With billions of dollars sitting in the banking system and limited investment options available in Barbados, a leading businessman who has co-established and grown a highly successful auto-retail enterprise, is calling on more Barbadians to invest in small businesses to help them grow.
“It is not a secret, our banks are very liquid . . . Our idea is to tap into some of those people who have that money sitting down in the banks and say ‘look, there is another area to invest, into a company or new venture’,” said Dereck Foster, co-founder of Automotive Art which has outlets in several Caribbean countries.
He added: “If we are able to get successful companies in Barbados and, the more of them we form, especially if we get some more companies that can compete internationally, it is better for our country. It is better for everybody. If you look in our banking system, there are millions and millions of deposits with nowhere to go and most investments end up going into real estate because there is nothing else to invest in.”
Foster’s call was made yesterday in an address at the official launch of the 2015 Trident Angels Investor Network at the Cave Hill School of Business. The net was established by the Barbados Entrepreneurship Foundation (BEF) after recognizing the constraints which many entrepreneurs face when seeking financial support to grow their businesses
The BEF also yesterday announced this year’s Trident Angels call for proposals. The application, which can be found on the BEF’s website, is open until July 31 to entrepreneurs seeking to get investment to grow and expand their companies.
Foster, a Trident Angels champion, said it was necessary to get people to invest in small businesses to help them to grow. This, he said, would result in an increase in employment and more robust economic activities that will benefit the island.
Noting that the local stock exchange had “limited” companies and not much trading was taking place, Foster said he would encourage high net worth individuals with deposits on the bank to consider becoming angel investors.
He also urged entrepreneurs to become more accepting of angel investment, pointing out that it was not easy to keep a business in operation for decades without the right kind of financial and technical assistance.
He explained that there was a challenge getting more entrepreneurs in Barbados to welcome angel investment into their operation because they believed they would be giving up ownership.
“Many entrepreneurs I speak with, that is the part they really struggle with – giving up equity. They seem to think that equity is control . . . but the reality is if you get the right equity partners, they add value to your business and could grow the business much faster,” he said.
“So our role is to see how we could mesh these two things together with them understanding this is high risk investment and the entrepreneur understanding that his could come with some control. But if you think you are in control when you go to a bank, you are sadly mistaken because the day you can’t pay their loan, they are coming for your assets. So this is about a different kind of investment,” explained Foster.
There are currently more than 30 business investors in the Trident Angels network. Foster said the intention was to expand to include more professions including lawyers and doctors.
Following the application process, the entrepreneurs will do a business pitch before the potential investors. This will be followed by a number of processes including an investor review and assessment of the business.
Foster said while he was encouraged by the range of businesses coming forward to get investment, “we need more”.
He said the Barbados Trident Angels Investor Network would be seeking to work with similar operations in Jamaica and Trinidad in the future, noting that angel investment was becoming increasingly popular throughout the region.