Angel investing being promoted

A new programme dubbed ‘LINK Caribbean’ has been launched aimed at helping regional entrepreneurs address the issue of limited access to finance through developing a culture of angel investing.

Speaking at the official launch last week at the Radisson Aquatica, Executive Director, Caribbean Export Development Agency, Pamela Coke-Hamilton, announced the programme which, being facilitated by Caribbean Export in partnership with the Canadian High Commission, the World Bank Group, InfoDev and the European Union, is the first of its kind in the world.

“The fact that the World Bank was willing to do this with us and to put in place a regional programme, owned by member governments and I think the support from the CARIFORUM Secretariat, from our member states, our board member has made it such that Caribbean Export has the credibility to be able to partner with the World Bank, to basically be able to pilot a prototype of this nature,” Coke-Hamilton said.

She added, “If this works and there are no ifs, we are going to make it work because we don’t do failure, it will then be able to be replicated across the board in so many other regions.”

The programme, she said, allows small and medium enterprises (SMEs) to have access to private investment from business angels and other early stage investors. She made the point while noting that a 2014 study conducted by Caribbean Export showed that credit card financing was the most popular form of business finance used by the SMEs, followed by bank overdrafts and commercial loans, which she said is understandable as the companies lack the security and assets needed to access overdrafts and loans.

“However, if the majority of SMEs are resorting to credit card financing, this further places them in a very vulnerable position as we all know that high interest rates can easily lead to further indebtedness. For example, here in Barbados, the interest rates on credit cards from one of the commercial banks range from 21.5 per cent to 24.99 per cent. So already you can begin to get a picture of the financial cost of doing business in our region... Because of this, Caribbean Export is pleased to be collaborating with our partners in the roll out of LINK Caribbean,” she said.

Coke-Hamilton said that through the programme, they intend to facilitate increased levels of equity financing going to early and growth stage SMEs, primarily through angel investors, and by so doing, increase the growth potential of the firms. Referring to studies in the US market, the Executive Director said that angel investing has been shown to greatly increase not only the survival rate of SMEs, but also impacted their growth, and she said they are hoping to see similar results in the region.

She explained that angels play a pivotal role in not only providing invaluable business expertise, but building strong management systems and leveraging their personal networks for the benefit of the SMEs they invest in.

The Caribbean Export head said that such a combination of capital and business acumen can significantly transform the region’s private sector.

On that note, she said that Caribbean Export together with InfoDev have been working on building out the ecosystem for angel investing under the Regional Angel Investor Network (RAIN). She noted that to date they have provided training on best practices for engaging angel investors to entrepreneurs in Barbados, Jamaica and St. Lucia.

She indicated that through RAIN, angel investors and SMEs will have access to an online introductory and convening mechanism to facilitate connections, while
offering access to a wealth of resources. (JRT)