The Tribune

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

ELIGIBLE Bahamian small and medium-sized enterprises (SMEs) will now be able to raise up to $5m in equity capital to fund their business ventures via crowdfunding, State Minister of Finance Kwasi Thompson said yesterday.

Speaking during a virtual press conference, Mr Thompson said new regulations released by the Securities Commission – which allow SMEs, start-ups and entrepreneurs to raise capital via crowdfunding – were recently approved by Cabinet and have since been brought into effect.

According to the state minister, the initiative is a part of the government’s many efforts to support SMEs and aspiring entrepreneurs, which, he said, are “critical sectors” to the nation’s economy.

Hailing the financing platform as a “ game changer”, Mr Thompson said that no other administration has been able to do what this current government has done for Bahamian entrepreneurs.

He said since being in office, the Minnis administration has directly invested over $60 million into small businesses across the country by way of grants and loan guarantees.

“It is a track record that we are immensely proud of,” Mr Thompson said at yesterday’s press conference. “Today, we make another evolutionary step in the development of entrepreneurs and small business opportunities right here in the Bahamas.

“The economic recovery committee established by the prime minister provided a number of recommendations to support more and more Bahamians getting into business so we could have a more dynamic and inclusive economic growth.

“One of these recommendations is that the government implement legislation to facilitate and support crowdfunding and the junior stock market to expand access to capital and Bahamian businesses. So today, I am pleased to support that the government has heeded the recommendation.

“As such, the Cabinet of the Bahamas recently approved new regulations from the Securities Commission that establishes a legal framework to allow SMEs or small businesses to participate in what is commonly referred to as crowdfunding. These regulations have been gazetted, released to the public and are now in effect.”

Crowdfunding involves financing a project or business venture by raising small amounts of money from a large number of people, typically via an Internet-based electronic platform such as ArawakX. It pools money from friends, family and investors.

Besides crowdfunders earning a higher return on their investment, via dividends and share price appreciation if the business prospers, this financing method also enables start-ups and entrepreneurs to avoid having to take on a heavy debt financing burden that can often cause their idea to fail.

“This reform represents a game changer for business ownership and entrepreneurship in our country,” Mr Thompson added yesterday. “With these new and innovative crowdfunding regulations, we are furthering the potential of small businesses to raise more investment money on the private capital market. We are breaking down the walls that were once able to be traversed by big, corporate players. A new wave of possibilities for Bahamian ownership and entrepreneurship is now here.

“Eligible entrepreneurs can raise up to $5 million to put towards the development of their start-ups or existing small businesses and better, the platforms allow them to raise money from citizens and residents across the country who are interested in investing in promising businesses,” he also said.

Finance officials said the guidelines will also include protections against hostile takeovers of SMEs and cybercrime among other things.

Mr Thompson continued: “The rules also provide for how the initiatives are going to be vetted and what information and so on that has to be provided to investors (in order) for investors to be able to gain the necessary information but it also provides for mechanisms that protect the investors so there are certain time periods that they will be able to request their funding back but… it provides a balance in allowing persons to be able to access the funding, but also how do we best protect the investor in making sure the investor has the right mechanism in place to protect their investments as well.”