Home' Trinidad and Tobago Guardian : May 25th 2014 Contents MAY 25 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG7
Not just about financing
CEO OF CME Consulting and one-time administrator of
the VCIP, Judith Mark, concurred with Julien s assessment of
the situation. She said there were not enough deals to keep
the industry vibrant between 1997 and 2007.
"The decline in venture capital activity in T&T reflects a
similar picture to what occurred in the wider Caribbean, par-
ticularly Caricom member states. This may be attributed to
the performance of a large percentage of funds."
She continued, "T&T does not create the number of inno-
vative, value-creating projects which mirror the profile of the
ideal investment for venture capital activity. Venture capital
thrives in an environment where there is an adequate flow of
suitable projects and an adequate availability of risk and venture
capital. Both are available in limited quantities in T&T."
Mark said that in the case of the state-initiated VCIP, "the
model was not conducive given that the other essential com-
ponents of the venture capital ecosystem were either non-
existent or not sufficiently developed."
The absence of key components of the venture capital
ecosystem affected all funds whether state or private sector,
created or managed.
In speaking about the number of projects the VCIP helped
develop when she was at the helm, Mark said that while many
entrepreneurs came forward for assistance, their focus was,
more often than not, on getting financial assistance.
She told the Sunday BG: "If by develop we mean access to
venture capital, it was less than 100. If assistance also included
the pre-funding or pre-investment activities required in prepar-
ing businesses to access capital, then the number increased."
She said: "With respect to actual investment made, it was
less than 20 for all registered VC companies. The problem is
most entrepreneurs within the SME sector believe that financial
capital is the solution, be it at start up or expansion stage,
but may be reluctant to allow the venture capital or private
equity provider or manager the necessary advisory or partnering
role required for success."
Unlike Julien, however, Mark thinks that T&T has a strong
entrepreneurial culture, and pointed to evidence on the Global
Entrepreneurship Index. She also said one can attest to the
number of new ventures through observation.
"The issue is sustainability of these ventures so that we see
an increase in net starts," she concluded.
On the 2013 Global Entrepreneurship and Development
Index (GEDI), T&T ranks 70-74 on a list of 118 countries. The
US is ranked number 1 and Chad ranked lowest at 118.
According to the Global Entrepreneurship and Development
Institute: "The GEDI captures the contextual feature of entre-
preneurship by focusing on entrepreneurial attitudes, entre-
preneurial activity and entrepreneurial aspirations."
She however believes that entrepreneurs should not rely on
VC funding as the local industry is near dormant. She said,
"even if thriving, not every entrepreneur should use VC even
if available. There must be alignment and fit between financial
instrument and project profile."
Even though T&T s economy is experiencing high liquidity,
Mark does not see investors moving toward investing in venture
She said: "High liquidity is indicative of the absence of
suitable options to give higher returns and as such a fund may
be welcome. However, the structure, management and oversight
of the fund must be acceptable to the targeted investors." She
said she does not think T&T investors will put money into
a venture capital fund based on the theory of taking above-
average risk and get significant or above-average returns.
"The reality is the prerequisites for a vibrant venture capital
market must be there. An investment in a company in which
there is limited option to scale-up or access markets beyond
TT or the region will not entice investors."
Mark believes that Trinbagonians are brave when coming
to traditional risk situations, since these are what were available
"There are very few innovative, high-value projects although,
in some quarters, some attention is given to this in order to
stimulate national growth. There is no or little incentive to
invest in innovative projects. If significant profits can be made
by low-value ventures that do not create additional wealth,
then that is where the funds will flow to."
Part of the problem here, she believed, was that "bank
financing is the first port of call and given that their mandate
is to safeguard depositors funds, then projects which fall outside
the established safe zone will not attract capital from this
So what role does government play in developing the VC
Like Julien, Mark thinks the Government s main role is in
"The Government s role is to be a facilitator, providing
measures for the enabling environment and making it easier
for new and existing entrepreneurs to conduct business. This
must be reflected in policy initiatives to drive the innovative
capacity of citizens and to allow businesses to grow and access
their market potential. Legislation and unnecessary reporting
requirements are not the answer to entrepreneurial activity."
With reporting by Kwame Joseph
Stimulating national growth
From Page 6
and the Dominican Republic
Dom Republic 0.23
Source: Global Entrepreneurship
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