Angel Investor Welcomes Sidecar Fund

Noted Angel Investor, Sandra Glasgow, has welcomed the proposed Sidecar Fund Facility to be implemented by the Government, which will provide equity financing to early-stage, scalable and investment-ready business start-ups.

The facility, with technical and funding support from the Inter-American Development Bank (IDB), will make $200 million in equity financing available to business start-ups by matching the support from identified angel investors on eligible ventures.

Mrs. Glasgow said she is “most excited” about this announcement by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, during his 2019/2020 Budget presentation in May. The creation of the Sidecar Fund is among a raft of measures the Government will be undertaking to provide increased support to micro, small and medium-sized enterprises (MSMEs).

Founding member of the country’s first angel network, First Angels Jamaica Limited, Mrs. Glasgow was speaking at a meeting of the Rotary Club of St. Andrew, held at the Hotel Four Seasons in St. Andrew, on Tuesday (July 23).

“The Sidecar Fund will co-invest with our network, which is amazing, because we have already invested (just over) $200 million in four years. So, with another $200 million from the Government added to our funds, we will have a bigger pool of funds to invest in companies,” she said.

Presenting on the topic ‘Giving Ideas Wings: Angels Supporting Entrepreneurs’, the Business Mentor said it was “refreshing” to hear the Finance Minister’s Budget presentation, which proposed “measures to improve access to finance and reduce transaction costs as the way to empower Jamaicans to rise up through their own efforts”.

Among the measures cited by Dr. Clarke were an increase in the General Consumption Tax (GCT) threshold from $3 million to $10 million; abolition of the Minimum Business Tax; and elimination of the Asset Tax for non-financial companies.

“These measures have been particularly helpful to small and medium enterprises, especially the kinds of businesses that I believe will make the greatest impact on Jamaica’s economic growth,” Mrs. Glasgow said.

These, she pointed out, are new, innovative companies that are utilising the latest technologies and have the potential to grow into significant businesses in the future and create jobs.

She praised the Government, which, through the Development Bank of Jamaica (DBJ), along with a group of players in the private sector, has been leading in the development of a venture capital and private equity ecosystem over many years.

“I have to give kudos to the DBJ, which has invested a lot of money in developing the venture capital and private equity ecosystem, looking at supporting entrepreneurs through training, grants, vouchers and we are actually promoting that model,” Mrs. Glasgow said.

It was further announced in Dr. Clarke’s presentation that $1.8 billion has been earmarked for loans to MSMEs over the course of the 2019/2020 financial year, through the DBJ and other intermediaries.

This includes $600 million to provide loan guarantees through a Credit Enhancement/Loan Guarantee Fund to MSMEs with limited or no access to the collateral required to access loans; and $400 million allotted to finance the Risk Capital Financing Fund for MSMEs.

Mrs. Glasgow, who is also a Corporate Governance Specialist and Business Coach, said that this type of financial support from the DBJ and Angel Investors has been crucial to the development of business start-ups, which are normally challenged in accessing funds, particularly from banks.

“We know that traditional bank financing is ill-suited for the early stages of businesses like these, and particularly for newer, innovative and fast-growing companies with little or no collateral and which present higher-than-normal risks,” she said.

Mrs. Glasgow, who noted that she has spent the last 30 years of her working life devoted to helping Jamaicans start and sustain businesses, contended that private equity and venture capital support has been scarce in Jamaica and the Caribbean.

It is for this reason that First Angels Jamaica Limited was founded in 2014 “to support and finance the development of innovative businesses that have the potential to grow into significant businesses in Jamaica and throughout the Caribbean”.

She noted that the company, which now has 37 members, including individuals and companies that are based in Jamaica and the Caribbean, has invested over 600 hours in doing due diligence.

“We have funded 14 deals in 12 companies, representing 34 per cent of all the companies pitching to us,” she informed, adding that 177 company founders have been trained in investment readiness.

Mrs. Glasgow explained that Angel members are high net worth private equity investors who have the desire and high net worth to enable them to invest part of their assets in high-risk, high-return entrepreneurial ventures.

“In return, they expect to get a share of the company, a share of the income and, ultimately, capital gains,” she said.