Investment Opportunities
are normally a small percentage of proposals received but, nevertheless, more companies were expected to be active by this time. In 2010, we expect to start a shift away from a fund-based model to a project-based venture capital model. This will be more inclusive and should encourage investors and entrepreneurs alike. Trinidad and Tobago could start by setting up a club or network of angels and running training to increase their numbers. For example, we run SECA (South East Capital Alliance) the only regional business angel network in the South East of England. This allows entrepreneurs and investors to create mutually beneficial partnerships. Registered investors actively seek investment opportunities at Investor Forums across the South East throughout the year. Each event gives companies the chance to pitch to investors for the investment that they require. Business angels will usually take a seat on the board of their investee company, thus bringing experience, skills and contacts which the fledgling business often lacks. Many businesses rely on good support from banks and this is undoubtedly important. However, some business models do not suit the risk or the inflexibility of financial products offered by banks. For example, some technology businesses will need years to work on their research and development before they have a marketable product to sell. This is particularly true of some sectors such as bioscience. Sometimes neither loan nor equity is quite right for a business so alternatives are needed. In the UK and some other countries there are loans available from the government where you do not need to start paying anything back until the business is profitable. Partnering with universities and other research bodies is another important element in a truly innovative economy. At Finance South East we have recently teamed up with a government-backed research institution – The Engineering and Physical Sciences Research Council (EPSRC) - to create a unique Collaboration Fund. The fund awards grants, through calls for proposals, of up to £100,000 to researchers in UK universities. All projects must involve a business partner who will work with the applicants to take commercial opportunities forward. This ensures a swifter transfer from lab bench to commercial reality with wins all round for the university and the commercialising partner. This fund also highlights the need to make the best use of existing knowledge to create businesses with truly innovative products and services. Collaboration such as this, between universities and small dynamic businesses, accelerates technology much faster and could ensure innovations benefit the Trinidadian economy and not overseas. Business mentoring plays an important role here, too, as developing a business involves more than simply accessing finance. The Collaboration Fund also offers the opportunity for the project team at the university to work with an experienced entrepreneur assigned to them as an impartial and objective business coach or mentor. It is far too easy for small companies to burn cash if they do not have welldeveloped plans and financial controls. At Finance South East we offer a wide range of support. For example our investment readiness support service provides strategic guidance for companies seeking investment, preparation and rehearsal of investment pitches and post investment support though mentoring and coaching, as well as signposting to other agencies who provide other support (e.g. exporting). We have found these kinds of programmes critical to achieving successful investments and a world-class region with sustainable prosperity.
The BDC and the Ministry of Trade and Industry provide some of these services along with NEDCO. The University of Trinidad and Tobago also offers similar services but these are primarily aimed at their own students. Trinidad and Tobago could also offer alternative funding and mentoring to create a sustainable support system for entrepreneurs, businesses and their investors. Through the concept of a funding escalator in the UK we can support high-potential businesses from startup right through to expansion. Our Commercialisation Fund provides loans of up to US$100,000 for companies at proof-of-concept stage. At the other end of the scale the Seed Fund offers mezzanine loans of up to US$500,000 to allow companies to expand. It is important to ensure there are no gaps in funding at any stage of a business’ life cycle as different business need investment at different times. Ultimately, the world is becoming a smaller place and it shows in the fact that our expertise and know-how has been transferred to many other regions of the world from Belgium through to the former Baltic States to Eastern Europe. Trinidad and Tobago has a fantastic resource of talented and ambitious entrepreneurs, but clearly they can only achieve so much without finance and support. Ultimately, the key is giving private investors truly valuable business opportunities at a point where the risk/reward ratios are in balance. Stand alone schemes do not succeed; the needs and ambitions of the region need to be examined and a range of measures implemented to ensure long-term success and prosperity. Sally Goodsell is CEO of regional funding organisation Finance South East which specialises in providing funding and support for ambitious businesses. While based in the UK, the organisation collaborates with many other countries. For more information see www.financesoutheast. com
Top 10 tips for creating a knowledge economy 1. Boost entrepreneurial activity with early stage government finance for ideas with strong potential 2. Link universities and other research organisations to businesses and help translate academic discoveries into financial returns 3. Keep innovations in Trinidad and Tobago by providing alternative ways of profiting from innovations rather than selling ideas overseas 4. Incentivise private investors with tax breaks 5. Train wealthy individuals to become business angels and set up networks and syndicates 6. Provide mentoring and business coaching services for entrepreneurs 7. Get extra support for groups with more barriers to entrepreneurial activity such as women and young people 8. Train entrepreneurs in how to win private investment; both locally and abroad 9. Ensure there is appropriate funding available for every stage in the business lifecycle, from start-up to large scale expansion 10. Remember, stand-alone initiatives will be limited in their success and instead aim to create a whole ecosystem. This means gathering feedback from entrepreneurs and investors and adapting your programmes to suit the needs of the people who can transform the T&T economy.
Business Trinidad & Tobago
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