The Tribune

• ArawakX: Multiple issuers lined up through March

• But warns: ‘More than just taking people’s money’

• Eyeing non-profit product and regional expansion

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian crowdfunding platform yesterday predicted 2023 “will be a stellar year” for capital raises with investors seeking a collective $26m set to approach the market between now and end-March.

D’Arcy Rahming Jr, ArawakX’s chief technology officer, told Tribune Business he was “hopeful” that a further two crowdfunding issuers will launch their offerings to investors before year-end with a further three “lined up” for each month of the 2023 first quarter.

He revealed that it typically takes between three to six months to prepare businesses and entrepreneurs to come to market, adding that “they have to understand this is more than just taking people’s money”. Mr Rahming explained that issuers needed to be sensitised to, and fully aware of, their fiduciary responsibilities to investors, the need to act fairly towards the minority at all times and implement rigorous corporate governance practices.

Telling this newspaper that such work was akin to developing “a new business culture” that results in a “win-win” for companies and investors, he added “nobody is born knowing” how to meet timely disclosures and other standards required of entities that offer shares to the public.

Confirming that ArawakX has been invited to expand its platform and business model to other Caribbean jurisdictions, Mr Rahming said it was also working on a mechanism that will allow non-profit organisations (NPOs) to “raise money in a more transparent way while still being compliant with their rules”.

Besides the ongoing Nassau Gas & Tanks offering, which is shown as having exceeded its $150,000 minimum by 63 percent at $244,600, ArawakX’s website is advertising multiple potential new issues as “coming soon”. While no names are mentioned, they are said to include a Nassau-based liquor distillery seeking up to $1.8m to finance the expansion of “local production and distribution” to it can export to the US and Europe while also enhancing local tours.

Two transportation companies, one in Nassau and the other in the Family Islands, with the former focusing on a “ride share” model using electric vehicles, are each set to approach investors for $1m. A 20,000 square foot movie, bowling and restaurant complex is eyeing the raise of $1.5m, while a medical manufacturing company “in prototype development stage”, and said to hold two US patents and four international ones, is targeting the same amount.

Other potential crowdfund issuers are an air conditioning manufacturing company, which is aiming to attract $2m from investors; an ophthalmology company seeking $1.8m to finance a “proven glaucoma treatment solution in The Bahamas and UK”; beverage manufacturing and seafood processing entities each focused on $1m raises; an established payday and corporate lender eyeing $4.5m; and a Family Island resort development set to approach investors for $2.5m.

“We’re hopeful that there will be two in December, but we’re still going through the regulatory work with them,” Mr Rahming told Tribune Business of upcoming issues. “For certain we have at least three lined up for each of January, February and March. It’s $26m in total. 2023 is about to be a stellar year for investment.”

He added, though, that ArawakX executives are finding it typically takes between three to six months before crowdfunding prospects “realise their obligations” to investors and are ready to approach the market for equity financing. “People want to invest, people want to be issuers. This is a market,” Mr Rahming said.

“There’s a need for business financing, and there’s also a need for quality investments. We’re really hopeful that the market, the investors, will meet the issuers because there’s a lot of really great businesses out there trying to get financing and just need a fair opportunity.”

Explaining the process that businesses must go through, Mr Rahming said: “Obviously compliance. There’s all the background checks, making sure they are properly incorporated, but also the business owner has to understand this is more than just taking people’s money. It’s a fiduciary responsibility you are embarking on.

“They have to build in layers of corporate governance. They must remain accountable to people. Even if you remain the majority shareholder, you’re accountable to your minority shareholders. The Securities Industries Act is completely about protecting minority shareholders. You have to be educated about that and understand what it means. Chef Culmer [at Tropical Gyros, an earlier crowdfund raise] gets it.

“It’s like a child. You are responsible for the child, take care of it and everybody benefits. It takes time for people to get used to that. It’s a new business culture, one that is a win-win. The truth is that nobody is born knowing how to do any of this stuff. It has to be learned, it has to be nurtured, and we’re hopeful that’s what ArawakX can become.”

With one eye to the future beyond The Bahamas’ 50th anniversary celebrations next year, Mr Rahming added: “I’ve been thinking a lot about this road to 50, what are we going to be like in 2073? I would like to see The Bahamas be a place where people with good, honest, legitimate businesses grow their businesses and live the dream of independence.”

ArawakX is not confining its ambitions to The Bahamas. “We have been invited to move into other jurisdictions as well,” he added. “People from the outside are recognising what we’re doing at ArawakX is special, and they want us to duplicate that in other jurisdictions.

“We’re close. I have to have a conversation with a regulator in one of those jurisdictions in December, so I don’t want to say too much. Our plan is to help grow their local businesses and investment community. We don’t want to tell people how to run their own country. We want to work with them to help them grow capital and returns. Business is about relationships, and exchanges more so.”

Besides ArawakX’s previously announced plans to develop new products, such as a savings bond and real estate investment trust (REIT), for Bahamian investors, Mr Rahming said it is also seeking to help local non-profits. “One thing we’re working on making happen is that different types of non-profits have been asking what we’ve learned,” he told Tribune Business, “and are discussing helping them to be more transparent in their financing.

“We’re working on developing a similar type of product for non-profits. We think there’s some things we’ve learned that translate over to the non-profit space so we’re doing a product to help them raise money in a more transparent way while being compliant with their rules. We believe our non-profit ideas should be funded properly and run in a transparent way.”