Poverty & Social Development: A Caribbean Perspective

Facilitators for the Bahamas Entrepreneurial Venture Fund Forum, headed by the Chairman of the Fund Board of Directors, Parliamentary Secretary in the Ministry of Finance, Michael Halkitis, the Member of Parliament for Adelaide; the Fund Administrator, Jerome Gomez, of the accounting firm of Gomez and Co.; Fund Board Member, Edison Sumner, together with Bahamas Industrial and Agricultural Corporation (BAIC) G.B. Manager, H. Rudy Sawyer; Domestic Investment Officer, Gary Russell, and Chela Cartwright, of BAIC’s Handicraft and Souvenir Section, addressed the conditions under which enterprising Bahamians will be able to apply to the Fund for assistance in launching owner-operated businesses.

Mr. Halkitis, in a short address, thanked the audience for showing up in such good numbers for “this important Government initiative”, and before turning the presentation over to Mr. Gomez, the (Fund’s) Administrator, and Mr. Edison Sumner, one of the private sector representatives on the Board of Directors of the Fund, expressed the hope that following the presentation, “many of you would be able to take advantage of this programme”.

In giving an overview of the history of the Fund and the reason for its creation, Mr. Sumner said the Bahamas Entrepreneurial Venture Fund, briefly called the Venture Capital Fund, was established and incorporated in 2005. The purpose of the Fund being incorporated and formed really was the brainchild of Prime Minister Christie, who made mention of it a few years ago.

The Fund was officially incorporated and formed in May of last year for the purpose of being able to assist entrepreneurs, small business persons, who were trying to begin a business or helping those already in business to expand their businesses.“Because”, he pointed out, “they understood and realized that small businesses drive the country’s economy: hence the creation of the Venture Capital Fund in 2005 with one million dollars, sponsored and put in by the Government of The Bahamas.

“The Government sponsored the Fund, which meant, at that time the Government was the only shareholder of the Fund”.Mr. Sumner said the Government does not run the Fund. Mr. Halkitis, who sits as Chairman of the Board of the Fund, is the only Government representative on the Board, which is comprised of mostly private-sector individuals who bring a certain level of expertise to the Board so that when they review applications they get a wide cross-section of opinions on the applications and businesses being presented.Mr. Sumner is a Director and Chief Operations Officer at Montague Securities International in Nassau, and he also sits as a Director on the Bahamas Entrepreneurial Venture Fund. Mr. Sumner told participants that they could rest assured that when applications are submitted for review they get consideration from a good cross-section of expertise and qualified minds to the process.The Fund, Mr. Sumner stated, is doing quite well so far. The first million dollars put in by the Government has already been allocated, and a second million dollars was injected into the Fund, and it is expected that another million dollars would be added to the Fund during the next budgetary year in the next few weeks.

Mr. Sumner noted in time to come, perhaps between the next year or two, “We expect to start attracting private equity into the fund – meaning that we will be coming to the public, going to the banks. Right now we are talking to one or two commercial banks about them becoming partners with us with the Venture Capital Fund; so that they will be able to put some cash into the Fund and to build its capital base.“But the idea is also that in time to come, in the next year or two after we would have established a track record for the Fund, we expect to go to the public to attract more private equity and private finances into the Fund, so that we will have more money available to lend and to assist small business persons like yourselves.

“We meet and look at application forms regularly and we respond to applicants in a very timely fashion; and a part of what we do is that we want to take away the bureaucracy and the red tape of going through Government systems; and that’s why we have got so much private-sector involvement with the fund.”

Mr. Sumner noted that Scotia Bank has also begun their own Venture Capital Fund, but there were some fundamental differences in these funds and the structure and what are the purposes of these funds.“For example,” he said, “the Bahamas Entrepreneurial Venture Fund will fund a business from its inception. We will provide funds to start up businesses. The Scotia Bank Fund will only fund existing businesses. Also our levels of financing are different. So we are talking with them as well, hoping we can get some arrangements where we can actually use their fund as a secondary fund to the Bahamas Entrepreneurial Fund.”

Mr. Sumner expressed pleasure to see the interest level of individuals who came out to hear the presentation, and described as “very productive” meetings held earlier in the day with representatives from the Grand Bahama Chamber of Commerce, BAIC and the Port Authority; we also met with some private interests and with a few persons who had already submitted some applications to the Fund for consideration

Mr. Jerome Gomez, who administrates the Fund and receives the applications, processes them and keeps all the records of the Fund, gave an overview of the Fund and how to apply.

Mr. Gomez, of Gomez, Partners and Co. the accounting firm charged with the responsibility for managing the Fund, said the Government in its wisdom thought it fit to privatize the fund as much as possible and so it decided that no department of the Government should be in charge of the Fund.

“And,” he continued, “it went to market and did some bidding and our firm was successful in the bidding process, in becoming the Administrator, although all decisions are made by the Board of Directors, not by the Administrator.

“The Administrator’s job is to receive the business proposals, and to interview applicants if necessary, as not all applicants are interviewed. “We review your business plan; we prepare a presentation in summary report for the Board of Directors; we correspond with applicants, and we expect applicants, even if you know members of the Board to still correspond through the Administrator.

“Then we are responsible for dispersing the funds and all the follow-up legal work and other activities we do, so we are the main focus and major point of contact. “We do have a website – bahamasventurefund.com, where you will find much of what I will tell you this evening, and you will be able to refresh your memory and see exactly what you have to do,” said the Administrator.

Mr. Gomez said, “Even though we have an application fund, we require applicants, and if you want to get through the process quickly – submit a complete business plan. Another thing”, he advised prospective applicants, “don’t believe reaching me to discuss the matter will help before hand; it may delay it, because I do travel quite a bit and I am out of the office doing different things, so get your proposal in. “Once it comes to our receptionist, she stamps the date received, and we begin to process in the order applications are received. However, some people do get pushed if your idea is so unique that we, as a Fund, feel we should act on that idea immediately to avoid it getting lost in the fray”.

Mr. Gomez noted that presently the Fund has an office in Nassau and applications can be forwarded to our office in Nassau using BAIC’s Grand Bahama office, or send it by email. I will acknowledge receipt of your plan and we will proceed from there.

“If you are successful in securing a loan from the Venture Capital Fund, and we set up an account at the Bank of The Bahamas, you will also be required to set up an account at the Bank of The Bahamas.“We are funding small and medium-size businesses – no big businesses, and people with an existing businesses that might need some extra capital to expand. We look at most business sectors, most industries, and we do have a few restrictions. One of the strongest points is you, the applicant, the person applying to the Fund. We put a lot of focus on that person who should be experienced in what they are going to do. “There must also be a clear need for the product or services that you are going to provide; and you must be certain. The fund will assist you with that, that once you have been funded and started, you are gong to keep financial records which we will want to see from time to time,” said Gomez.

Among the businesses presently on the Funds restricted list, Mr. Gomez said, were: beauty salons, agriculture and fishing projects, wholesale and retail liquor stores, car washes, convenience stores, pre-schools and female clothing stores.Participants were advised that present, the cap on loans from the fund for small businesses is $50,000 repayable in 3-5 years. Eligible existing businesses will be considered for the maximum of $50,000. But for start-up businesses the maximum loan generally would be 80 per cent with the owner putting in the remaining 20 per cent. Interest rate is at a very low 8.5 per cent, and the Grace Period for start of repayment is three months.

Mr. Gomez also gave the Fund’s conditions, applicable where special equity requirements would be sought for successful businesses seeking loans up to $100,000.