By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government-sponsored venture capital fund is targeting a three-year strategic plan, its chairman telling Tribune Business yesterday that despite a 67 per cent business failure rate in the Family Islands it was particularly interested in financing tourism-based ventures.

Michael Cunningham, the Bahamas Entrepreneurial Venture Fund’s chairman, who was a presenter at a business summit hosted by the Exuma Chamber of Commerce, said: “We have a three-year strategic plans for the Bahamas.

“With the Family Islands, in particular, we are looking at touristic projects, technology projects, just as we would in New Providence. We’re not going to try and treat it separately, but we know that the Family Islands are particularly geared towards touristic products. We know that if we can link those we can generate employment and create new business opportunities.”

Mr Cunningham added: “There is a 67 per cent failure rate for businesses in the Family Islands. New Providence is a bit better, but not good enough that you would want to write home about.

“The failure rate is still high and I believe the recession had a lot to do with it.

“We expect a high failure rate when it comes to small businesses, but if we can get 45-50 per cent reasonably successful operations that generate employment and spark others’ interest in the economy, then we’re happy. We appreciate the fact that business in the Family Islands would have a higher failure rate than New Providence because of the lack of other opportunities that a failed business can take advantage of in order to get back up and running.”

Mr Cunningham noted that the Bahamas Entrepreneurial Venture Fund has partnered with the Bahamas Chamber of Commerce and Employers Confederation on a mentorship program to help improve the success rate of small and medium-sized businesses.

He said the fund was seeking to move away from debt financing and take equity stakes in the ventures it supported.

“The reason we are moving toward equity as opposed to loans is because with the initiatives like the mentorship program and the incubation program with the Chamber, and the Board seats we can establish on these various companies, it gives us more control and more influence over the operations, as opposed to just having a loan with those companies,” Mr Cunningham said.

“In addition, the investee is less stressed because he doesn’t have to be concerned about meeting a $2,000 loan every month. With equity it’s a partnership arrangement.”

He added: “Right now, delinquency as it relates to the loans is getting a little better.

“It’s encouraging because it’s moving in the right direction. As it relates to the equity, we have had companies recently that are starting to buy back their shares, which tells us they are becoming rather successful.

“One company came to us two weeks ago for funding to really take their business to the next level, and based on their business model they will be able to pay back.

“If we inject $200,000 in terms of equity into their business, they should be able to pay us that back in the next 18 months with a good return for the fund, and less red tape because they are able to get it in less than two weeks.”