Entrepreneurs now have access to capital to start or grow their business – something that banks cannot provide given the risks involved. But the value that angel investors add to entrepreneurs in Barbados is much more than money – they provide decades of business experience and relationships with potential clients, suppliers or key employees. In a 2-hour meeting, they may enable entrepreneurs to leap forward one year or avoid mistakes that cost thousands of dollars. The Trident Angels are successful local business leaders passionate about entrepreneurship, like Dereck Foster who founded Automotive Art and expanded it to over 65 countries in 25 years. If he or any other investors in the network chose to invest their savings and time in an entrepreneur, other valuable resources will be available and new doors opened.
What’s the catch with angel investment?
Well, because angel investors take higher risks, they expect higher returns. Unlike banks, they don’t require security or personal guarantees, but will purchase some ownership in the business and want to be involved on the board of directors. Smart and ambitious entrepreneurs recognize the advantages of having experienced angel investors as business partners and don’t mind relinquishing some equity – they recognize that it’s much better to have a smaller portion of a very large pie than a large portion of a tiny one!
Who’s looking to invest?
Multilateral Donors and Development Agencies
Multilateral donors and development agencies have long recognized the value that entrepreneurship brings in a developing country to reduce poverty and address social issues. Many offer grants for business training which is extremely important to build an entrepreneurial pipeline. When these training or educational programs are connected to private sector investments, the likelihood of success increases dramatically. A Harvard research provides evidence that angel-funded startups have historically been less likely to fail than companies that rely on other forms of initial financing. This is mainly due to the involvement of the investors’ time and networks they introduce to the venture. Additionally, they typically invest in scalable businesses with high profit margins that attract foreign exchange as opposed to small ventures. These high growth enterprises tend to create more employment, promote high performance standards, and prevent brain drain. Moreover, the savings invested generate economic activities that would otherwise not occur if left dormant in a bank account.
Local Business Leaders
Large businesses with a history of success or a privileged position in the market sometimes fall into the trap of complacency or struggle to evolve at the same pace as technology or best practices suggest. Some business leaders recognize that joining an organized network such as the Trident Angels gives them access to talented people with new approaches that can change the way business is done. Half of the proposals received so far were products or services focused on business-to-business (B2B) as opposed to business-to-consumers (B2C). These opportunities for improvement within/across industries are multiple, and sometimes easier to adopt through external investments than through in-house development.
In addition to capital, foreigners often bring know-how and state-of-the-art equipment. By connecting with local angel investors, they can accelerate their understanding of the local business culture and obtain new business connections. Such sharing of risks and rewards can prevent failures and foster global expansion. The Caribbean Export agency is working on developing a regional network of angel investors to promote syndicated deals. Ultimately, international investors mean access to international markets which is particularly important given the size of the local economy.
Anyone With Savings
Many professionals or high-net worth individuals who may not have the relevant expertise to provide business guidance are looking for investment opportunities to generate income or diversify their portfolio. Given the limited return expected from bank deposits and the local stock market, they need new investment instruments. Once the Trident Angels have a few successful stories of profitable deals, a sidecar fund can be established which will enable non-business investors to invest alongside angel investors. Such a fund increases the pool of capital available to entrepreneurs and reduces the overall risks for each individual. There are also opportunities to obtain matching grants from international institutions that can be used to help pre-revenue entrepreneurs become “investor-ready”. Be sure to sign-up to receive news updates about this exciting project as it unfolds: www.tridentangels.com
To date, the Trident Angels have reviewed over 40 business proposals and had 10 companies pitch, all in an effort to find suitable investments. Ultimately, the development of angel investing in Barbados is great news for us all!
 A Harvard report by William R. Kerr, Josh Lerner, and Antoinette Schoar