PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

capital, mainly in the form of equity financing, as a sustainable means of financing for
SMEs.
Thus, within the context of the strategic framework of the Growth-Inducement Strategy
presented here, the JVCP is viewed as a flagship initiative which is intended to promote
the following objectives:
Development of entrepreneurship;
Innovation and technological development;
SME development;
Increased access to, and lower cost of, financing for both early stage start-ups and
established companies;
Development of business networks (including firms oriented to technology,
research, product development, management and marketing) to service the SME
sector.
3.0 The Venture Capital Industry in Jamaica
Venture capital investments in Jamaica have generally operated through an informal
mechanism. This includes capital available through the entrepreneur’s own funds or that
of friends and family. Additionally, “angel investors” have always been active, but
funding through this source has depended to a great extent on access to these investors by
entrepreneurs, which is a function of their level of social capital and ability to network.
Formal venture capital programmes have been limited. Apart from the Jamaica Venture
Fund which mobilized capital through a number of corporate entities and financial
institutions in the early 1990s, there have been few or no certifications of Approved
Venture Capital Companies, under Section 36 of the Income Tax Act. Moreover, the
sustained environment of macroeconomic instability and the extent of Government
demand for funding for its own operations were not conducive to the development of a
Venture Capital industry.
In order for sustainable development of the economy to occur, the economic environment
has to be conducive to long term capital formation. This requires that investors, fund
managers and entrepreneurs be able to operate within a transparent legal, regulatory and
taxation environment. Analysis of the Jamaican environment has identified clear gaps in
this environment. Hence, the components of the JVCP will be designed to fill these gaps.
The deficiencies identified in the local venture capital environment include:
Lack of an equity culture as well as lack of trust between providers and users
of capital;
Lack of venture capital and private equity fund management expertise;
Lack of investor knowledge of the venture capital asset class, with little or no
involvement of institutional funds including pension funds;
Lack of investment-ready entrepreneurs and SMEs, as many require training
and capacity building in order to attract investors;
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