By Anthon Garcia
Though historically overlooked, the Caribbean is now swiftly becoming a crucial hub for private investment. By 2024, analysts forecast that the region will have a total capital raised worth $335.6 million. Pivotal to this growth are venture capital and private equity firms that believe in Caribbean businesses’ entrepreneurial spirit.
More often than not, countries in the Latin America and the Caribbean (LAC) region are not the first thing that comes to mind when it comes to investments. Talks about private investments, especially in the global context, often revolve around clusters like Silicon Valley, London, Shanghai, and the UAE.
If we look at historical data, the World Bank reveals that venture capital funding for startups in LAC has lagged behind other regions. But the region is catching up — with LAC startups receiving an unprecedented VC funding outpour worth $18.5 billion in 2021. Boasting a staggering 288% increase in value from 2020, the region was the fastest-growing in terms of venture funding.
Growth drivers
The World Bank points to three key factors for this growth: increased demand for digital services as prompted by the COVID-19 pandemic, investment from deep-pocketed, non-domestic investors, and a robust local startup ecosystem.
The Caribbean, in particular, has emerged as a promising hotbed for investments. Statista forecasts that the total capital raised could hit $335.6 million in 2024.
There also seems to be a growing awareness among entrepreneurs about the benefits of VC funding. As the World Bank states, “VCs provide ‘smart money’ to young, innovative companies that can disproportionately contribute to economic growth, yet have difficulty in attracting financing.”
Additionally, the Caribbean has also witnessed the rise of local venture capital firms and angel investor networks. And they help fuel investments in the region’s startups and early-stage companies.
One such example is Esther Ventures.
Supporting Caribbean businesses
Launched in 2016, Esther Ventures is armed with “the vision of making a positive impact on the Caribbean business landscape by supporting companies in a way that focuses on the realities of the Caribbean.”
In an interview with The World Financial Review, Managing Partner Javette Nixon shares what makes Caribbean businesses particularly appealing.
“Caribbean businesses are uniquely positioned at the intersection of tradition and innovation. With a strong entrepreneurial culture, rich creative resources, and proximity to North and South American markets, the region offers significant potential for growth,” Nixon shares.
He also describes local entrepreneurs as “problem solvers, who are deeply connected to their environments’ cultural and social contexts, which often leads to the development of solutions that are economically viable and socially impactful.”
Barry O’Brien, Co-founder and Group CEO of Williams Caribbean Capital (WCC), echoes the same sentiment. WCC is an award-winning impact investment, private equity (PE), and renewable energy asset development business.
However, O’Brien says the Caribbean’s relative lag in terms of investments can, in fact, work in its favour.
“The Caribbean has advantages and disadvantages as an environment for scaling businesses. The advantages include being able to replicate successful models across other markets in the region, as Caribbean markets can be a number of years behind more developed markets,” he explains, adding the WCC has successfully done so with its Williams Renewable Energy and IT Company SCG Growth Partners.
However, Caribbean entrepreneurs also have many hurdles to overcome.
“Caribbean entrepreneurs often face several challenges when accessing venture capital, including limited access to finance, insufficient infrastructure, and the small size of local markets. The region’s complex regulatory environment can also pose significant hurdles,” Nixon says.
Meanwhile, O’Brien remarks, “Some of the challenges for startups include the unavailability of seed funding and lack of VC companies, the small scale and population in many markets, difficulty with currency exchange and finding suitable, qualified, and experienced workforce, unfit regulations, and the need to educate the marketplace on products that exist elsewhere.”
This is where VCs and PEs come into play.
Beyond financial support
Beyond providing financial capital, Esther Venture are committed to offering strategic guidance, mentorship, and access to networks that can accelerate growth.
“By leveraging our relationships within the Caribbean and international markets, we help entrepreneurs overcome the barriers to scaling their businesses. This is a process that admittedly takes us a longer time from the initial interest to transactions and exits, but building these capacity-building initiatives into the funding makes for a more personal and integrated approach,” Nixon notes.
Some of the companies they have invested in include Zoombridge Solutions Limited, an entity that offers data disruption and technology-driven solutions in the region, and First Cloud, a trusted Technology Success Partner (TSP).
Your True Shade Cosmetics — the first Caribbean cosmetics beauty line to be certified by Cruelty-Free International in the UK — is another success story. Founded by Jamaican entrepreneur Dianne Plummer, the brand provides a variety of eco-friendly skincare and cosmetic products designed for diverse skin tones and formulated without harmful chemicals.
Commenting on his VC’s role in the brand, Nixon says, “Through Esther Ventures’ investment and support, Dianne was able to expand her manufacturing capabilities and strengthen her research and development initiatives, enabling Your True Shade to become a trailblazer in natural skincare innovation within the Caribbean and beyond.”
Investment criteria
When looking for businesses to invest in, Nixon prioritises investments in businesses with strong leadership, innovative strategies, and scalability, particularly those that drive social and economic change in sustainable development sectors.
Among the emerging sectors he says is ripe with opportunities are tech (e.g., fintech, agritech, and data solutions), sustainable energy, and healthcare.
Like venture capitalists, PEs like WCC invest in innovative projects. WCC is particularly investing in the renewable energy sector, which is a rapidly growing and evolving industry.
When evaluating prospects, O’Brien says that they have a number of criteria.
“Assuming that the project is viable financially, we need to explore the potential environmental impact of the project. We do this in a number of ways, including calculating the kgs of CO2 that would be offset by the project and social and environmental impact,” he shares.
Since its establishment in 2017, WCC has distinguished itself as the sole issuer of certified green bonds in the Caribbean. So far, they have successfully launched five green bond issuances to finance photovoltaic (PV) solar projects.
Caribbean proves its spot on the investment map
Underlining the importance of private equity in accelerating the Caribbean’s growth, O’Brien notes, “The Caribbean will continue to develop with increased sums of private equity available to drive business ventures.”
For him, it’s only inevitable given the substantial returns that investors reap.
Such prospects are promising; they open opportunities for the world to see more exciting entrepreneurial stories unfold across the Caribbean’s business landscape.
This is why Esther Ventures remains “focused on investing in businesses that not only have a clear growth trajectory but also contribute to the overall economic development of the region.” And one of the recent investments they take pride in is in the agro-processing space, specifically a company that processes organic honey from the Blue Mountains, the longest mountain range in Jamaica.
“We are super excited about its growth prospects and what that will mean for smallholder farmers who support its business model,” Nixon enthuses.
But as much as private entities help, the public sector is another story.
According to O’Brien, there are large sums of private capital in banks in the Caribbean that are available — and can be unlocked by impact investment once a business case is proven valid.
Nonetheless, no matter the source of funding, one thing is clear: the Caribbean market is ripe with potential. And with venture capitalists and private equity investors like Javette Nixon and Barry O’Brien at the helm, a more vibrant era of business for the region is not too far-fetched.
About the Author
Anthon Garcia is an award-winning journalist and book editor based in Dubai, United Arab Emirates. He currently writes freelance for Economy Middle East, Energy and Utilities, Inc. Arabia and Cityscape Intelligence. He graduated with an AB English degree from the University of the Philippines and an MBA from Western Global University.
