The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government-sponsored venture capital fund has suffered a Grand Bahama/Family Islands “failure rate” that is 11 percentage points higher than New Providence, although its chairman yesterday said it expected to receive a further $1 million injection from the Government by April.

Michael Cunningham, the Bahamas Entrepreneurial Venture Fund’s chairman, disclosing that its experience outside the capital had “not been good”, said its Grand Bahama/Family Islands business “failure rate” stood at two-thirds or 67 per cent compared to 56 per cent for its New Providence investments.

These figures are still relatively good for a venture capital fund, and it has only assisted five Grand Bahama-based businesses and four in the Family Islands - as opposed to 48 in New Providence- thus providing a much lower starting base.

Mr Cunningham, speaking to Tribune Business after his address to a seminar organised by the Bahamas Entrepreneurial Venture Fund, said the problems in Grand Bahama were linked heavily “to the types of business” it had helped to finance.

A number were in the tourism industry, he added, and that sector had been particularly hard hit by the decline in arrivals to Grand Bahama.

Mr Cunningham also acknowledged that getting the Bahamas Entrepreneurial Venture Fund’s message out to Family Island entrepreneurs had been “a big problem”, and its administrator, Baker Tilly Gomez, and Board of Directors planned to take a tour by April to rectify that.

Disclosing that the Government was supporting the Fund “very heavily”, the chairman told Tribune Business: “We got $250,000 last month, and expect another tranche pretty soon.

“So between now and April, we will have just about $1 million.”

Mr Cunningham also indicated the Government was set to embark on a major shake-up of its small business support services and mechanisms, due to the impending enactment of the long-awaited Small and Medium-Sized Business Development Bill.

Tribune Business was told that the Christie administration was looking centralise, and rationalise, the various agencies - such as the Bahamas Agricultural and Industrial Corporation (BAIC), Bahamas Development Bank (BDB), Bahamas Entrepreneurial Venture Fund, government-guaranteed loan programme and others as part of a major restructuring to accompany the Bill.

Essentially, the structure the Government is assessing places the proposed Small and Medium-Sized Business Development Agency (SMEDA) at the top, co-ordinating everything, with BAIC and the Bahamas Entrepreneurial Venture Fund closely aligned with it.

Tribune Business was also made to understand that the BDB, with its sizeable delinquent loan portfolio of 55-60 per cent, would effectively be ‘segregated’ from the new structure to enable that situation to be cleaned up.

Such a move was backed by a BAIC official attending yesterday’s seminar, who said: “Right now we have pulled back from the Bahamas Development Bank. We understand there are some situations there. The Bahamas Entrepreneurial Venture Fund is the only place right now.”

Edison Sumner, the Bahamas Entrepreneurial Venture Fund’s vice-chairman, yesterday said the Government and Ministry of Finance were also exploring the feasibility of the Fund taking over administration of micro loan programmes such as the Self-Starters and Jump Start grants.

Nothing has been decided on that yet, although the impression given by Mr Cunningham and other executives associated with the Fund was that they did not want to be dealing with micro loans.

Meanwhile, Mr Sumner reiterated that the Bahamas Entrepreneurial Venture Fund was seeking to move away from debt financing to a trend of taking equity stakes in the business ventures it supported.

He explained that this was because many Fund clients had found it impossible to repay the initial debt financing taken on, and were thus heavily burdened when coming back to it for further expansion.

To date, the Bahamas Entrepreneurial Venture Fund has invested in 57 businesses. Of these, some 14 have been equity investments and 43 debt, with the Government injecting $4.43 million into it.