The current business environment has evolved tremendously since the 1998–2003 period when I began my entrepreneurial journey. While Romania's GDP per capita was around $5,000 in 2000, it exceeded $11,000 last year—a quite impressive leap.
Despite this progress, companies still face growing risks similar to those in 1998–2003: increasing financial gridlock putting greater pressure on company cash flow, with average payment terms extending from 110 days in 2007–2008 to 180 days in 2016; a rising share of overdue suppliers, accounting for 45% of total trade debt; and artificial wage increases mandated by government decisions in certain key sectors, lacking any economic foundation.
Furthermore, political and fiscal risks remain significant factors that create unease and generate distrust among international investors, as well as local ones who are unsure whether to continue with planned or ongoing investments.
1. You have nearly 25 years of business experience, both as an entrepreneur and as a top executive in large international corporations. What would you say are the main stages of your entrepreneurial career?
I have been in entrepreneurship since I was 19; for the first 10 years, I was active in the retail, distribution, and footwear manufacturing sectors.
At 29, I began a nine-year period of intrapreneurship and accelerated development within the Coface group, initially focusing on Romania, then moving into a regional development role for Central and Eastern Europe.
For the last 7 years, I have returned to entrepreneurship in management consulting and financial services for medium and large companies, and since 2018, I have been involved in financing micro and small businesses through Instant Factoring.
2. How has the business environment in Romania evolved in recent years, both from a general perspective and at the entrepreneurial level?
The current business environment has evolved tremendously since the 1998–2003 period when I began my entrepreneurial journey. While Romania's GDP per capita was around $5,000 in 2000, it exceeded $11,000 last year—a quite impressive leap. We tend to get used to the good things quickly and focus on what we lack, but the progress made by the business environment is huge, despite current shortcomings such as fiscal instability and political turbulence.
The level of sophistication of the Romanian economy, while still far from the industrialized economies of Western Europe, is clearly superior to that of the 2000s.
3. How do you see the development of the business context surrounding technology startups and beyond?
The entrepreneurial environment over the last 7–8 years has seen spectacular dynamics through the creation of an ecosystem conducive to developing and supporting startups in their initial, most vulnerable phase. This includes business incubators, support services offered almost for free by major consulting firms, and a business angel and seed investor community that continues to grow steadily. There has also been a strong increase in the volume of IT startups, an expansion of their scope from national to global, and increased interest from international investors who are always looking for opportunities. Seven years ago, startups similar to the unicorn UiPath would not have had much chance of success without an ecosystem to support them.
4. What do you consider to be the biggest challenges facing entrepreneurs in Romania, and what is your outlook for the next 2–3 years in this regard?
At the risk of sounding repetitive, the biggest risk comes from fiscal unpredictability and unfunded budget expenditures, which create serious imbalances in the economy.
Other major risks with a high impact include: increasing financial gridlock putting greater pressure on company cash flow, with average payment terms extending from 110 days in 2007–2008 to 180 days in 2016, with a rising share of overdue suppliers accounting for 45% of total trade debt; and artificial wage increases mandated by government decisions in certain key sectors, lacking any economic foundation. Furthermore, political and fiscal risks remain significant factors that create unease and generate distrust among international investors, as well as local ones who are unsure whether to continue with planned or ongoing investments.
5. What are the main resources an entrepreneur needs to succeed in Romania?
The main resource is personal energy and a passion for a field that helps you overcome all obstacles without being demotivated by the difficulties and challenges you will certainly encounter at every turn. You need high stress resistance, both to what is happening around you and to the loud noise generated in the media by socio-economic factors induced by the political environment.
As an entrepreneur, you must remain focused on achieving your own goals and serving your target market, create maximum value for your customers at a level superior to your competitors, adjust your business model in line with changing customer requirements and trends in external markets, and constantly seek to innovate.
What may seem like an ideal solution today could be rejected by the market tomorrow.
6. You developed a fintech product, Instant Factoring, for financing micro-enterprises and small businesses, which was launched in Romania last spring. How was this product received by small and medium-sized companies in Romania? Did it meet expectations?
The local entrepreneurial environment welcomed us with open arms and gave us a warm reception.
We have clients who, even though they didn't need financing, wanted to try a new, innovative solution to see how things could be done differently than in the banking system. We have a satisfaction rate of over 90% from clients who have worked with us so far, and our client retention rate is over 80%, which I believe is proof that they are happy with the services we provide. We are committed to constantly improving their experience in their interactions with us and ensuring they are satisfied with the value we bring to their business every day.
I remember an episode with one of our current clients who told me at the beginning: "Sir, I didn't need the money, but I wanted to see for myself that it was possible, that it was real, and that the fintechs I kept reading about in the press actually work for us too," or another client who told me he had to pinch himself because he couldn't believe he had the money in his account within 24 hours after having spent weeks of stress trying to access financing through the traditional model.
7. How prepared is the local business environment for innovative financial products that have a significant technological component and are completely opposite to traditional ones?
The degree of digitalization and the level of technology integration in the local entrepreneurial environment is not high, but this is changing every day. There is a limited number of companies in our target market that use technology for their daily operations. Once we exhaust this segment that is already familiar with using digital services, we will strategically reorient ourselves to attract those who are still accustomed to accessing financial services in an "analog" way.
8. Is there an optimal level of business digitalization in Romania?
We see that digitalization, while helpful, does not replace people's need for communication, for knowing that there is someone reliable on the other end who they resonate with and who understands their needs.
We have many examples where potential clients want to get to know us, meet face-to-face, see that we exist as people, and have us explain what we do verbally. Although we insist that everything can be done online without any personal contact, we understand their human need to sit "eye-to-eye" and see who is behind the business and who they are building a relationship with. This component is important, and I don't think we can ignore or eliminate it; it comes from our evolutionary process.
9. What is next for you and Instant Factoring this year?
The mission of Instant Factoring is to support and help small and micro-companies grow and succeed in the market by providing access to flexible financial products tailored to their needs. Therefore, my goals and those of Instant Factoring for 2019 are linked to fulfilling this mission.
A primary goal is to increase our financing volume by over 400% this year, which is absolutely achievable considering our low baseline, as we began operations in April 2018. Then, another important target is to reach operational profitability in Romania, which we have estimated for the fourth quarter of this year.
10. How much will you invest in 2019 in the company's development in Romania and other regional markets?
We have an investment budget for organizational development for 2019 of over 1 million euros, and we are targeting the opening of two more new markets in 2019 in countries surrounding Romania. The first new destination is Croatia, as we have a local partner there with extensive experience in risk management who has built sustainable and operationally solid companies throughout his career. For the second market, the analyses are nearing completion, and the decision will be made in the coming weeks.
By the end of the first half of the year, we are preparing to attract a capital investment from an international Venture Capital fund to help us continue developing our technology and support us in accessing new markets.
Our motto is "One Team – One Dream," which inspires and motivates us to do everything in our power to serve the small and micro-companies that use our services.
➡ Read the full article on hotnews.ro: https://hotnews.ro/p-cristian-ionescu-ceo-si-cofondator-instant-factoring-mediul-antreprenorial-din-ultimii-7-8-ani-a-avut-o-dinamica-spectaculoasa-prin-crearea-unui-eco-sistem-propice-dezvoltarii-si-sprijinirii-sta-331388
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