Entrepreneurs: Frequently Asked Questions

Venture capital is a type of private equity provided to early stage, high-risk companies with high growth potential. Investments are usually made in exchange for shares in the invested company.

The funds disbursed to entrepreneurs typically originate from institutional or high net worth individuals who invest in the venture capital fund with the hopes of earning high returns.

Returns to the venture capital company are expected within a 3-7 year period through selling shares on the stock exchange or through invested companies being acquired by another company.

Venture capital is most attractive to small companies that are too small to raise capital on the stock exchange and are unable to secure a bank loan or complete a debt offering.

Companies wishing to raise venture capital must have high growth potential, a well-developed business model and an impressive management team.

We focus on sectors that have been identified by the Barbados Government as instrumental to Barbados' economic growth. The sectors are:

• Business Development Services
• Creative Industries (e.g. Film, Music and Fashion)
• Education
• ICT
• Renewable Energy
• Health & Wellness
• Construction

However we consider ideas outside these sectors if they have demonstrated potential.

Entrepreneurs must submit an expression of interest form which is scored on a 170-point basis. A score of above 114 must be attained for the company to be considered. Forms are reviewed on a monthly basis. Successful applicants are assigned shepherds (business mentors) who work with a team of business advisors to construct a business and implementation plan. Funds from the seed capital fund are used to assist with the construction of this plan. It is then submitted to the venture capital board for consideration. The entrepreneur uses the plan as the basis of an investor pitch to the board. After the pitch, the board decides if the company is ideal for investment.

It is expected to take an estimated 6-weeks for companies to receive seed capital funding to construct their business and implementation plans which are used as the basis for a venture capital decision.

Shepherds are assigned within the first week of a company being accepted for seed capital funding.

We focus on several key areas:

• Realistic financial projections and business valuation
• A strong competitive advantage
• An effective sales and marketing strategy
• A competent management team
• Evidence the company can hit the ground running.

The CBET Shepherding Model^TM is a risk mitigation tool designed to heighten the probability of business success. It is based on 3 key components:

• a shepherd to mentor the entrepreneur in pertinent aspects of business development
• an entrepreneur whose idea has huge potential
• capital to support the development of that entrepreneur's idea

The Barbados Entrepreneurs' Venture Capital Fund, supported by the Barbados Revolving Seed Capital Fund, makes up that critical capital component of the Model. Both funds are quick response to get entrepreneurs the vital funds needed to push their ideas to the next level.

The seed capital stage is an essential component of the CBET Shepherding Model^TM. A large percentage of start-ups fail because they lack proper guidance. The seed capital stage is meant to give entrepreneurs that initial guidance and set systems in place for further development. This guidance is provided through a shepherd (business mentor) and a team of business advisors. They help the entrepreneur develop and pursue sales opportunities while ensuring he/she follows best practices. They also help the entrepreneur prepare a business and implementation plan and an investor pitch that have a higher probability of being accepted for venture capital.

There is no guarantee that a business receiving seed capital will receive venture capital.