Business Angel Investing To Be Introduced to St. Vincent and the Grenadines

On Tuesday, May 7 2019, Invest SVG hosted a media launch to announce the implementation of a new initiative – Angel Investing Pilot Programme – to St. Vincent and the Grenadines, which is designed to provide MSMEs with an alternative route to finance and mentorship. Executive Director Ms. Annette Mark delivered the feature address.

The recognition of the key role played by small and medium enterprises (SMEs) as drivers of economic growth has been increasingly acknowledged by public policy makers. Globally this has led to a number of countries developing and implementing a range of initiatives, policies and policy frameworks to support, promote and grow this segment.

In St Vincent and the Grenadines, the government has long since recognised the importance of SMEs and the positive impact they have on key economic and social variables. While SMEs in St Vincent and the Grenadines do contribute to job creation, their contribution to overall economic growth, even when accounting for the weight of the informal sector, lags behind other countries in the region. With this in mind the team at Invest SVG has been working with regional and local partners to explore the challenges our SMEs face, the opportunities they present, and how their further development can be supported.

We are of the belief that by focusing increased attention on strengthening the SME sector we will help to build greater economic resilience in St Vincent and the Grenadines. Our findings revealed that while the SME sector faces a number of significant challenges, access to appropriate financing sources in their respective local markets is still one of the main hindrances for growth.

This access to finance challenge is compounded by the fact that traditional financial institutions are reluctant to lend to SMEs and start-ups as the perceived risk is typically considered too high, leading to demands for excessive amount of collateral, which most are incapable of providing. And while we do know that the governments do provide grants to support this segment, these programmes are too ad-hoc and far between.

Again, we recognize that financing needs are only a piece of the puzzle of a number of challenges and policy responses required to develop the SME sector. Nevertheless, we felt it important enough to pay special attention to this area; and that is why today, with the support of the Caribbean Business Angel Network (CBAN) and Caribbean Export Development Agency, Invest SVG launches its Angel Investing Pilot Project, designed to explore the development of Business Angel Investing in St Vincent and the Grenadines.

What is Business Angel Investing and how does it work?

Business Angel Investing is defined as the practice of High Net Worth Individuals (HNWIs) investing their personal time, money and expertise into early stage businesses in which they have no family connection, with the aim of helping those businesses to grow and realize a financial return on their investment over the long-term. It also involves providing access to influential networks.

Business Angels typically take a more active role in the business than a traditional private investor. In exchange for the financial and intellectual investment in the firm, Angels often require equity in the company and are, therefore, committed to the business and its success. Angel investing is often a favourable form of capital for seed and early stage enterprises as angels generally understand the inherent risks associated with early-stage ventures and have a higher risk tolerance.

The goal of this pilot project is to introduce Business Angel Investing to St Vincent and the Grenadines as a way to increase private investments to SMEs and other early-stage firms. While this is new to St Vincent and the Grenadines, it is not new to the Caribbean. The Caribbean Business Angel Network (CBAN) was started in 2017 by Caribbean Export with support from the World Bank. The aim of the program was to foster an Angel Investing ecosystem in the region to improve the flow of private capital to support early-stage companies and SMEs across all sectors.

Today, there are Angel groups in Jamaica, Trinidad, Barbados, Dominican Republic, the Bahamas, and an OECS group is being developed with over 75 individual investors. Additionally, over 25 firms within the region have benefited from Angel investments totally to a sum of US$4 million. These companies are from St Lucia, Trinidad, Barbados, Dominican Republic, just to name a few.

Business Angel Investing, as do other forms of investments (local and Foreign) play a key role in understanding and thereby improving the local investment environment in St Vincent and the Grenadines and will certainly be helpful as Invest SVG takes the lead in developing a National Investment Policy and Strategy. It is our expectation that, through this and other such programs, Invest SVG will be able to bring together all relevant stakeholders to share ideas towards an inclusive and robust investment ecosystem for St Vincent and the Grenadines. However, it should be noted that this is just a first step towards fostering a private investment ecosystem within St Vincent and the Grenadines, with Business Angel Investing being a key part of that.

What to expect over the next few months

A call for interested start-ups and SMEs will be sent by early next week by print and social media and the deadline for applications is the 31st May, 2019. The applications will be evaluated by Caribbean Export Development Agency and 16 potential businesses will be selected. There will be four preliminary rounds, with local business owners from a wide cross section of the society acting as judges on each panel.

The winners of each round will receive a cash prize of US$500 each and will have a place at the finals in October. The finals will take place on the 29th October, 2019 at the Everything Vincy Plus Expo 2019 and the winners will appear before the OECS Angel Investors, who will hopefully find a business idea/ideas or an existing business that they can invest in.

There can only be on winner though for the grand prize of US$2,000, but all four candidates will have the opportunity to pitch there ideas and could still attract the attention of an Angel. During the period between the selection and the finals candidates will have an opportunity for training to be hosted by Invest SVG which will prepare them for the finals and possibly for the preliminary rounds. However, the latter is dependent on scheduling.

This is a very exciting project for us and we are looking forward to working with some key stakeholders and individuals over the next five months or so. This will allow for the building of synergies and relationships with the main purpose of contributing our efforts to the development of our SMEs, economic growth in St Vincent and the Grenadines and the empowering of persons within our society.