 million people going into unemployment in just one week).

Phase 3 - THE RECOVERY

The key movement is for central banks and national authorities to take monetary & fiscal measures, and also strengthen the labor market. Economies that will not adapt their structure to the new global conditions are risking a lot, as the rational sell-off, the one based on structural economic decisions and profitability calculations, has a longer life cycle and a much stronger influence than the one caused by initial panic.

Monetary/fiscal support packages have already been launched by all major economies (in the US alone, the Federal Bank announced a $ 3.3 trillion program to counteract the crisis effects), but it won’t be enough: businesses need to adapt their methods, plan everything out in advance, and invest more to add value to their work.

The global economy will recover, markets will reach historic highs again, and investors will regain their optimism. But before all this happens, a global sync with the new economic conditions is deeply needed.

 

MY BUSINESS PHILOSOPHY

There are 3 extremely important factors that have ruled my business philosophy so far:

• Longevity - I have to build something that will last through it’s added value 

• Liquidity - cash flow is essential; I must maintain a balance between savings and investments

• Legacy – ways of building my business to leave something valuable after me

The same 3 factors mentioned above are the ones that will push some companies to new records and others into bankruptcy.

I am deeply convinced that technology giants like Alphabet, Apple, Amazon, Microsoft, Facebook will recover quickly and hold onto the growing trend because their fundamentals are healthy, they have huge cash reserves and their business plans are built for the long run.

My predictions are that Amazon will be the first company to reach a market capitalization of 2 trillion dollars - the e-Commerce sector is booming right now.

However, others won’t be so lucky. 

I am more optimistic than in 2008 because I appreciate that the common individual’s level of financial education has increased, governments and central banks have much quicker reactions and are prepared to make any effort to minimize the effects of the crisis.

WHAT TO DO?

I want to leave you with a few recommendations on what’s to be done during a bear market:

Don’t panic! - crises aren’t pleasant, but they’re natural and temporary. History tells us that global stock exchanges spend more than two-thirds of the time close to historical highs)

Take care of your portfolio and finances! - we are all interested in discounts. What better time to buy, right? A global crisis is for the stock market what sales are for shops!

Be patient! - rethink your portfolio, lower your expenses, increase your savings and assets and wait for your return

Hunt opportunities! - moments of crisis create huge investment opportunities - be on the lookout and choose the ones that fit your profile

CONCLUSION

Panic is useless; add structure to your thoughts, plan strategically, be aware of the risks and act with caution.

We’re going through a natural phenomenon, don’t lose your cool, make smart investments and you will soon reap the fruits!

You can follow me on Twitter and LinkedIn

If there is someone who hasn’t heard the name Microsoft, then they must have not lived on planet Earth in the last 30-so years. The company has become ubiquitous and provides know-how in many different areas of technology solutions, therefore has now become a sine qua non ingredient in the success of many exciting startups and corporations. None more exciting, of course, than our own.

And we're very excited to say that now Microsoft has heard of the Key Way Group. This is my latest enterprise, which I'm developing as CEO. Key Way Group is an innovative FinTech company in the investments field. Active at a global level, and managing multi-departmental projects, the company needed the perspective that a mix of Microsoft solutions can provide. As such, we built its internal processes around Microsoft 365 and Azure Active Directory. We also benefit from the use of Azure Data Factory, while our different teams can make quick and efficient data-driven decisions through the help of Power BI.

Our setup and integration of Microsoft solutions has been the object of a best practice story published recently on the Microsoft global website.

 

We use a number of Microsoft solutions:

• Microsoft 365 - the cloud-based Office suite
• Azure Active Directory - the cloud-based identity and access management resource
• Azure Data Factory - the cloud-based enterprise data integration service
• Power BI - the business analytics service
• Microsoft Planner - the planning app
• Microsoft Teams - the communication platform
• Microsoft Flow - the automated workflow creator
• Power Apps - the app creator

Here’s how it works for us:

The integration of Microsoft solutions has allowed us to immediately streamline several of our processes and save an enormous amount of time at both the planning and the execution stages of several projects. For example, we now use Microsoft Teams for all internal communications, and Microsoft Planner to set up projects and assign responsibilities around our global teams. This is further helped by the use of single-sign-on, which allows every new employee onboarded to essentially hit the ground running. 

The tangible results? Here’s an example: a project that would take over one week and several meetings to set up we have now taken down to four hours and one meeting. Imagine all the business- and personal-orientated things you can achieve by finding a better use for that time.

We’re now at 1,500 successful Microsoft Flow run per month, which we use, together with Power Apps, to streamline and simplify all processes. We collect data that we can then structure with Azure Data Factory, use Power BI to visualise the results and can then make data-driven decisions on the go. 

Next steps? Client management (with Dynamics 365 CRM) and machine learning. We envision a future where automation allows us to use our time for the big things: strategy, networking, building new businesses, all while ensuring wellbeing for ourselves and our teams.

It used to be the case that one would have some money, and they would go to an advisor who would then, in turn, research different markets and make a recommendation. That person would charge their client a fee for managing the money and a success fee should the placement of funds generate a profit. While the former would vary from, generally, 0.5% to 2% (with the rule being that you pay less when you place more money), the latter could go to up to 20% of your profits. And while, in the old days, one would pay for the work the advisor does behind the scenes to research and get top-notch information in a market, the alternatives nowadays no longer justify paying such high prices to place one’s money. The advisor is slowly being replaced by a user’s own research, online investment management companies, or even Artificial Intelligence.

The price for investing your money has also gone dramatically down, with the rise of more and more digital companies using advanced software to analyse data and generate attractive portfolios. 

Stock market investments are also an attractive alternative. However, without experience in the field or a fee-hungry advisor, this can prove to be a problematic choice. The issue is two-fold: on the one side, picking the stocks to “bet” on can be extremely difficult, as it takes serious market research to identify the potential long-term champions; and then, of course, there is the approach that some companies might skyrocket when they are launching new products or tapping into a new market. However, this comes with significant risk, as overnight success is rare, and massive failures have been generating headlines since before we can remember.

One could think that actively investing one's own money is a bold move, but the old-fashioned “keep your money in the bank” option is now a money-losing option.

It’s been 12 years since the modern financial sector started to show its weaknesses, and 11 since the sequence of events that started with Lehman Brothers collapsing nearly destroyed the world economy. The new reality is one of lack of trust in the banks from the younger generation, and of negative interest rates. Yes, in many countries it actually costs you money to have banks take your placements. 

As such, it is no wonder that it actually makes sense to find alternative ways to protect and expand one’s wealth. However, there is one significant risk that one should always consider: while not being tied to big institutions such as banks is what has made these alternatives attractive to younger generations in the first place, the downside to that is that, if anything were to happen to them, they will not have an entity behind them to bail them out, which poses an increased risk to customers. As such, research and caution are highly desirable.

Over the last 2-3 years, the shared economy model, championed by the likes of Uber, has been adopted in more and more industries, including the financial one.

More and more platforms are offering the option for people to create portfolios using small amounts of money, relying on the power of the crowd to create strength when put together.

So, here are a few of the options that are out there, and a bit on how they work:

 

• FinTech is always an exciting field. Have a look at players such as Robinhood and Sofi.com, which offer lending, mortgages and investment to categories of people who would not always qualify for support from a traditional bank.
• Peer-to-peer lending (P2P) uses marketplaces or platforms to match borrowers (people) lenders (also people) - see Mintos, Grupeer, Peerberry, Lendermarket. Those interested can “buy” a share of a loan on the platforms.
• Startups: new and exciting startups are in the news almost daily. Two of the ones that have piqued my interest are forgeglobal.com, seedrs.com. If you have a more serious amount of money to invest, getting “in on the action” at ground level can be incredibly rewarding, both in terms of supporting an entrepreneur who’s just starting out, as well as potentially getting a significant return for your investment. But, as with everything, make sure you do your due diligence and ample research in the space you are about to invest in.
• If you want to go industry-specific, there are now marketplaces for investments in real estate. Don’t have enough money to buy and flip a piece of real estate? That’s okay. You can pair up with other investors, crowdfund and get involved that way. Crowd Estate, for example, promises 17% annual returns. 

Please note that I am an investor in some of the companies I have mentioned in this article. This article is not meant to provide investment advice, it is merely an investor’s perspective on alternative investments available. Capital at risk.

 

 

Over the last decade, I've built my professional life as an investor, focusing on 3 key areas: financial services, real estate and tech startups. I’ve participated in the setup and development of two major fintechs, and after those two successful exits I’m now directing my resources into building a new enterprise in this area – the Key Way group. 

I've started, participated in and developed companies in Romania, as well as Bulgaria, Hungary, Czech Republic, Germany, the UK, Mexico, Dubai and South East Asia. I'm constantly looking for new segments, new markets and new opportunities, and therefore I interact regularly with the regulator institutions and official agencies in various countries and  markets. 

The most recent example is the GCC area (Gulf Cooperation Council - Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, and Saudi Arabia).  I  started to research opportunities in that area at the end of 2018 -  more specifically, the United Arab Emirates, which are establishing themselves as one of the most dynamic markets in the world.

The whole experience of working with the official institutions there was a great example of how to attract and encourage investors! ADGM, the Abu Dhabi Global Markets regulator, was established quite recently and I was absolutely impressed with their professionalism.

To start off, I researched the local market regulators online. The information was clear and easily available: I contacted them online, via their website and LinkedIn accounts. They responded promptly, and in only a few days, we set up a series of meetings with the financial markets regulators in both Abu Dhabi and Dubai!

The ADGM gave me full support and very clear, detailed information on what and how I need to do to obtain a trading licence in financial services in the UAE. I met with representatives from both the ADGM registration department (where all new businesses have to register before they acquire a licence for online trading) and from the FSRA (Financial Services Regulatory Authority).

They were very clear on the procedure, steps to follow and criteria we need to meet, which is a fantastic help for an investor on a new, highly regulated financial market.

In a few days I started the onboarding procedure - everything happens online, everything is digital, everything is set up for maximum ease and transparency.

They set investors up for success, but they make sure they vet them thoroughly as well! A "user friendly" approach does not mean lower standards, quite the opposite - they made sure I meet all commercial and business criteria, they assessed my financial, capital and business status and previous experience, and checked references from markets in which I operated previously. 

We went through a process of  very rigorous assessment and due diligence, and several meetings where I detailed our business plan and long term vision. Professional but friendly - you feel welcome, encouraged and supported as an investor. 

Furthermore, their “enthusiasm”, or appetite for new business, equaled mine! They’re happy to welcome new businesses, they work hard to attract them and to set them up for success. I was very impressed that they genuinely appreciate the fact that investors, however big or small, choose their market to set up a company. 

I’d love to see this same level of energy, hard work and appetite for business in my home country, Romania.

While other jurisdictions welcome investors and work hard to create the framework for development and success, I often feel that the Romanian regulators, for financial markets and not only, start from a default position of suspicion or, at best, indifference. Investors are regarded with thinly veiled (if at all veiled!) suspicion and distrust and sometimes downright hostility, you almost feel guilty or embarrassed to be successful financially. 

I hope to see this mentality change in Romania, because I, as well as most Romanian entrepreneurs I know, really want to make our country a top choice for investments,  not just in outsourcing and services. We want to make Romania known for its know how and creativity.

I think Romanian regulators  should remember that their whole purpose of existence is to enable business, not hinder it. And as investors, especially once we see best practices from other jurisdictions, we need to remind them of this reality.

 

 

According to a report by McKinsey, globally, over 12,000 Fintech startups are competing with banks for up to $1 trillion in profits of which up to 60% are at risk, in the following five retail businesses: consumer finance, mortgages, small-business lending, retail payments, and wealth management. As an investor, I’m focused on tech, fintech and real estate startups. These areas have seen a huge wave of disruption, transformation, and evolution, and the tide is still high. My own home country, Romania, is a hotspot for tech and fintech innovation, and I keep a close eye on what’s going on in this market. Though it’s still in an early stage compared to nearby countries such as Poland, the Czech Republic or Hungary, the Romanian fintech industry is poised to take off as demand for fintech solutions and digital banking increases. Here are a few exciting startups that caught my eye recently. Some of them are in startup accelerators, some of them have already gone through various rounds of investment, but all of them have one thing in common: they provide innovative, agile solutions for needs and issues that traditional companies have ignored for too long.

1. Fintech OS - B2B services and TaaS enabling automation for financial services. The fact that this is a Romanian company that has achieved such rapid growth proves that (to paraphrase) geography is not destiny. Their experience is inspiring.
2. Fagura - P2P Lending. Although Fagura is actually coming from Moldova, they are present in Romania. This is a friendly peer-to-peer platform, modelled on UK similar companies. I think it has good potential for success.
3. Smart dreamers – a platform for recruitment marketing automation, they’re already in the UK, the US, and Singapore, with enterprise-ready software that helps companies reach and engage with potential candidates online.
4. Medjobs – this is a platform for recruitment and jobs in the healthcare sector. I like their focus and the fact that they’ve honed in on this very specific opportunity, as it is a very dynamic niche and was generally very fragmented.
5. Typing DNA – such an original idea! They’ve developed an app for typing biometrics authentication – recognizing people from the way they type, this is an AI-based solution for risk-based authentication and fraud prevention.
6. Competitors.app – a very useful and comprehensive app for monitoring competitors’ marketing activity across online channels.
7. Finqware – this was badly needed in Romania, since most companies and people have several bank accounts and they need a centralized dashboard for their finances.
8. Keez – A user-friendly alternative to accounting, payroll, and ERP software.
9. Teleport HQ - An AI powered platform and suite of open source tools which simplifies UI building and adds realtime optimisations by analysing user's intentions.
10. Cyscale - a Multi-Cloud Platform, for all major providers like Amazon, Google and Microsoft, which handles Cloud Native Security, Threat management and Secure Cloud Design.

Do you know of any other Romanian Startups that are worth mentioning here? Leave a comment - or, if you are an entrepreneur launching your startup, you can always contact me and let's see if there's an opportunity of working together!  

As an investor, I am focused on 3 key areas: financial services, real estate and tech startups. This is my bread and butter, this is where I’ve built my expertise and strengths in over a decade. I’ve participated in the setup and development of two major fintechs, and after those two successful exits I’m now directing my resources into building a new enterprise in this area – the Key Way group. I am constantly looking for new segments and new markets and at the end of 2018 I started to research opportunities in the GCC area (Gulf Cooperation Council - Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, and Saudi Arabia).  More specifically, the United Arab Emirates, which are establishing themselves as one of the most dynamic markets in the world. A short few months later, I’m very pleased to announce that I was granted in principle approval for the first ever license for online trading for retail clients, on the GCC market! We’ll be opening there in the first quarter of 2020! How did this all happen and how did this happen so fast? Well, I started with the famous “first step” of any thousand-mile journey: research! I did my homework. Once I set my focus on the UAE, I researched the market regulators in the area and contacted them online via their websites or LinkedIn accounts. In only a few days, we set up a series of meetings with the financial markets regulators in both Abu Dhabi and Dubai! ADGM, the Abu Dhabi Global Markets regulator, was established quite recently and I was absolutely impressed with their professionalism. They gave me full support and very clear, detailed information on what and how I need to do to start trading in the UAE. I met with representatives from both the ADGM registration department (where all new businesses have to register before they start trading) and from the FSRA (Financial Services Regulatory Authority). They were very clear on the procedure, steps to follow and criteria we need to meet, which is a fantastic help for an investor on a new, highly regulated financial market. Furthermore, their “enthusiasm”, or appetite for new business, equaled mine! They’re happy to welcome new businesses, they work hard to attract them and to set them up for success. I was very impressed that they genuinely appreciate the fact that investors, however big or small, choose their market to set up a company. In a few days I started the onboarding procedure - everything happens online, everything is digital, everything is set up for maximum ease and transparency. After about a year of rigorous assessment and due diligence, several meetings where I detailed our business plan and longterm vision, and a minimum capital of USD 2 million, the ADGM gave me the first ever financial services retail license! They hadn’t even had this type of license before, but they were open to new ideas, they listened to our plans and strategy and they were willing to make things possible! Now as a footnote, I’d love to see this same level of energy, hard work and appetite for business in my home country, Romania. While other jurisdictions welcome investors and work hard to create the framework for development and success, I often feel that the Romanian regulators, for financial markets and not only, start from a default position of suspicion or, at best, indifference. I think they should remember that their whole purpose of existence is to enable business, not hinder it. And as investors, especially once we see best practices from other jurisdictions, we need to remind them of this reality.