Billionaire businessman and philanthropist Strive Masiyiwa believes Barbados can lead the region in creating a venture capital ecosystem to help grow entrepreneurship.
He proposed that to devise that ecosystem, financial regulators such as the Central Bank and Financial Services Commission (FSC) should implement rules and incentives to encourage pension funds, insurance companies and other investment-type financial institutions to set aside a portion of their investment for venture capital activities.
He also suggested that entrepreneurship be taught in secondary schools, noting that this was critical to helping deal with unemployment.
“I sense that you guys could lead the way on this in the Caribbean,” Masiyiwa said during the 47th Sir Winston Scott Memorial Lecture on Monday under the theme How Innovative Entrepreneurs Can and Do Use Philanthropy and Technology to Solve Economic and Social Issues.
“We need to do something about jobs, and the only way we can tackle that, I know, is to promote entrepreneurship . . . . It would be great if every high school leaver left with an understanding that being employed is not necessarily getting a job from somebody but it is about being able to go out and start something even with your classmates . . . . This should be standard for any education system.
“Then, of course, the monetary and fiscal authorities have the tools that they turn around and say, ‘of all the investable capital, we just want one or two per cent to be put at high-risk and we will guarantee that’. Leave it to the market but if your pension funds and insurance companies could put a little bit aside as high-risk capital for which they are protected by the state and they invite skilled money managers to come forward, you could create an extraordinary ecosystem such as what’s in Israel. The beauty is that you don’t have to reinvent the wheel here,” added the Zimbabwean founder and executive chairman of Econet Global Cassava Technologies.
Masiyiwa said he believed entrepreneurship will play a critical role in building prosperity for the country. However, he insisted that new financing models were needed to help incoming and current entrepreneurs and venture capital should be the tool that is considered.
The tech entrepreneur pointed to examples in Silicon Valley, the United States as well as China where venture capital is used to help grow entrepreneurial enterprises.
“The Central Bank, the monetary authorities can create incentives that allow these institutions to make one or two per cent available of what they would invest for the support of a venture capital ecosystem.
“It has to be an industry that emerges from half a dozen or so venture capital players who take the money and begin to invest in entrepreneurs, providing seed capital, providing series B, Series C [bonds] and so forth. You’ve got to have that,” he said.
“But it is also critical that to the extent that [as] venture capitalists and even private equity players emerge they need to be able to get out. So you need to look at how your stock market develops because that is the exit point which venture capital works from. They’ve got to be able to sell out their positions and move on to new positions. And the stock market themselves must also carry out reforms that allow access to new companies.”
Masiyiwa said once people begin to see success, this could encourage them to be less risk-averse.
Governor of the Central Bank Cleviston Haynes agreed that institutional investors needed to be willing to provide venture capital for emerging entities.
“….Because bank loans are just more debt and what you perhaps need more of is equity. That is my spin on it,” he said.
“I think what we have always felt is that we need to create the enabling framework for business generally. If we can create the right macroeconomic conditions then I think we create a framework in which businesses can prosper. When we speak of venture capital we are now getting to the point of access and what we have to be able to do is try to create once again an investment climate that will allow persons to be willing to invest in venture capital.”