Jamaican investor math: “We’ll give you $10,000 for 30% of your startup.” I swear, I don’t know if it’s ignorance or arrogance. 😂
Entrepreneurs are so frustrated Due to the state of the local investor market in Jamaica, they are fed up with why there are investment offers of $10,000 for 30% of a startup, or 60% for $3,300. Entrepreneurs feel insulted by these offers and are vocally saying “Never, never.”
So, it’s been 10 years since the first two angel investor groups were launched and the foundation was laid for organizations like the Development Bank of Jamaica to convene and educate new tech investors, so why are we still here?
This current situation leads us to ask the following questions:
What was the outcome for the companies that received and accepted these low offers? Did the deals and companies succeed? Because the only way these predatory terms will stop is for companies to realize that they would be more successful if they offered reasonable, competitive terms. What is the success rate?Because if the founders are not motivated, running the business is a whole different story. Are investors making money this way, or is there data that shows they’re shooting themselves in the foot?
moreover
• Is stock investing the wrong approach? Are priced rounds beneficial or harmful for early stage startups, and should investors and entrepreneurs take advantage of them? Convertible bonds How to manage both upside and downside risks? Does the local investor market understand how this works?
• Are these deals being offered as is? Strengthening the startup pipeline Does it really need to happen so that abundant patient capital emerges?
• Are some investors offering these deals to kill or buy out the startup entrepreneurs who have developed the product? Scaring or confusing them What is your current position in the industry?
• How much is this? A culture of risk aversion is widespread What does this mean for early stage startups, when more mature digital businesses seem to be having trouble attracting capital? But where will future innovation and industry leadership come from if we continue to water only one part of the industry? In some ways this seems like a backwards strategy.
• can Jamaican investors see themselves as investing in early stage businesses in the same way as experienced and successful American and European investors. What does this kind of investment look like as a simple math and long-term strategy? It means having a portfolio of at least 20 startups, knowing that 80-90% will fail, but the successful ones will pay for themselves exponentially.
• our The financial system remains too oligopolisticIs there not enough competition between funding sources and interest rates?
• Could the passing of the Partnership Act 2017 cause disruption to the local investor scene? Jamaica’s technology and finance industries have been waiting with bated breath for ministerial approval and the regulatory framework to fully come into effect. The newly enacted Partnership (Limited) Act, 2017; Each time this is done, “A major necessity and complexity in the modern commercial environment includes several new forms of limited liability partnerships and a clearer set of rules governing their formation and operation. Many of these rules facilitate the effective use of limited liability partnerships as investment vehicles..”
in short, Angel and venture funds can be easily registered and established in Jamaica without going through any legal formalities.This will enable a freer, more legal and abundant flow of investment capital for technology startups and small and medium-sized digital businesses, and will also eliminate the need for technology startups in particular to register in the United States in order to attract U.S. angel investors and venture funds to launch and grow their digital businesses.
Click here for details
1. Entrepreneurs need to be better educated How and when to raise funds for a startup, what makes a good investor, and How to negotiateif you don’t choose the bootstrap route.
2 Wealthy individuals and angel investors are new entrants into the field, How to evaluate a tech startupand works with entrepreneurs to make offers either as private investors or as part of an angel community fund.
3. The government may enact partnership laws and regulations to facilitate the establishment, registration and legal operation of funds. Generate investor cash flow an influx from immigrants from across the Caribbean, from Caribbean countries, and from experienced and successful investors from the United States and Europe.
References
Funding and Taking Off – Four Jamaican Entrepreneurs Join TechStars
They tell us why TechStars invested in three Jamaican tech startups last week.
