Pillar Presentation - Finance Availability

Finance Availability Pillar

Summit Outcome & 2011 Action Plan

Mission

Increase availability of equity & debt financing options available to

Entrepreneurs (of all stages and sectors) in Barbados

in order to be the #1 Entrepreneurial Hub

in the World by 2020

Measures of Success 2011 Finance Web portal launched online by 1 April

2011 4 Business Finance workshops offered covering

capital structure and financing alternatives in 2011 (consider Kauffman Fasttrac program)

One or more Angel Investor Groups activated: Invests in 10 Ventures in 2011 Professional and other groups help

companies prepare to pitch and refer entrepreneurs to angels

Possible tax incentives to Angels

What does World Class look like? World class investors to world class

entrepreneurs Understand your business idea ‘domain

knowledge Willing to share risk & rewards Trust Responsive No ‘pie in the sky’ valuations

What does World Class look like?Product/Situation Barbados Today World Class Requirement

Micro-enterprise Loans √ √

Active Angel Investors √

Active Venture Capital √

Venture Debt √

“Growth Capital/PE” √

Mezzanine Financing √

Senior Bank Debt √ √

“Frictionless” Foreign Investment – Central Bank

√

Advisor Ecosystem √

Benchmark / Indicators World Class Barbados

There is no “one size fits all” for financing entrepreneurial ventures at different stages (eg start-up) and sectors (eg services) – equity is critical to ensure B/S strength

Full range ofFinancing vehicles

exist

Limited – micro and bank loans – little to no equity

Culture must accept role of outside equity investment in high-growth entrepreneurial companies – “smaller piece of bigger pie”

Understood as a premise for high

growth – more than just $

Chicken vs. egg?Is it culture or lack

of availability – younger group -

latterPrivate sector “Ecosystem” that supports company formation and financing – attorneys, banks, lawyers etc. “discount” fees in early years and have programs to support new business development

Long-term view – grow your future

market leader pipeline

“One fee fits all”?No commitment to

ecosystem

Stable government policy – frictionless opportunity for foreign investment and repatriation (subject to tax rules etc.)

Tax regimes can be complex but no

FX/CB restrictions

CBOB “sand in the gears”

Where is Barbados on the Benchmark Indicators?

Situation: Barbados characteristics

Individual traits Lack of information available on how to

access funds Risk averse – investments are typically

long term & fully guaranteed with limited ‘skin in the game’

Reluctance to give up control for equity financing

Businesses are built not sold – ‘exit strategy is counter cultural’

Situation: Barbados characteristics

System traits Banking system is not set up to encourage

entrepreneurs Not yet a truly competitive market Regulatory environment hinders equity

driven investment Protectionist – constraints in free trade Investments are typically small scale &

ROI expectations are low

Narrowing the gap1. Educate Barbadians on Financial

‘language’ and types of investment available to raise capital

2. Lack of government support & policies directed at promoting the availability of finance

3. Lobby Government for regulatory reform4. Work with Government & Central Bank to

develop incentives and breaks for entrepreneurs

5. Relax FOREX controls & implementation of credit bureau solutions

Key Themes

Fear of Failure – less acceptable than in other cultures

Role of angel investment in developing markets

Reform to Pension fund regulation Foreign Direct Investment - raise

profile of Barbados brand to international entrepreneurs

What Why When Who Status Remarks /Actions

Measures

Create a web portal • Source for Information & Education on finance• Promote key events

April 2011

Establish an Angel investor network in Barbados

• Act as a source of capital for start ups

Jan 2011

Explore establishing a dedicated Venture Capital enterprise growth fund

• Raise new sources of capital

Nov 2011

2011 Action Plan – Top 3 priorities

Reconfirm Mission

Increase availability of equity & debt financing

options available to Entrepreneurs (of all

stages and sectors) in Barbados in order to

be the #1 Entrepreneurial Hub in the World

by 2020