Home' Trinidad and Tobago Guardian : June 1st 2014 Contents JUNE 1 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
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Jason Julien, general manager, FCB Invest-
ment Services, and Judith Mark, chief exec-
utive officer of CME Consulting, shared
their views on the state of the venture capital
industry in T&T.
The following are some of the salient
Though the government-sponsored Ven-
ture Capital Investment Programme (VCIP)
started operating in 1996, there were not
enough deals between 1997 and 2007 to
keep the industry vibrant; T&T does not
create the number of innovative and value
creating projects which are ideal for venture
capital investment; people have to get com-
fortable with losing money if they take risks;
most entrepreneurs believe that obtaining
financing is the solution and may be reluc-
tant to allow the venture capital/equity
provider or manager the necessary advisory
or partnering role required for success; there
is little or no incentive to invest in innovative
projects if significant profits can be made
by low value, low risk ventures that do not
create additional wealth; bank financing is
the first port of call and given the mandate
to safeguard depositors funds, projects that
fall outside the established safe zone will
not attract capital.
Both commentators see that to improve
or build the venture capital industry, there
is, indeed, a role for governments, but this
should be restricted to being a facilitator,
creating policy and providing incentives that
could drive the innovative capacity of citizens
and allow businesses to grow and access
their market potential.
But the more fundamental statement was
made by Mark:
"... in the case of the State-initiated VCIP, the
model was not conducive, given that the other essen-
tial components of the venture capital ecosystem
were either non-existent or not sufficiently developed."
Venture capital cannot flourish where an innovation
system does not exist.
All entrepreneurs at some time or another will
require financing, moreso at start-up of the business.
But there are two kinds of entrepreneurs; those who
intend to trade with a well-known product or service
and are responding to market demand possibly with
minor twists in marketing or advertising and the
others who are attempting to take a new idea, a novel
product or service to the market, which may not
even exist at the time.
The risk attached to the former is generally low,
for example, building a new mall in a growing com-
munity, as compared with the latter, in which the
risk is higher, but could reap higher returns on invest-
ment. For example, implementing a newly patented
product to provide, as Dr DeFour, a new method to
control electric motors in appliances.
The former type of entrepreneur is well suited to
the current financial system in T&T. The latter suffers
because the funders are not interested in taking such
risks and, more importantly, the knowledge acquisition
and creation system to drive the innovations do not
exist in the country, contributing to the dearth of
Further, the emergence of the latter type of entre-
preneur has been stymied by the economic model
we operate, the plantation, in which the onshore
depends on rents from the energy sector that support
the entrepreneurs engagement in commerce which
provides low risk and significant profits.
As a result, our education system, our knowledge
generating system, has no need to focus on providing
the continuing know-how, experimentation and inno-
vative ideas that produce the latter kind of entre-
But the pointers are on the wall. The petroleum
resource is depleting and what may be left will be
expensive to produce and uncompetitive.
The view of the near future from the economic
balcony demands that the latter type of entrepreneur
be produced and to do so, an innovation system has
to be created.
The current culture of the private sector suggests
that the role of the Government has to be more than
policy making and facilitating. This role has to include
building a system that generates the technologies
and ideas and be the venture capitalist of last resort.
Mary K King
Government venture capitalist of last resort
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