PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

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Appendix C1 Development of a Dynamic Venture Capital Park in Jamaica 60 1.0 Introduction A financing gap exists for most SMEs, compared with capital available for Corporate firms and Micro Businesses. Within the SME grouping, more capital is likely to go to the existing firms than to the start-ups. Moreover, most entities within this grouping do not by themselves have the administrative structure to undertake many of the developmental initiatives including capital-raising, in addition to their focus on creative and operational activities. Hence, the build-out of a venture capital eco-system as envisaged under the JVCP should also explicitly recognize the need to have a supportive sub-system to improve the viability of startups and to provide a dynamic space to explore and develop new ideas from concept stage to prototype, with the assistance of technology as well as business support groups emanating from the University. The Global Entrepreneurship Monitor (GEM) 61 has identified nine Entrepreneurial Framework Conditions,that provide the basis for an ideal entrepreneurial environment. These are: Financing, Government Policies, Government Programmes, Education, Research and Development (R&D) Transfer, Commercial and Legal Infrastructure, Market Openness, Physical Infrastructure, and Cultural and Social Norms. Jamaica, according to the GEM, ranks highly when compared with many other countries as it relates to the prevalence of entrepreneurial activities, with approximately 24% of all adults being involved in entrepreneurial activity. This level of activity reflects the low level of economic activity in the country because, although most of these entrepreneurs are ‘opportunity’ entrepreneurs, there is also a relatively high level of ‘necessity’ entrepreneurs. There is a significant failure rate for entrepreneurs and startups. Many of those which do survive undergo limited growth and expansion. To have a sustained positive effect on economic growth and employment in the country, survival of these businesses must be improved and supportive infrastructure must be provided to ensure that the currently unfulfilled potential is realized in many productive areas and sectors, including those related to the production of tangible products and services, as well as intangibles in technology and our creative industries. 60 Adapted from Development Bank of Jamaica and Planning Institute of Jamaica, “Discussion Document: Development of a Dynamic Venture Capital Park,” (Unpublished, October 14, 2011) . 61 GEM, 2009. www.gemconsortium.org 161
Locally, the Scientific Research Council has not successfully transformed many of its research products into viable businesses, and the local Universities (UWI, UTECH, NCU) are also in need of a formalized structure to incubate and eventually commercialize viable research ideas. In many countries, this supportive system is created within a dynamic venture-capital park, within which symbiotic relationships are created among the entrepreneurs, the business support services providers, the academic researchers and the providers of capital. In most models, this actual physical space allows for the sharing and development of ideas, the nurturing and incubation of new businesses, and the mentoring and interaction with angel and venture capital investors. With the development of the venture capital industry in Jamaica, it is recognized that over the medium to long term, the source of many new VC initiatives, and possibly the source of many businesses for which the country will have a competitive advantage, will emanate from having a space from which these ideas can be germinated, nurtured and grown to a level where they will attract seed capital and eventually qualify for follow-on funding and growth capital. Additionally, existing companies can realize their high growth potential through the access to new technologies and research. 2.0 Key Lessons from Selected Cases Studies In assessing the feasibility of the creation of this entrepreneurship park, in Jamaica, successful models in other countries need to be examined, in order to understand the structure, the stakeholders and the key success factors. One important lesson is that in many countries the venture capital investments tend to be concentrated in regional clusters and/or centres or parks, which can provide the supportive infrastructure. Examples of this include the YOZMA in Israel, the Ben Franklin Technology Centre in Pennsylvania. These centres provide access to capital, access to knowledge and access to expertise, in addition to the nurturing of an entrepreneurial culture. The key advantage of these venture-capital centres is the establishment of networks and the establishment of relationships with angel investors, venture capitalists, financial institutions, governmental institutions and other partners to facilitate the needs of the investee companies and entrepreneurs. With collaboration among universities and researchers, the best discoveries can be nurtured and developed for commercialization through the marketplace. Similarly existing technologies and products from overseas markets may be adapted and ‘rolled out’ into local, regional and global export markets. 162
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i A GROWTH-INDUCEMENT STRATEGY FOR
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To the many ordinary Jamaicans who
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Preface The Jamaican economy has ex
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for making a determined start on th
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the private sector groups, listed b
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Citibank N.A. Jamaica Branch Grace
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need for “additional fiscal space
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Chapter 2 ________________ Summary
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1.0 The Economic Situation Today 1.
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expected to provide an essential an
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Table 2.1. The Policy Framework: A
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programme of social inclusion that
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Strategic Focus Table 2.2. Growth S
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6.0 Short-Term Growth Stimulus 6.1
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decline of 2.0 - 2.2 percentage poi
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Table 2A.2. NWA Projects To be Fast
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Table 2A.5. Community Renewal Proje
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Table 2B.3. Impact of Repairing Far
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Appendix 2C Methodology of the Grow
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Part I _________ Overview 28
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2.0 Vision 2030 Jamaica Before delv
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3.0 May 2010 Security Event and Aft
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the longer than anticipated global
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April July October January April Ju
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Three industries recorded increases
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9.0 Proposals for Growth-Stimulus I
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targeted economic and social infras
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partnering with government to disco
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3.0 Growth Inducement Strategy The
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Growth-Inducement Strategy Alignmen
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50 Part II _________ Situational An
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inadequate provision of public infr
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2.0 Macroeconomic Assessment 2.1 In
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Increased global oil consumption wa
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$4,742.0 million and $688.4 million
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Non -Traditional Domestic Exports E
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negative impact of the Jamaica Debt
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ethanol and paint, whereas lower de
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Analysis of preliminary GCT data re
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The number of ship calls to the isl
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industry was, however, estimated to
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4.0 Projected Performance 4.1 Calen
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increased marketing and extension s
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Electricity & Water For FY 2010/11,
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J$ Million Figure 5.1. Private Sect
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2011/12). These extreme weather eve
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Chapter 6 ________________ Assessme
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creates allocative inefficiencies,
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Million $ Per cent Jun-10 Mar-10 De
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Table 6.1. Employed Labour Force by
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J$ million Mar-10 Dec-09 Sep-09 Jun
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FIGURE 7: GROSS NATIONAL SAVINGS RA
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4.10.2. However, the extent of the
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Part III ____________ Analytical Fr
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functional relationship between the
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It follows that: (5) s = I/Y = [S -
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However, the existence of measureme
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(d) v* = Y*/K* This is a measure of
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in Chapter 8. The mutual interactio
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Transforming the complex set of str
Page 121 and 122: Appendix 7A A Methodological Note T
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Page 127 and 128: to ask, is it possible to predict g
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Page 131 and 132: For further elaboration of the cons
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Page 135 and 136: Table 8.2. Jamaica: Doing Business,
Page 137 and 138: Table 8.4. Global Competitiveness I
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Page 141 and 142: Rank* Constraint Table 8.7 Business
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Page 145 and 146: 3.0 The Burdens of LAC’s Logistic
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Page 149 and 150: Figure 9.4. Proportion of Primary A
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Page 153 and 154: 7.0 Fundamental Steps Forward for J
Page 155 and 156: Part IV ________________ Policies a
Page 157 and 158: Current Status: Cabinet by decision
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Page 165 and 166: 5.0 Expected Outcomes These measure
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Page 179 and 180: 5.0 Recommendations Based on the ma
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Page 185 and 186: Table E.2. Unemployed Labour Force
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Page 189 and 190: Table F.1 (continued) Area Type of
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Page 193 and 194: Figure G.1 Community Renewal Progra
Page 195 and 196: Table G.1 Priority Initiatives Obje
Page 197 and 198: Table G.2 Phased Implementation Pla
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Page 201 and 202: 3.0 Transparency Guarantees By desi
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the elders, youth, children. What f
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C __________________ Enhancing Nati
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Figure C.1. National resilience is
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