Classic loans can also be smart money

The idea that a classic loan can be smart money initially came from Gust Van Put, former bank manager of HBK Spaarbank, specialist in employee participation and one of Patricipiums’ advisors behind the scenes. Years ago, an old French book gave him the idea not to work with shareholders, but with financiers who provide a loan. “Do not look for shareholders but bond holders”, he advised Jan Lagast over a good glass of wine. That advice proved particularly valuable. The team of Participium would experience this for themselves later that day during their first informal meeting with their financiers.

Together with a credit provider or a bondholder you make agreements about an interest and a repayment period. With that, the entire financial picture is resolved and it’s finally possible to talk freely about the future with that financier. Of course, that financier will be concerned if you come up with crazy ideas or if the financial information of the company is unfavourable. Yet in all other cases, that financier knows that this conversation will not get him paid a euro more… and therefore he or she does not have to start monitoring (thinking: “then I’m sure that entrepreneur is not making me gain less”) or putting pressure to reduce costs (because “then I’m sure I will get more out of it”).

Participium experienced that this leads to a very different kind of conversation, at their first meeting of financiers. Of course they asked some critical questions, but the mood of the evening was one of support and of thinking along. Thinking along about opportunities, possibilities, growth. That feels very nice indeed. The same conversation with shareholders would have definitely been much sharper and more arduous. That is because in every conversation with the shareholder, the financial return is also included in the balance. This is not the case with classic loans. If you regularly inform those lenders, involve them and ask them for support, that’s when you get smart money. Moreover, due to this financial calm in the collaboration, that money is much “smarter” than it would be with shares.

First contacts in Slovenia are promising

Today we are exploring Ljubljana, the capital of the small EU country Slovenia, which is trying to stay afloat with a domestic market of only 2 million inhabitants. With a work ethic similar to the Austrian one, a passion that characterizes the Balkans and a lot of diligence, it is a country where you can expect to see results achieved. At least that is Participium’s impression after having spent an interesting day in Slovenia.

This afternoon we were guests at Polygon Center, the largest co-working space that runs completely without government funding and attracts a lot of IT professionals and creatives. At the Polygon Center we almost immediately found a potential team for the further developments of FunkyTime. Nothing definitive, but we definitely felt a connection so strong that we had a hard time leaving and returning home.

KVI as most important administrative measure

Today the ExCo meeting of Participium took place. Participium’s evolution is constantly observed through a number of parameters. One of these parameters is the particular status of the companies that it helps to grow.

The most important parameter is the Key Value Indicator (KVI). KVI is a method developed by the people at management consultancy Forte to check whether customers are satisfied with the added value that they were promised during the sales talk. The KVI not only measures ‘supplier delivery’, but also ‘client perception’.

Recurring business

KVI is the most important predictor of recurring business. After all, if customers realize that your company truly offers them added value, they will most likely want it again. This is so important for a healthy company that it is a crucial part of any advice Forte gives its clients. It is so important for a stable growth that Participium has decided to follow not only its own KVI closely, but that of every company it guides through growth.

Participium fixed capital fully paid up, ready for 2015

In December 2014, Participiums’ fixed capital is fully paid up. In the meantime the company has found –  in personal network – a few friendly financiers, who are willing to give financial support through a private loan with a term of 5 years. On the other hand, the umbilical cord that connected Participium to the parent company Forte was cut by buying back the shares.

Cautious growth

With those actions the company can finally start working on its own growth. In the first years, that growth will remain cautious. We consider this period to be the preparation phase for the real first growth spurt later on. During this preparation phase, the partners want to gain experience by rolling up their sleeves in some of the companies that were close to Participium from the start:

• management consulting and marketing agency Forte, which Participium wants to help grow strongly
• FunkyDev, software developer for specialized service providers and freelance knowledge workers

New companies

In the meantime Participium is working on business plans for three new companies. We are also open to collaborating with a company where we can realize the turn-around as an external partner. Moreover we dream of an investment fund that can leverage growth companies with a European dimension and a high level of participation.

Finally, we are going to further develop the Quarturn movement, to spread the Quarturn vision and inspire all stakeholders of companies with the idea that there is a different approach possible to investing, managing and working than the classical management theories inspired by Taylor. A lot of work to do in 2015, but Participium is well prepared.
Jan Lagast (chairman) and Herman Demarbaix (managing director)