Risk-takers wanted

VENTURE CAPITAL companies need to become more risk prone by investing in the creation of new products and services, said Independent Senator Mary King, while addressing a one-day seminar on the venture capital industry at Central Bank on Wednesday. King explained that the culture of risk-taking in the economic development of a country is an important factor of innovation and inventiveness, noting that investors in Trinidad and Tobago are not interested in taking the risk of failure in the creation of new products and services. “Business failure is borne as a personal and permanent badge of disgrace,” noted King.

She said that one venture capital company informed her they would not support any new company or start-up that depended on the ideas of one or two persons, but, as King pointed out, “this is a normal characteristic of many innovative start-up firms, and this is why the bedrock of the reinvention of our economy is doomed to failure. “Not because of the paucity of the ideas, but because of the lack of financing, the lack of venture capital,” noted King. Touching on the international market, King explained that a new company called Nanolink was attempting to raise US$30 million in venture capital funding, although that company had not produced any product for sale. She noted that investors were looking ahead to what new products could come about and what rewards could be earned, and based on these factors, they were willing to take the risk on innovation.

She stated that the country’s stock market is illiquid, while the second tier has failed to support start-up companies. King also noted that the vision 2020 subcommittees spoke about education, moving our tertiary level from ten percent to 25 percent to create new jobs and businesses, encouraging new investors in local and joint venture projects. King pointed out that despite all that was being focused on, none of these things specifically addressed the creation and development of a science and technology innovation system, which required a community of technical scholars that are intertwined with the industry. In addition, there should not be a conglomeration of disparate firms, but clusters of like companies that use the same general technologies to help each other, despite being competitors, and finally, there must be the existence of venture capital and dynamic corporate venturing.

King noted that without these things an innovation system would collapse. Trade and Industry Minister Kenneth Valley said that venture capital legislation has been structured to include other companies, including those in the oil and gas sectors. He said it is hoped that banks and other companies would set up venture capital funds to assist in the quest to bring companies to the market, noting that venture capital is no longer “simply for the start-up, but a platform to create the entrepreneurship that is latent in all of us.” Valley called on taxpayers at the top marginal rates to attempt to save some of their tax dollars in a venture capital company.

He stated that there is no longer a requirement or the limitation allowing only a venture capital company to make investments. “You can get a couple of friends together, buy your venture capital company, apply for your tax deduction and make your investment,” Valley said. He noted that Government had made the changes to the legislation in order to get investment going in the country and is aiming at doubling the number of companies listed in the stock market. Valley noted that while there were a number of ways for Government to achieve this, they chose to provide a platform to widen and deepen the availability of equity financing.