Venture Capital Fund Next Fiscal Year

The Development Bank of Jamaica (DBJ) is to launch a venture capital fund within the first half of the next fiscal year, which begins April 1, 2014.

This initiative forms part of the Jamaica Venture Capital Programme (JVCP), which is being implemented over three years in collaboration with the Inter-American Development Bank (IDB).

The JVCP is a Government of Jamaica (GoJ) initiative, aimed at developing the environment to mobilise long-term equity funding to enable greater access to alternative financing sources for high potential, small and medium size (SME) enterprises, and entrepreneurs.

Making the announcement at a Venture Capital Conference held at the Jamaica Pegasus hotel in New Kingston on September 9, Minister of Finance and Planning, Dr. the Hon. Peter Phillips, pointed out that the venture capital fund, and the efforts involved in making it a reality, “assume a central place in the policy perspectives of this administration”.

He said this move is important as it takes place within the context of the Economic Reform Programme and an Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF), which has, as its centre-piece, the reduction in the levels of public debt.

“It takes place against the background where we recognise that there are many factors that impede the development of the MSME sector. There is a high degree of informalisation, inadequate knowledge of modern business procedures, the difficulties of accessing financing, problems of high energy costs, and some of these will require government interventions in other ways and policy interventions to help solve them, but it is in this context that the DBJ with its mandate to facilitate economic growth, has reached out in very significant ways to place emphasis on that sector,” Dr. Phillips stated.

Chairman of the DBJ, Joseph Matalon, said DBJ views the availability of venture capital as one solution to address the issue of lack of access to long-term financing required by high potential SMEs, as well as innovative start ups.

“We recognise that there continues to be a persistent gap when it comes to longer term SME financing…within the next 12 months, it is our intention to provide seed funding to a newly established venture capital fund or funds, but we also wanted to ensure sustainability, and our main objective, is to therefore lay the proper foundation for a vibrant and sustainable venture capital and private equity industry that is driven by the private sector,” he explained.

For her part, Country Representative, IDB, Therese Turner-Jones, informed that a consultant “will be looking at the system which is necessary to make venture capital a reality in Jamaica”.

“We see this as an excellent opportunity to enable small enterprises in Jamaica to have more durable, sustainable, long-term access to finance, and in such a way that we create a fund and opportunities for venture capitals to really thrive in Jamaica in the future,” she stated.

The implementation of the programme is as a result of a technical co-operation agreement signed by the DBJ and the IDB in February this year.

The agreement sees the IDB providing some $14 million (approximately US$150,000) in grant financing under its Multilateral Investment Fund (MIF) facility, with the DBJ putting up counterpart funding totalling $12 million (approximately US$128,000).

The one-day conference is being held under the theme: ‘Advancing Innovation and Entrepreneurship – Seeding Tomorrow’s Opportunities’.