The Jamaica Venture Capital Programme 2013 - 2015

The Jamaica Venture Capital Programme (JVCP) has completed three (3) successful years: 2013 – 2015, during which a number of milestones have been achieved, not least of which is the ranking of Jamaica’s Venture Capital industry, as 9th out of 11 Latin American and Caribbean countries by the Latin American & Caribbean Private Equity and Venture Capital Association (LAVCA) and the recognition of the accomplishments as “noteworthy”.

The JVCP came out of the Development Bank of Jamaica’s (DBJ’s) expanded focus to provide access to equity, and this was supported by the Inter-American Development Bank (IDB) through a Technical Cooperation Agreement (TCA) signed in February 2013, as well as significant advice and guidance received from specialists and associates both in Jamaica and Washington DC.
 
The major imperatives of the DBJ-JVCP strategy are:

  • Developing a venture capital ecosystem to create an environment conducive to the establishment of a dynamic private equity/venture capital (PE/VC) industry to include legal, taxation and regulatory changes as well as significant training of local investors, fund managers and entrepreneurs; 
  • Fostering the establishment of new venture capital and private equity funds through public and private sector collaboration with local and international fund managers.  Further, the DBJ will also seek to stimulate investments in new venture capital funds by becoming an anchor investor in VC funds along with private sector partners; 
  • Fostering the development of a sustainable deal flow of investment-ready businesses, through the support of entrepreneurs, incubators and accelerators and sponsorship of business model competitions and pitch events; 
  • Building strong linkages with our international development partners (IDPs), the Jamaican Diaspora as well as our Latin American and Caribbean neighbours; 

Since inception of the programme, strong focus has been placed on ‘filling the gaps’, within the local environment, which are likely to constrain the development of a vibrant VC market.  The VC team, along with its international development partners, the IDB and the World Bank embarked upon a programme of knowledge development, information sharing and sensitization of stakeholders, in an effort to increase awareness and move local market participants along the ‘learning curve’.  Activities included conferences, speaking engagements, presentations at seminars and workshops as well as participation in local panel discussions and sponsorship of key industry events.  The next phase of the programme is focused on facilitating venture capital transactions, supporting high potential entrepreneurship, enacting legislative, regulatory and taxation changes as well as greater communication, training and awareness building.
  
Milestones & Achievements to date
 
1.  Legal Taxation & Regulatory Framework
Specific legislation is required for the PE/VC industry.  The JVCP has identified a number of legal, taxation and regulatory changes that are required. Recommendations have been documented and short, medium and long-term strategies have been devised. A public, private sector working group will be deliberating these recommendations with a view of submitting legislative amendments for consideration by the Ministry of Finance and possibly the Cabinet during Financial Year 2015/2016. 
As a start, a special working group comprising public and private sector attorneys, tax accountants, Government tax policy specialists, external services commission and the DBJ are reviewing the existing taxation legislation under the Income Tax Act with a view to clarifying the processes for applying for taxation incentives and identifying legislative amendments.
 
                  Legal Toolkit
In an effort aimed at cost reduction to the end-users, entrepreneurs and SMEs, the JVCP has identified and developed a ‘toolkit’ of best practices, guidelines, forms and templates for the venture capital and private equity industry.  It is anticipated that this compendium of forms, templates and documents will greatly assist in reducing the overall legal costs to stakeholders undertaking venture capital transactions.
 
2.  Executive Training Workshops
As part of the developmental process, two executive training workshops were held over the period June 30 – July 5, 2014 with the objective of ensuring that all critical stakeholders are provided with the requisite knowledge and information to ensure a vibrant and sustained industry.  Ascentium Associates, a UK-based specialist-training provider that focuses on the private equity sector conducted the workshops. Participants were exposed to topics such as:  private equity and its role in an investment portfolio; key issues in investment selection and appraisal, exit strategy development and execution, among others. 
 
3.  Venture Capital Conferences
The DBJ-JVCP has successfully hosted two Venture Capital Conferences.  The first, held in September 2013 was a two-day event and was attended by over 300 persons, representing a wide cross-section of Jamaican professionals, local and international policymakers, regulators, academics and entrepreneurs.  The keynote address was delivered by venture capitalist, Paul Ahlstrom, the founder of Alta Ventures, USA.  Other presenters included the Hon. Minister of Finance & Planning who officially opened the Conference.  Day One of the conference took the form of plenaries and round table discussions, and concluded with a dynamic post conference workshop on Day Two, for local and international, private sector and governmental policymakers. 
 
Building on the success of the first VC conference, the second was held in September 2014 at the Jamaica Conference Centre, downtown Kingston and was well supported.  Keynote presenter was world-renowned Harvard University Professor Josh Lerner, as well as some 30 local, regional and international presenters, with conference events held over three days the main 2014 VC conference  event addressed a wide range of topics such as: Putting the Caribbean on the Global Venture Capital & Private Equity Map; Backing Women Entrepreneurs; The Creative Economy, Sports, Culture and Grow. Is VC a ‘game-changer’ to the creative industries?  Fuelling a Hub for Innovation and Getting the Deals Done.  Day One was dedicated to workshops for angel investors, and for policy & decision-makers; Day Two was Conference Day and the final day was geared specifically to students, entrepreneurs and SMEs.

A third VC conference was held on March 7 - 9, 2016, at the Jamaica Pegasus Hotel, under teh theme - "The Power of Smart Capital...expanding the financial landscape, fuelling innovation, driving entrepreneurship.  The activities of the conference were held over three days and featured:

  • Day 1 - Infrastructure Funding through Private Equity Funds Workshop, which was facilitated by Adam Nicolopoulos, founder of ADN Capital Ventures, Inc.  The workshop facilitated a “think tank” comprising of 37 stakeholders (13 public and 24 private sector stakeholders) with in-depth discussions on infrastructure development and funding through PE funds.
  • Day 2 - Conference Day - attracted in excess of 250 participants including fund managers, corporate and institutional investors, bankers, angel investors, business owners, business services providers, lawyers, accountants as well as public and private policymakers.  The day’s activities featured keynote presentation by Chinedu Echeruo, fireside conversations, plenaries, round table discussions and networking sessions.
  • Day 3 - Entrepreneurs’ Workshop attracted in excess of 263 participants which included existing and potential business owners, university as well as high school students.  The workshop included discussions on the following topics: Creating value through incubation and acceleration,Building successful businesses, Angel investing, Options for financing your business … Loans, Equity, Grants. 

 4. Investor Panel
An Investor Panel comprising local public and private sector investors, including institutional investors, corporates, investment bankers and advisors, as well as pension funds and multilateral partners, was established in April 2014.
 
The mandate of the Panel is to encourage the establishment of venture capital and private equity funds operated by qualified local and/or international fund managers, who are fund-raising for the purpose of investing in companies operating in Jamaica.  The members of the Panel will individually, based on their investment preferences, make the decision to invest in selected fund managers, following a due diligence process.
 
Through the mechanism of the Investor Panel, new, as well as existing fund managers, have had the opportunity of presenting proposals to this consortium of prospective local investors and have the potential to acquire partners with access to significant pools of capital.   The Panel will drive the process of identifying, selecting and investing in these fund managers.  Many of the investors who sit on the Panel are expected to be actively involved in the angel and venture capital communities.  It is anticipated that members of the Panel will also participate in mentorship and coaching of new entrepreneurs.
 
5.  Call for Proposals for Fund Managers
During the period June – September 2014 the first ‘Call for Proposals’, for Venture Capital & Private Equity Fund managers interested in investing in Jamaican businesses, was issued.  Eight proposals were received (four from local managers and four from overseas).
 
A due diligence process is underway with a view to final selection of fund managers, early in the 2015/16 Fiscal Year.
 
6.  Entrepreneurship Development - National Business Model Competition (NBMC)
The National Business Model Competition was introduced to Jamaica at the September 2013 Venture Capital Conference, when keynote presenter, Paul Ahlstrom of Alta Group, extended an invitation to the universities to organize the competition.  Prize monies as well as a place in the international competition were sponsored by Alta Group and Jamaica’s ICD Group of Companies.  Further sponsorship was secured from the DBJ, through the JVCP, the IDB’s Multilateral Investment Fund, Jamaica's investment community and the Private Sector Organization of Jamaica.  The DBJ-JVCP provides leadership, technical support and sponsorship to the NBMC.

The objectives of the NBMC are to encourage and promote creative thinking and the entrepreneurial spirit and to create a pool of potential businesses.  The idea of involving the universities was based on the international model where universities are seen as fertile grounds for the unearthing of new innovation. 
 
Organized on a tiered model whereby intra-university competitions were held between October, and January to select their top four teams to participate in the national finals, the competition saw three universities – University of Technology, Joan Duncan School of Entrepreneurship, Ethics, & Leadership; Northern Caribbean University’s Morris Entrepreneurial Centre and the University of the West Indies through the Mona School of Business & Management, and the Edna Manley College of Visual & Performing Arts - working together collaboratively, to develop a first-class event.  The number of universities participating the NBMC is likely to increase over the short to medium period as more universities sign on initiative.  Annually the national winner is offered an all-expense paid trip to participate in teh International Business Model Competition (IBMC) held in the USA.
 
The NBMC is now listed on the universities’ calendar of events, and the expectation is that the competition in the coming years will attract the participation of hundreds of student entrepreneurs, across the various campuses.
 
7.  Angel Network
Critical to the success of a vibrant and sustainable VC/PE industry is the need for ‘angel’ investors who will provide guidance, mentorship and patient funding for start-ups and innovators.  The JVCP is supporting the establishment of Jamaica’s first angel investor network – FirstAngelsJA.  Advice and guidance on the establishment of a network is being received from the Bank’s international development partners and the network now has 13 members and is actively hosting pitches from entrepreneurs.
 
8.   Legal Forum
On February 24, 2015 the JVCP Unit hosted a Legal Forum under the theme:  setting the table… a legal, taxation & regulatory framework for Jamaica’s private equity-venture capital industry at which three critical documents were presented (i) The Legal, Taxation & Regulatory Framework; (ii) Toolkit: Private Equity and Venture Capital Best Practice standardized documents guidelines and templates; and (iii) Allowable Limits for Pension Funds and Insurance Companies. The Forum was well attended and participants included: lawyers, accountants, business services providers, entrepreneurs and small business owners.  The theme “setting the table” was borrowed from Professor Josh Lerner’s book “Boulevard of Broken Dreams” and recognizes the need to have an effective ecosystem conducive to VC growth.
 
Going Forward
The JVCP over the next three years has a major focus on developing the entrepreneurial ecosystem, encouraging new funds, in particular seed and growth equity funds and  advocating  for relevant legal, regulatory and taxation modifications.   With the successful implementation of these activities, it is an objective that Jamaica’s ranking on the LAVCA Scorecard would be significantly improved.

1.  Creating a deal flow of investment ready entrepreneurs (impacting thousands of local and regional entrepreneurs)

  • Training and coaching for high potential entrepreneurs
  • Pitch events; business model competitions
  • Support of local incubators, accelerators and linking with international incubators and accelerators
  • Support university-led programmes:  incubators; IP/ commercialization of research; private equity curriculum
  • Establishment of a Mentorship Council – comprised of local and international mentors 

2.  Increase stakeholder training and capacity building

  • Training, workshops, conferences
  • DBJ VC portfolio monitoring tracking system 

3.  Promotion of Equity Financing

  • New VC and private equity funds operational
  • DBJ selectively investing in eligible funds
  • Diaspora engagement
  • Establish the Jamaica Venture Capital and Private Equity Association 

4.  Knowledge Management and Communications  Strategy

  • Communications Plan aimed at facilitating a cultural shift in attitudes towards equity finance
  • Website and Social media strategy
  • Database established to track VC industry deals 

5.  Legal, Regulatory, Taxation framework

  • Enactment of relevant legislation and regulations
  • Establishment of Tax incentives to encourage the establishment of Seed Funds and other early stage investors.