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Businesses told: think globally to attract venture capital

Published:Monday | September 9, 2013 | 5:54 PM

Jamaica has been described as unattractive to venture capitalists, but with a high collaborative environment as well as global thinking behind entrepreneurial ventures, the country could well be poised to achieve much success in attracting investments for small and medium sized businesses.

That is according to Paul Ahlstrom, chief executive officer of Alta Venture and keynote speaker at the Development Bank of Jamaica’s (DBJ) venture capital conference in Kingston today.

Ahlstrom, referring to the ‘crab in a barrel’ syndrome said, “I’ve seen this happen in many countries where the crabs like to pull the other crabs back into the pot. You see someone becoming successful and you pull them … down. If one person doesn’t win then you don’t win either. Your success is tied to the other person’s success.”

The CEO urged the private sector, government and entrepreneurs to pull in one direction in creating a sector that could attract investment for start-ups. He also pointed to the “lack of collective will …” unpinned by “mistrust” as an obstacle to development.

“As a country you guys would be amazing, unstoppable if you got together and made this a country-wide initiative, but if you keep doing the same old things you are not going to be relevant,” Ahlstrom said.

He admonished local entrepreneurs to make their ventures globally appealing to boost recognition of the country and, by extension, the region as a serious innovative force. “Jamaica will be relevant to the extent that Jamaican entrepreneurs think globally,” Ahlstrom added.

“Venture capitalists are looking for large markets … but if Jamaica looks at the world as its market then Jamaica can be very exciting," he said.

"So if you don’t limit your ideas to the island but you think about the Caribbean, Latin America (and) the United States, there is no reason Jamaica couldn’t build great companies with global customers.”

The absence of a flexible legal structure to support deposits into a fund to kick-start venture funding now also makes the country unattractive to investors, said Ahlstrom.

“You have (a) little way to go to get the fund managers in place and get the vehicle going,” he said.

However, DBJ chairman Joseph Matalon, in an interview with The Gleaner, said a review of the legal regulatory framework as it relates to venture capital has been conducted and the recommendations would guide an appropriate regime for Jamaica.

Project consultant, Audrey Richards said consultations with stakeholders revealed that while Jamaicans were interested in a joint-venture programme, one of the gaps that required urgent attention was a lack of knowledge of its workings.

She stressed the need for training and capacity-building over the next three years in order to make the programme a success.

The Jamaica Venture Capital Programme (JVCP) is a Government of Jamaica initiative aimed at developing the environment to mobilize long term equity funding to enable greater access to alternative financing sources for high potential, small and medium size enterprises and entrepreneurs.

Implementation of the JVCP is being made possible through a technical co-operation agreement between the DBJ and the Inter-American Development Bank (IDB).

The agreement will see the IDB will providing some $14 million in grant financing under its Multilateral Investment Fund facility, with the DBJ providing $12 million toward the programme.