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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