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 design this ecosystem, financial regulators such as the Central Bank and the Financial Services Commission (FSC) implement rules and incentives to encourage pension funds, insurance companies and other institutions. investment-type financial institutions to reserve part of their investments for venture capital activities.
He also suggested that entrepreneurship be taught in secondary schools, noting that this was essential to help tackle unemployment.
“I feel you could be leading the way in this area in the Caribbean,” Masiyiwa said at the 47th Sir Winston Scott Memorial Lecture on Monday on How Innovative Entrepreneurs Can and Are Using Philanthropy and Technology to Solve Economic Problems and social.
“We have to do something for jobs, and the only way to do that, I know, is to promote entrepreneurship. . . . It would be great if every high school grad left understanding that being employed isn’t necessarily about getting a job from someone, it’s about being able to go out and start something even with your classmates. . . . This should be the norm for any education system.
“Then, of course, the monetary and fiscal authorities have the tools that they turn around and say, ‘of all investable capital, we just want one or two percent to be at high risk and we guarantee that’. Leave it to the market, but if your pension funds and insurance companies could set aside some as high-risk capital for which they are protected by the state and invite qualified fund managers to come forward, you could create an extraordinary ecosystem such as what there is 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 would play a vital role in building the country’s prosperity. However, he insisted that new funding models were needed to help incoming and current entrepreneurs and that venture capital should be the tool considered.
The tech entrepreneur cited examples in Silicon Valley, the United States as well as China where venture capital is used to help grow entrepreneurial businesses.
“The Central Bank, monetary authorities can create incentives that allow these institutions to make available one or two percent of what they would invest in support of a venture capital ecosystem.
“It must be an industry that emerges from half a dozen venture capitalists taking the money and starting to invest in entrepreneurs, providing seed capital, providing Series Bs, Series Cs [bonds] And so on. You must have that,” he said.
“But it is also essential that insofar as [as] the venture capitalists and even the emerging private equity players they need to be able to exit. So you need to look at how your stock market is doing, because that’s the exit point from which venture capital operates. They must be able to sell their positions and move into new positions. And the stock market itself must also carry out reforms that allow access to new companies.
Masiyiwa said once people start seeing success, it might encourage them to be less inclined to take risks.
Central Bank Governor Cleviston Haynes agreed that institutional investors must be willing to provide venture capital to emerging entities.
“…Because bank loans are just more debt and you may need more equity. That’s my take on it,” he said.
“I think what we’ve always felt is that we need to create an enabling environment for business in general. If we can create the right macroeconomic conditions, I think we’re creating an environment in which businesses can thrive. When we talk about venture capital, we now come to the entry point and what we need to be able to do is try to create again an investment climate that will allow people to be willing to invest in capital -risk.
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