‘Many loan options for start-up businesses’

While start-up businesses can find capital through various equity loans and corporate bonds as well as shares, most businesses depend on banks for loans.

Aspire Fund Management’s chairman Howard Dottin said for the private equity market to flourish, in addition to investors, there need to be the fertile generation of ideas. He was speaking last Thursday at the company’s first Private Equity seminar on the “Disruption and Transformation of the Capital Markets” at Hyatt Regency, Port of Spain.

“We as a country need to start creating or moulding a sustainable group of entrepreneurs. We are investing a lot of money in educating our people up to the post-graduate level, but there is still some way to go for our country to get an optimum return on that investment.”

Dottin said while top graduates from the Ivy League business schools in the US seek to open their own businesses, TT’s MBA graduates seems more focus on elevating themselves within their current organisations or getting better paying jobs rather than opening their own businesses.

He said in the In the developed world, small start-ups to large corporations are able to source capital from Owners Equity, Private Equity, Banks, Corporate Bonds, and through the issuance of shares to the general public.

“However, in the Caribbean region, the capital market is not that well developed and as such banks have been called upon to be all things to all people.

“For early stage ventures banks have not proven to be as helpful due to the traditional conservatism and failure to recognise that leverage ratios and the provision of security are not an appropriate criteria for evaluating Venture Capital type projects.”

Dottin said while TT graduate schools may not be able to teach “ambition, creativity, a relentless sense of getting things done,” the love of risk and adventure, and the awareness of the need to constantly adapt, they must find ways of ensuring that business disciplines are not taught in silos.

He said the nation’s graduates should not settle for a false sense of security by shirking from taking on the right risks.

Explaining the difference between angel investors and venture capitalists, Dottin said angel investors are wealthy individuals who invest their own money into companies. While venture capitalists invest other people’s money into companies.

He said the biggest advantage of working with private equity is that, unlike a loan, there’s no obligation to pay it back.