The Smart City story has been a topic of daily conversation in the coffee shops of Valletta. Its performance has been analysed and dissected by the ablest minds in our fine capital city, which aches for venture capital based on science like any other capital city in the EU.
When this country was much poorer, it had more than one successful venture capitalist. Cisk furnished loans which could be legitimately defined as seed capital. Valletta banks are no longer led by suitably motivated venture capitalists, although it has many a banker who has ample potential of being such. Independent wealth is a prerequisite in venture capital. Malta's banks have a track record in the venture capital field, even one relating to science-based industry.
This goes by the name of the Malta Development Fund, in which they participated massively and which was extravagantly successful. It is now time for this country's coming budget planners to think hard how Maltese venture capital can be again loaned in Malta. I have personal knowledge that it is being loaned out in Singapore, by express declaration of that city's bankers.
The Malta Development Fund brings to mind Ivan Burridge, the doyen of Malta's stockbrokers who passed away a few days ago. Burridge was a member of our capitalist class which helped me promote the MDF. He put monies in it belonging to the San Tumas Property company. This was the best investment San Tumas ever made, he once told me.
Burridge was aware that however strong the lure of science-based industry, the flywheel of any country's economy always remained the housing sector. This has been demonstrated in the US and the UK by the catastrophic collapse of subprime banking. This was nothing more than the venture capital idea overdone in a ludicrous fashion.
The subprime banking trouble is now looking far less of an unplanned happening than before. Was it engineered to deflate the world economy and consequently stop the escalating price of oil and gold which were strangling the US dollar?
The MDF never functioned satisfactorily in Malta, Citadel insurance being its only major achievement here. UK investments of thousands were turned into millions. One investment goes by the name of the Glasses Company which must be now capitalised at £1 billion. MDF, at Lm3 million, was far too small. This did not justify the Hambros opening of an office in Malta. If a new MDF were to be launched, it would be able to profit from the experience of the old operation. One can sound public opinion for a new Smart City operation. Nothing ventured, nothing gained.
The matter of venture capital is not to be taken lightly. The Financial Times' LEX column last week analysed the UK government's recent decision to invest £150 million in a new venture fund. Smart City sought Arab financial co-operation and it was right to explore that venue. We should know however that the UK has yet to develop a vibrant start-up ecosystem. The US and Israel are the first in the field. Israel has always been Malta's friend. Israelis built the Preluna Hotel - a prime example of venture capital if there ever was one in Malta.
If this country is serious about nurturing a venture capital culture, it should first consult the finest human product of the MDF - Jeremy Hand.
He first came to Malta as a boy holding the slides for an arrogant and able, but ultimately charming, Gilbert Chalk, a London Hambros banker straight out of a Hollywood film. Hand was recently appointed chairman of the British Venture Capital Association. Malta gave him his first venture capital job.
The success of the MDF can be easily repeated. It needs to be repeated. The next few months will be ones of deflation to be followed by a world inflation of possibly dangerous proportions.
In these circumstances, any government can be swept dramatically from power. The unspeakable wrath in the media against UK premier Gordon Brown and the entire British political class is doing that country no good. Let us all do our best to give this country peace and quiet.
The best way to do that is to promote prosperity and the prosperous ideas enjoying a track record in creating it: ideas which produce results.
Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S and P.
johnazzopardivella@hotmail.com