Venture Capital in the Caribbean Current Status, Future Prospects

1
Venture Capital in the CaribbeanCurrent Status,
Future Prospects
University of the West Indies International
Conference on Business, Banking and Finance

• Jelle Sjoerdsma
• 27 April 2004

2
Agenda

• Venture Capital in the Caribbean
• Current Status
• Global Perspective
• historical growth trends
• VC industry sizes
• Future Prospects
• Caribbean economies
• VC potential

3
Caribbean VC Status

• 1492 Columbus discovered the West Indies after
  receiving VC
• early 1990s several local initiatives in some
  countries
• mixed results failures, mergers, survivors
• Puerto Rico is in class by itself

4
Puerto Rico Investment (M)
1,000

• source Puerto Rico Venture Forum

5
VC in the Caribbean
country firms capital (M)
Barbados 3 20
Jamaica 2 60
Puerto Rico 8 ?
St. Lucia 1 6
Trinidad 5 20
6
Status is Mostly Immature

• Puerto Rico is a maturing market, with strong
  influence from USA
• Rest of Caribbean is
• led and managed locally
• only a few active firms per country
• small in scale
• making slow progress

7
Global Perspective

• VC trends in other countries
• historical growth
• economic contributions to GDP

8
UK Investment

• source British Venture Capital Association

9
UK Investment / GDP
10
USA Investment
106,000

• source National Venture Capital Association

11
USA Investment / GDP
1.06
12
2002 VC Investment / GDP ()
source 3i, EVCA, PricewaterhouseCoopers
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Caribbean Prospects

• Top-down review of economies
• VC Potential
• countries
• investment sizes
• Conclusions

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Caribbean 2002 Economies
Country GDP (US B) population (M) GDP/capita (US)
Puerto Rico 67.900 3.863 17,575
Dom Rep 21.300 8.600 2,477
Cuba 13.245 11.300 1,172
Trinidad 9.371 1.276 7,345
Jamaica 8.365 2.622 3,190
Bahamas 5.050 0.312 16,193
Martinique 4.568 0.426 10,723
Guadeloupe 4.542 0.440 10,323
Haiti 3.600 8.300 434
Barbados 2.598 0.271 9,595
Caymans 1.841 0.043 43,305
Antigua 0.721 0.077 9,426
St. Lucia 0.677 0.159 4,251
Grenada 0.401 0.103 3,911
St. Vincent 0.361 0.109 3,308
St. Kitts 0.356 0.046 7,732
Dominica 0.258 0.071 3,628
Turks 0.216 0.021 10,345
Anguilla 0.112 0.012 9,410
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Population (million)
Bahamas0.3
Cuba11.3
Puerto Rico3.9
Caymans0.0
Guadeloupe0.4
Jamaica2.6
Dom Rep8.6
Haiti8.3
Barbados0.3
Trinidad1.3
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GDP (US billion)
Bahamas5.1
Cuba13.2
Puerto Rico67.9
Caymans1.8
Dom Rep21.3
Guadeloupe4.5
Jamaica8.4
Barbados2.6
Trinidad9.4
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GDP per capita (US 000)
Bahamas16.2
Turks10.3
Cuba1.2
Antigua9.4
Dom Rep2.5
Caymans43.3
Jamaica3.2
Guadeloupe10.3
Puerto Rico17.6
Barbados9.6
Trinidad7.3
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VC Potential
Bahamas5.1 0.3 16.2
countryGDP pop /cap
Puerto Rico67.9 3.9 17.6
Jamaica8.4 2.6 3.2
Guadeloupe4.6 0.4 10.3
Martinique
cutoff limits gt 1.0 1.0 5.0 gt 1.0 0.2
5.0 gt 1.0 0.2 3.0
Barbados2.6 0.3 9.6
Trinidad9.4 1.3 7.3
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Annual Investment Potential
Assume annual investment at 0.1 of GDP
country US million
Puerto Rico 68
Trinidad 9
Jamaica 8
Bahamas 5
Barbados 3
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Conclusions

1. Only a few Caribbean countries can sustain a
   local VC industry
2. VC activities, outside Puerto Rico, are small
3. Scope for new initiatives is limited
4. Experiences from other countries indicate that
   modest growth and long-term sustainability is
   achievable

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Q A

• www.dynamic-equity.com