START-UP BARBADOS
START-UP BARBADOS – BASIL SPRINGER COLUMN WHICH WILL APPEAR IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON OCTOBER 22, 2012
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“So we can say with confidence: The Lord is my helper; I will not be afraid. What can anyone do to me?” – Hebrews 13:6
Last week there was a vibrant email exchange on the subject “Immigrant entrepreneurs: The Chilecon Valley challenge”, an article in The Economist magazine drawn to our attention by Peter Boos.
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In pointing out the following extract: An entrepreneur with a good idea can get a visa in a couple of weeks. Since 2010, when Start-Up Chile began, it has attracted some 500 companies run by whizz-kids from 37 countries; Peter commented that “Barbados could benefit tremendously from pursuing a sustainable Immigrant Entrepreneurship Policy. Recent proposed legislative amendments to attract high net worth individuals and International Entrepreneurs are a good step but we need to go further more quickly. Effectively connecting with the Diaspora and other Business Friends of Barbados would be a great start (as Professor Cardinal Warde has done). Our policy could be based on our strategic sectors (and infrastructure needs) where we know we can compete globally. JVs (joint ventures) and other forms of partnership with domestic entrepreneurs should be heavily encouraged. Start-up Barbados should be a very high priority now. Ability to focus strategically, innovate and execute will differentiate successful nations in the coming tough years”.
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Chis Hillier quickly agreed: “The US Government is also discussing an Entrepreneur’s Visa. Especially, technology graduates who will be given a green card stapled to their diplomas. It has come about since e.g. Intel, Yahoo and Google were all formed by immigrants”.
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Eddie Molloy responded to Peter as follows: “Peter, for the past few days we have had the 3rd annual Dublin web summit, all started by one young guy. There were over 100 technology minnows from around the world pitching to some of the biggest companies, like the founder of Skype and to venture capital companies. We started at the exact same time as the Barbados Entrepreneurship Foundation initiative with similar aims of making Ireland the best place in the world to do business. The Irish government is behind it now and it is definitely moving. The focus is on early stage support for start-ups from anywhere in the world, as Basil Springer calls them – companies the size of a mouse but with the DNA of an elephant, and a perspective that says the technology is there to enable you to go global very quickly.”
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When I was working on the “Compelling Case” document to do with re-organising the Barbados development agencies, I produced a proposal for the establishment in Barbados of The International Centre for Research, Development and Distribution of Digital Solutions for Island Communities. Underpinning this Institution would be a strong university faculty of software engineering, the absolutely vital skill required for the digital age industries. I scoped it out, put a cost on it and approached a philanthropist for the funds to get it going. He said ‘yes. No problem’. And that is where it all ended.
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It required following up by one of the agencies and for the government to make premises available. Subsequently, at the BEF conference I spoke of the problem of Implementation Deficit Disorder which is endemic in the established institutions. Unless you can do something about this meta-problem, you are stuck. More reports and conference speeches will not unblock the logjam.
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Hal Austin then tuned in: “Eddie, this is vitally important, moving from ideas to implementation, with proper funding arrangements. There is no reason why there is no venture capital investment vehicle in Barbados, properly incentivised by government, to provide the pepper corn funding for start-ups. We are talking about a country that gives foreign businesses a tax holiday. Why can’t we do the same for start-ups: no corporation tax or national insurance payments for the first three years – the embryonic years, and venture capitalists investing taxed income, with a tax-free growth and tax-free dividend, and tax-free withdrawal. What we have is a culture in which politicians and civil servants believe that everything should be taxed and that money put in the Consolidated Fund where it could be used like a piggy bank”.
He added that “the other problem, of course, is that the small business unit is a civil service unit, not one geared at supporting start-ups and other small businesses. I would refine that by making it an organisation separate from the civil service (with existing employees maintaining their civil service benefits), with a board of management drawn from the business, trade union and community council sectors; it would have a number of successful business people and trained and qualified financial advisers as mentors for new businesses…We need creative thinking”.
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After an interjection by me, Henry Fraser commented as follows: “The nub of the issue remains translation of idea into action … Basil’s summary – The incentives to encourage private sector investment (proposed by the late Prime Minister David Thompson) to provide a guarantee on the capital amount invested in a bond issue by CBET (Barbados), as a means of capitalising this Venture Capital Fund, were never put in place by the civil service thus frustrating the attempt to develop The Barbados Entrepreneurs’ Venture Capital Fund. The private sector were all poised ready to invest, once the incentive was in place, but that was not to be – suggests that private sector will not under any circumstances provide venture capital without the incentives…. is money sitting in the bank a profitable alternative incentive? At pre- election time, a government could win much support if lobbied hard enough and repeatedly to ‘realise the vision of David Thompson’ by quick action … he is constantly being quoted”.
Let us bury the fear and take some action.
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(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business Enterprise Trust Inc. – CBET – Columns are archived at www.cbetmodel.org).