Management Consultant and Business Angel for Startups
A focus on startups world with a management consultant and business angel
An interview for startup founders with an expert of startups looking them from different perspectives: as investor but also as management consultant.
Let’s meet Fabio Fanecco, management consultant and business angel.
Interview with Fabio Fanecco, management consultant and business angel, Board Member of IBAN, Mentor of Impact Hub Milano and Startupbootcamp, Member of the Startup and Innovative Industries Committee of FOIM, Co-Founder of LogicBid, CEO of Linnet Consultant, an international career in various sectors and as management consultant in innovative projects, reorganizations for development and business growth.
Fabio graduated in engineering and obtained an Executive MBA from MIP.
Good morning Fabio, you are an experienced Management Consultant, so, we would like to talk with you about this world. You are CEO of Linnet Consultant, a management consulting company for the development of projects, business ideas, startups, supporting small and medium-sized enterprises and collaborating with important industrial firms for the implementation of innovative projects, business process reengineering, new business models, strategic re-positionings and generational changes. What is your approach and how do you help startups?
The Linnet Consultant project was founded in 2004. It is based on three pillars.
The first one is that companies grow through projects.
The second one is that for each project it is necessary to put in place suitable competences, with experience, having an excellent executive capacity and a good dose of “maturity”, capable of carrying out the project.
The third one is the need to use resources and skills that, as much as possible, do not increase the costs of the company.
Before founding Linnet, I had a long corporate career. I held roles and assumed increasing responsibilities in marketing, sales, finance, and general management in industries, by my choice, different from each other and in multinational companies. In fact, I spent more than 70% of my career “away from home”, both in Italy and abroad. This allowed me to discover the “world”, interacting and building projects, giving life to new businesses in multicultural contexts, learning, sometimes making mistakes, but, in the end, always bringing home a result: being a goal achievement, a personal and team growth, or having built solid foundations through continuous teamwork. In summary, I have always worked on the basis of a project and a result: as an employee in the past, and as a consultant today.
Collaborating with an established company or developing a startup are obviously two extremes of Linnet’s business.What they always have in common is a clear and measurable goal, the identification of an adequate strategy, the value that a (small or large) company must generate and a team of people who must collaborate in a synergitic way with each other. This happens regardless of whether the company is structured or is a totally de-structured startup. Our real and unique mantra is making things happen. This means completing in a valid, effective, lasting, and sustainable way every project proposed to us. We become, – whatever the company, its history, its nationality, its size is -, an additional resource that is focused on reaching the goal until we leave and let the customer continue with his own legs, once the goal is reached.
Fabio you are Co-Founder of Logicbid, when and how was this adventure born and how is it going?
Logic-bid was born on a beach on the Adriatic Coast in a warm afternoon in August six years ago. My beach neighbor asked me to support him to carry out a project that consisted of creating a marketplace for the exchange and resale of used and abandoned industrial capital goods: an opportunity for some companies to monetize disused assets on one side, or acquire machinery, used industrial tools with a smaller investment for others. All aimed at “turning the economy around” and increasing the investment productivity in the country. I carried out a project that involved the creation of an innovative startup, able to create an online auction platform, focused on the exchange of industrial capital goods, divided into appropriate categories, depending on the nature of the goods, the activity they can carry out, and the outlet market. We set-up the company in 2006 as one of the first innovative startups. In 2007 we won the call for funding for innovative startups promoted by Emilia-Romagna region, and in 2019 we started invoicing, and now I can say that I fulfilled my partner’s dream.
Fabio, you are a management consultant but also a Business Angel, so we want to understand which startups you like to invest in, in which sectors and what are the criteria you follow for the selection of a startup to invest?
I don’t invest in one industry in particular but just in winning ideas. I prefer startups that are managed by an exceptional team, that has put in place an effective strategy and that has excellent execution skills. If an idea is good, it allows you to satisfy a need in a market that perceives the value offered; then the startup will work, regardless of the context in which it operates.
As management consultant and business angels, what are the fundamental aspects for the success of a startup at an early stage and then in the scaling phase?
It is always the team that makes the difference. It is the team that shapes the startup, builds it up, analyzes the market, identifies a need, designs the solution, plans, experiments, changes, perfects it and presents it to potential customers and knows how to convince investors.
How can incubation and/or acceleration pathways help startups grow and why?
First because a good incubator knows how to choose the right mentors who support the startup, understand the critical issues, and help them overcome them. They know how to advise, teach, transmit trust, suggest the right steps to take and above all how to grow and overcome obstacles. Many entrepreneurs have good ideas but do not know how to move, what to do, what are the priorities. Incubation pathways help these startups and their founders not to get lost in nowhere. That’s why they’re called incubators.
Considering that you are both a management consultant and a business angel, when a startup is ready for fundraising and how do you make a startup’s pre-money rating?
It’s ready when there is a validation of the proposed solution, a well-defined potential market, tangible competitive advantages and a cohesive team up to the task. If one of these elements is missing, fundraising will never be successful. As far as pre-money evaluation is concerned, there is no shared, certain, and scientific criterion. In the first early stage the pre-money valuation is mostly based on a negotiation between B.A. and founder. Subsequently, there are many criteria, and each investor has his/her own. There is a tendency today to evaluate a startup based on other similar companies operating in the same sector with similar sizes. I personally always prefer the DCF (DiscountedCash Flow) method. I like it better because it is the only model that allows you to estimate the value of the startup based on its ability to generate cash flows, given the structure and business model of the company. The DCF method, in fact, is built starting from the profitability of the company, which is linked to the startup turnover (revenue structure) and the marginality, that in its turn depends on the cost structure, investments, the absorption of working capital and the financial structure that determines its risk. These are all elements that can be controlled and analyzed, and they allow you to understand whether the startup is well designed, and it is an engine that has many or few horses.
In your opinion, when do startup founders should aim for an exit and when not?
It depends. Many Business Angels only aim to invest in startups where the entrepreneur already has an exit plan in mind. This allows them to evaluate both the time horizon of the investment and its multiplier once they exit. I believe that a company only works when there is a good entrepreneur behind it. I am and remain a manager who lives for the company, designs it, develops it, and looks after it when necessary. The risk of failure, when one activity passes hands with another owner, is always extremely high. The statistics measuring the success of M&A activity is not exciting. A business needs to always be run by qualified people. If an entrepreneur, who created his/her creature, exits, there must be one who is even more capable of taking over. It does not seem to me that this rule is always respected. Above all, I don’t think that’s the norm.
If you are interested in Business Angel Networks, please read more on: Business Angel Networks: the main ones in Italy