IN a press briefing Wednesday, Development Bank of Jamaica (DBJ) CEO Milverton Reynolds announced that his institution would be hosting a venture capital conference entitled “Advancing innovation and entrepreneurship – Seeding Tomorrow’s Opportunities” on September 9th at the Pegasus hotel.
One of the world’s leading experts on venture capital – Harvard Business School Professor Josh Lerner – would headline the event, supported by Patricia Freitas, the creator of the highly successful INOVAR venture capital project in Brazil, and Patricia Garcia – Robles, the Principal Investment Officer in charge of the IDB’s Multilateral Investment Fund (MIF) early stage equity group, who serves on over 20 boards of directors and investment committees of seed and venture capital funds. It would be an opportunity for Jamaicans to learn about venture capital first-hand, from both local and international experts.The conference is a key part of the Jamaica Venture Capital Programme (JVCP), launched in February as a partnership between the DBJ and the IDB. At that time, the IDB’s regional Caribbean head, Gerard Johnson, signed an agreement for the IDB to provide US$150,000 in grant assistance for the project, with counterpart funding of US$128,000 from the DBJ. The grant has funded a market analysis by Freitas, a strategic plan for the development of a venture capital ecosystem, and a communication strategy to build awareness among stakeholders and the general public on the importance of equity financing and an appreciation for venture capital.In his presentation, DBJ CEO Milverton Reynolds admitted that several previous attempts at creating a venture capital industry in Jamaica hadn’t really succeeded, but he believed that this attempt was different in being both “sustainable” and “inclusive”.DBJ Chairman Joe Matalon expanded on the issue of why venture capital hadn’t worked in Jamaica, arguing that the main issue was a need to create a venture capital ecosystem. Past efforts had focused mainly on the demand/funding side rather than taking an in- depth approach. Examples of a more in-depth approach included sensitising local industry, the training of local venture capital managers, and the preparation of potential investees (local companies) to be able to qualify for investment by a typical venture capital fund. Previous efforts had not been sufficiently grounded in the private sector, and while there had been individual successes, such as JMMB, the industry needed to be sustainable. The project would be launched over the next three years, and requires the involvement of all stakeholders to get companies ready for venture capital investment e.g. lawyers, fund managers, pension funds, angel investors, incubators etc.In the case of pension funds, Matalon noted, the typical Jamaican pension fund is invested very conservatively in public equities, real estate, and Jamaican Government paper. As would be expected, Jamaica’s previously very high interest rate environment had caused “risk” investment to wither. Recent changes in the macro environment, however, had changed that dynamic. Pension fund trustees were now looking at different asset classes as yields on government paper were now very low compared with the very high yields available in the past.Matalon argued that “he didn’t think the venture capital industry was going to happen overnight” and that the worst thing the DBJ could do was just put $1 billion dollars into a fund as they hadn’t yet done the work needed, and in any case any future fund should not be a DBJ fund. The DBJ would instead seek to be a catalyst for a private sector-led industry, co-investing with qualified private sector managers, who would conduct the necessary due diligence and make the investment decision regarding the capital financing of eligible projects.Addressing the issue of whether the state of the economy would negatively impact the creation of a venture capital industry in Jamaica, Matalon observed that “the investment community was not looking for announcements anymore, but wanted to see credible action”.Finally, responding to further questions as to why venture capital had not been a success so far in Jamaica, JVCP coordinator Audrey Richards advised that this would be addressed in detail at the conference. Further information was provided by the DBJ’s information sheet, “Why attend the conference?”, which addressed a number of potential issues related to the question of what is different this time around, including “an appropriate legal and regulatory framework” to “ensure that entrepreneurs and investors understand the rules, understand what is expected of them in entering contractual arrangements and how each party can be expected”. It also stated that the conference would address “the link between venture capital and private equity markets and the very successful Junior Market of the Jamaica Stock Exchange” and how the venture capital market can “create access to the stock exchange for an entrepreneur”.Development Bank of Jamaica (DBJ) Chairman, Joseph Matalon (centre), emphasises a point during Wednesday’s media briefing at the institution’s New Kingston offices, where he outlined details of developments pertaining to the Jamaica Venture Capital Programme’s (JVCP) implementation, being undertaken by the DBJ; and the upcoming conference in September, where the initiative is slated to be launched. Listening keenly are DBJ Managing Director Milverton Reynolds and JVCP Co-ordinator and Manager, Audrey Richards. (PHOTO: JIS)View the original article here
Can Jamaica create a sustainable venture capital industry?
