venture capital in the caribbean current status, future prospects
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Venture Capital in the Caribbean
Current Status, Future Prospects
Jelle Sjoerdsma
27 April 2004
University of the West IndiesInternational Conference on Business, Banking and
Finance
AgendaVenture Capital in the
Caribbean
1. Current Status
2. Global Perspective• historical growth trends• VC industry sizes
3. Future Prospects• Caribbean economies• VC potential
Caribbean VC Status
• 1492: Columbus “discovered” the West Indies after receiving VC
• early 1990’s: several local initiatives in some countries
• mixed results: failures, mergers, survivors
• Puerto Rico is in class by itself
Puerto Rico Investment (M$)
0
20
40
60
80
100
12019
91
1993
1995
1997
1999
2001
buy-out
VC
source: Puerto Rico Venture Forum
1,000
VC in the Caribbean
country firms capital (M$)
Barbados 3 20
Jamaica 2 60
Puerto Rico
8 ?
St. Lucia 1 6
Trinidad 5 20
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
Global Perspective
VC trends in other countries
• historical growth
• economic contributions to GDP
UK Investment
source: British Venture Capital Association
0
1,000
2,000
3,000
4,000
5,000
6,000
7,00019
84
1986
1988
1990
1992
1994
1996
1998
2000
2002
UKP million
companies
UK Investment / GDP
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%19
84
1986
1988
1990
1992
1994
1996
1998
2000
2002
USA Investment
source: National Venture Capital Association
0
10,000
20,000
30,000
40,000
50,000
60,00019
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
US$ million
companies
106,000
USA Investment / GDP
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%19
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
1.06 %
2002 VC Investment / GDP (%)
source: 3i, EVCA, PricewaterhouseCoopers
PortugalPoland
SwitzerlandDenmarkSpain
ItalyIndia
Indonesia
FranceHong Kong
USA
Greece
South Africa
Ireland
0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7%
ChinaCzechJapan
AustriaNorway
GermanyBelgiumIceland
CanadaAustralia
FinlandNetherlandsSouth Korea
SwedenUK
Caribbean Prospects
Top-down review of economies
VC Potential• countries• investment sizes
Conclusions
Caribbean 2002 EconomiesCountry GDP (US$ B) population (M) GDP/capita (US$)
Puerto Rico 67.900 3.863 17,575
Dom Rep 21.300 8.600 2,477
Cuba 13.245 11.300 1,172
Trinidad 9.371 1.276 7,345
Jamaica 8.365 2.622 3,190
Bahamas 5.050 0.312 16,193
Martinique 4.568 0.426 10,723
Guadeloupe 4.542 0.440 10,323
Haiti 3.600 8.300 434
Barbados 2.598 0.271 9,595
Caymans 1.841 0.043 43,305
Antigua 0.721 0.077 9,426
St. Lucia 0.677 0.159 4,251
Grenada 0.401 0.103 3,911
St. Vincent 0.361 0.109 3,308
St. Kitts 0.356 0.046 7,732
Dominica 0.258 0.071 3,628
Turks 0.216 0.021 10,345
Anguilla 0.112 0.012 9,410
Caymans0.0
Population (million)
Cuba11.3
Jamaica2.6
Dom Rep8.6
Haiti8.3
Puerto Rico3.9
Barbados0.3
Trinidad1.3
Bahamas0.3
Guadeloupe0.4
GDP (US$ billion)
Trinidad9.4
Barbados2.6
Puerto Rico67.9
Cuba13.2
Bahamas5.1
Jamaica8.4
Caymans1.8 Dom Rep
21.3Guadeloupe
4.5
GDP per capita (US$ 000)
Caymans43.3
Jamaica3.2
Cuba1.2
Bahamas16.2
Turks10.3
Dom Rep2.5
Puerto Rico17.6
Trinidad7.3
Barbados9.6
Guadeloupe10.3
Antigua9.4
VC Potentialcountry
GDP pop /cap
Trinidad9.4 1.3 7.3
Puerto Rico67.9 3.9 17.6
Barbados2.6 0.3 9.6
Bahamas5.1 0.3 16.2
Jamaica8.4 2.6 3.2
Martinique
Guadeloupe4.6 0.4 10.3
cutoff limits
> 1.0 1.0 5.0
> 1.0 0.2 5.0
> 1.0 0.2 3.0
Annual Investment Potential
country US$ million
Puerto Rico 68
Trinidad 9
Jamaica 8
Bahamas 5
Barbados 3
Assume annual investment at 0.1 % of GDP
Conclusions1. 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
Q & A
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