Home' Trinidad and Tobago Guardian : May 25th 2014 Contents SBG6 NEWS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt MAY 25 • 2014
What do Facebook,
Google, Apple and
Microsoft all have in
Aside from being some of the most suc-
cessful companies in the world, they are able
to lay claim to their dominant positions as a
result of sourcing venture capital.
But, according to local experts in the field,
there seems to be little hope for entrepreneurs
here who need venture capital to develop their
ideas into the next big billion-dollar company.
At the Caribbean Centre for Money and
Finance s Third Caribbean Business Executive
seminar, Central Bank Governor Jwala Ram-
barran said, "the industry has collapsed" and
when expressed as a percentage of GDP, VC
fundraising in the Caribbean was "negligible"
or at "zero".
First Citizens Investment Services general
manager Jason Julien presented data at the
seminar showing that venture capital and pri-
vate equity funds had sharply declined in T&T
from 2008. The data showed that before 2008,
there were as many as 15 venture capital and
personal equity funds. In an interview with
the Sunday BG, Julien said, "Today, you are
lucky to even find three."
For those unfamiliar with venture capital,
the local Venture Capital Incentive Programme
(VCIP) defines it as "a form of long-term
investment, also known as patient or equity
capital, that is typically invested in businesses
with potential for growth and profitability. In
addition to capital, the investor brings hands
on managerial expertise to the investee com-
Established by government in 1994, the
VCIP began operating in 1996.
The US is the leading country in terms of
venture capital activity. There, venture cap-
italists invest billions in the ideas of entre-
preneurs, seeking high returns on their invest-
According to the MoneyTree Report by
PricewaterhouseCoopers and the US National
Venture Capital Association, in the US, invest-
ments by venture capitalists amounted to
US$29.4 billion on 3,995 deals in 2013; an
increase of 7 per cent in dollar value and 4
per cent in deal numbers from 2012.
Culture part of the decline
Julien referenced a number of factors when
talking about the decline of venture capital in
T&T. He told the Sunday BG that between
1997 and 2007, venture capital funds faced
the challenge of putting the capital to work.
He said at the time there was available capital
to invest, but not enough projects to invest
"When people invest their money they want
to see returns. No one wants to invest in a
fund that is not being used, in that case, the
return is zero. There just weren t sufficient
deals for funds make sense."
Julien also said that people in T&T have to
understand how to analyse risk and the dif-
ferent industries that are managed under ven-
ture capital funds.
Speaking about local investors, he said,
"people have to get comfortable with losing
money if they take risks." He said US culture
is different in that they understand taking risk
for greater returns and are willing to do so.
He said it was this kind of thinking that fosters
entrepreneurship, whereas, our culture does
Continuing the comparison, Julien made
reference to the role government grants played
in the development of the algorithm that later
became commercially known as Google. With
the aid of a grant received through the National
Science Foundation s Digital Library Initiative,
two Standford University students, Larry Page
and Sergey Brin---the founders of Google---
were able to create the mathematical process
that revolutionised the World Wide Web.
Julien said: "Most university graduates in
T&T prefer to work for someone else rather
than go into business for themselves. In our
society, we are taught to go to school, finish
He also questioned the role of financial
institutions in T&T that would have turned
away the Google entrepreneurs, in the interest
of protecting customer s money from what
they might have deemed a risky investment.
"If the creators of Google had approached
a T&T bank for the capital to start, do you
think they would have received it for what
was only a mathematical calculation?"
Julien also said T&T has a culture that dis-
courages failure. Comparing again to the US,
the First Citizens Investment Services executive
said in such entrepreneurial cultures a person
could go bankrupt and still be considered a
success. But T&T attaches stigma to failure.
Julien said, the perception is, "if you fail in
our society, you are more or less damned."
He thinks, though, the younger generation
might be differently motivated on seeing the
success of entrepreneurs in the US.
"They are seeing the value in brilliant ideas
and may be more bold, but how do we feed
that boldness and find a way to nurture them
In response to his own question, he sug-
gested that improvement of the venture capital
ecosystem was necessary if it was to be an
option for entrepreneurs. He thought T&T s
current economic climate was right, but that
the country lacked the proper infrastructure
to encourage entrepreneurship.
He also said there needed to be public and
private sector involvement. The Government s
greatest contribution, he said, would be in
policy development to support the VC indus-
try.He also called for more support for entre-
preneurs and fund managers who better under-
stood the industries being managed in order
to make the best of investments.
Continued on Page 7
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