Pirates of Caribbean Startups

Disruption Needed in Local Tech Investor Culture

Author

Ingrid Riley
January 30, 2024

Hey Insiders, 

Welcome to the 7th issue of Silicon Caribe Insider where we uncover the stories that matter about who is shaking up what and where in Caribbean Tech and Business.

 

IN THIS WEEK’S SCI

  • The Lead: Pirates of The Caribbean Startups: Disruption Needed in Caribbean Tech Investor Culture.

  • Caribbean Tech News: Bahamas reClaims its Narrative and Leadership in Caribbean Digital Assets Business and more.

  • Global Tech News Snippets

  •  Flashback: A Moment in Caribbean Tech History

THE LEAD

Pirates of The Caribbean Startups: Disruption Needed Inside Tech Investor Culture.

BIng’s response to my headline prompt.

❝

Investor Math in Jamaica: "I'll give you USD $10k for 30% of your startup." I swear, I dunno if it's ignorance or arrogance. 😂

Entrepreneurs are so frustrated by the state of the local investor market in Jamaica. They are disgusted as to why are we seeing $10K USD investment offers for 30% of your startup or 60% of your startup for US$3,300 type of offers. Entrepreneurs are insulted by these offers and are loudly saying “hell-to-the-no-no-no.

I mean, we’re 10 years in from the start of the first two Angel investor Groups and the groundwork to corral and educate new tech investors by the organisations like Development Bank of Jamaica. So why are we still here?

This current state of things has us asking the following questions.

For the companies that got these lowball offers and accepted them, what did it yield? Were the deals and companies successful? Because the only way we’re going to get these predatory terms to stop is if they see it’s more fruitful to be reasonable and offer competitive terms. So what’s the success rate? Because operating a business is a whole other beast once the founder loses incentive. Are investors making money this way or is there data to show they are shooting themselves in the foot?

Additionally

  • Are equity investments the wrong instrument? Is doing priced rounds for early-stage startups helpful or harmful, or should investors and entrepreneurs should utilise convertible notes to manage both upside and downside risks? Does the local investor market understand how this works?

  • Are these deals being offered as is, because there is a perception that a stronger pipeline of startups needs to materialise so that real abundant patient capital will show up?

  • Are some investors offering these deals to kill or acqui-hire startup entrepreneurs who’ve created products that scare them or can disrupt their current place in an industry?

  • How long with this risk-averse culture prevail for early-stage startups as more mature digital businesses seem to now have a problem with attracting Capital? But if we only keep watering one section of an industry, where will future innovation and industry leaders come from? Seems kind of a backward strategy.

  • Can Jamaican investors see investing in early-stage businesses the way seasoned and successful American and European investors see this type of investing - as plain math and long-term strategy? Which is to have a portfolio of at least 20 startups knowing that 80-90% will fail, but the ones that succeed will return their money exponentially?

  • Is our financial system still too oligopolistic, so not enough competition among funding sources and rates?

  • Can the passing of the Partnership Act of 2017 Help Disrupt the Local Investor Scene? The Jamaican Tech and Financial Industry has been waiting with bated breath for the Ministerial sign-off and the regulatory framework to bring into full effect  The newly enacted Partnership (Limited) Act, 2017.  Whenever this is done, it will usher in some of the “key necessities and intricacies of the modern commercial landscape which includes several novel forms of limited partnerships as well as a more defined set of rules which govern their formation and operation. Many of these rules facilitate the effective utilization of the limited partnership as an investment vehicle.”

In short, Angel and Venture Funds could be registered and formed in Jamaica easily without the legal gymnastics, allowing for a freer, legal, and more abundant flow of Investment Capital for Tech Startups and Digital SMEs. Additionally, Tech Startups especially would not have to register in the United States to get US investor angel and venture funds to launch and grow their digital businesses.

More this Moving Forward

  1. Entrepreneurs need to get better educated on how and when to Fundraise for their startups, what makes a great investor, and learn how to negotiate, if they choose not to go the bootstrapped route.

  2. New to the game, high net-worth individuals and Angel investors need to get better educated on how to evaluate a tech startup, and the entrepreneur and make offers either as a solo investor or as part of an Angel Community Fund.

  3. The government can set up and Enact the Partnership Act Regulations that make for easy setup, registration, and legal operation of Funds that will create a flow of Investor cash throughout the Caribbean, from the Caribbean Diaspora into the Region as well as a flow from seasoned and successful Investors in the States and Europe. 

Further Reading

CARIBBEAN TECH NEWS

[ F.O.C.M.N.Y ] Future of Caribbean Money

Crypto, Blockchain, Digital Payments, Digital Insurance

Bahamas reClaims its Narrative and Leadership in Caribbean Digital Assets Business

I was in The Bahamas last week to attend OasisOnChain a three-day summit on consumer crypto, culture, and co-creation. (This is why there was no newsletter last week).

It was held at a Tech Coworking and Community Hub space Crypto Isle. I met a bunch of entrepreneurs, engineers, advocates, experts, Digital Asset Licensing Lawyers, and Investors there and I learned a bunch and further consolidated some relationships I’ve had there for about two years.  

Here is what I learned: They Open for Digital Business.

Since that American Fraudster Sam Bankman-Fried who headed up FTX was caught and charged…

  • The Bahamian Government has moved to upgrade their D.A.R.E Act Digital Assets Legislation to prevent instances of fraud and to reframe beyond crypto exchange businesses.

  • There is a significant uptick in global interest and registration for companies to have their Digital Assets related business, registered in the Bahamas.

  • Entrepreneurial Millennials leading ecosystem development - Fintech, Blockchain, and Crypto seeking to diversify away from being Tourism dependent, but that culture is nascent but growing.

  • FX Controls is more stringent than Jamaica and Trinidad and not particularly friendly to Bahamians.

Wind at their Back

The Bahamas which has been the leader in Digital Assets Legislation and Business Culture now has the wind at their backs especially with America recognizing Bitcoin ETFS.

And more recently Alphabet has announced the inclusion of certain cryptocurrency products within its Google advertising network, effective Jan. 29. This announcement marks a potential turning point for mainstream acceptance of digital assets and signals renewed confidence within the financial sector

Further Global ownership of digital assets grew by 34% in 2023. The user base grew from 432 million in January to 580 million by the end of the year. In the Caribbean, there were 214,000 Crypto owners in 2022.

Tech Ecosystem builders & Leaders to check when you are in Nassau

Crypto Isle - Davinia Bain & Dr Jillian Bethel

Caribbean Blockchain Alliance - Stefen Deleveaux

Haiti Gets New Digital Payments Laws

The Central Bank of Haiti has recently enacted its new Electronic Payment Regulatory Framework. This framework paves the way for the emergence of more efficient and more secure electronic payment systems in the country. 

We are excited about the digitalization of Haiti’s economy and the new opportunities electronic payments will bring by unlocking more value out of the Diaspora Remittance. Transforming Haiti’s cash-based bottom of the pyramid economy into a digital-centric ecosystem, will allow for better risk mitigation and more efficient financial products,” said Pascale Elie, Chair of CellPay.

Source: Forbes 

Because Innovation Happens Everywhere

GLOBAL TECH NEWS SNIPPETS

African Tech

  • In African Tech 2023 was a watershed year. US$2.748 billion was raised across 500 deals, and this includes Africa's largest-ever acquisition deal: Instadeep's acquisition by BioNTech for $682 million.

  • In more somber news, over 1,500 tech workers were laid off in Africa in 2023, while 15 startups that raised $214 million in funding shut down.

  • In 2023, female-led ventures in Africa raised just above $200m, showing positive YoY growth (+7%). Considering funding overall shrunk by -39% YoY, this is pretty commendable. During the same period, funding raised by male-led ventures went down -40%, though in absolute terms it is very far ahead at $2.7b, i.e. 13x times more. - TechCabal

Tech Accelerators

  • Techstars, a startup accelerator, has laid off 20 people, or 7% of staff, mostly in support and operations. This round of layoffs did not impact any investment professionals. Techstars plans to invest in 800 startups this year through its numerous accelerator

  • Y Combinator, axed 16% of its staff as it pulled back from late-stage investing last year. 

Big Tech

  • Microsoft is the second company in history to hit a market cap of $3 trillion — a milestone achieved by its recent investments in AI. Microsoft CEO Satya Nadella vowed to “move fast” to combat nonconsensual, explicit AI-generated deepfakes after several bogus images of Taylor Swift, reportedly made using Microsoft’s AI tech, circulated on X.

  • Google is rolling out an AI tool that helps customers generate ads for Search.

  • Elon Musk revealed on X that the first human has received a brain implant from his company Neuralink.’

Streaming

  • Netflix added a whopping 13 million subscribers last quarter, blowing past Wall Street’s expectations of 9 million. Additionally, Netflix reported a 3x increase in engagement with its streaming games last year, largely from releasing “Grand Theft Auto” games. It’s still a small gaming operation overall; October 2023 data showed that less than 1% of Netflix’s 250m+ subscribers were gaming daily.

  • Amazon Prime Video has ads now, and if you don’t want to see them, you’ll need to pay an extra $2.99 per month. Only US, UK, Germany, and Canada customers are impacted… for now.

Creator Economy

  • Reddit hopes to IPO at a minimum of $5 billion when the offering launches in March.

  • ▪“Chicken Shop Date’s” Amelia Dimoldenberg has been tapped to serve as the social media ambassador and red carpet correspondent for this year’s Academy Awards.

  • ▪People can’t stop livestreaming themselves getting fired… and people can’t stop watching them.

FLASHBACK

A Moment in Caribbean Tech History

6 Years Ago This Week, Jamaica had its first Crypto Event

It was a Trend Forum called “Understanding Blockchain Technology, Bitcoin and the Rise of Cryptocurrency”. The purpose of the event was to educate, excite, and connect people to the knowledge and opportunities of blockchain technology, bitcoin, and cryptocurrency.

MILAN KOCH – Silicon Valley Entrepreneur + Investor. Founder of AlphaBlock (USA+LONDON)

TREVOR FORREST – Senior Advisor Ministry of Science, Energy & Technology  (JAMAICA)

GHAFFAR ELLIS – CryptoCurrency Evangelist + Educator, Apply 3D  (JAMAICA)

ANDREA JOHNSON   – Blockchain Business Readiness Consultant, Crymmetry (JAMAICA)

CARIBBEAN TECH EVENTS LISTING

Kingston BETA

  • What: The Caribbean’s First and Longest Running Monthly Tech Community and Startup Stage Event.

  • Date: Wednesday, February 28th, 2024

  • Location: AC Hotel, Kingston

  • Format: Panel, Startup Stage Competition, The Best Tech Industry Networking in Jamaica

  • Website: https://kingstonbeta.com/

Beyond the Beach

  • What: An invite-only Tech Investor Summit of Super Successful and highly activated US, Caribbean Diaspora, and Caribbean Angel Investors and Tech Entrepreneurs excited about investing in early-stage Caribbean Startups.

  • Date: March 21-23, 2024

  • Location: Half Moon Hotel, Jamaica

  • Format: Unconference Style of Fireside Chats, Keynotes, Networking Lunches, Dinners, and Interactive Activities.

    An Entrepreneurs Across Borders and SiliconCaribe Event

 List Your Caribbean Tech Event here: email:[email protected]m for ad rates.

It’s now been 7 issues, and the responses have been deliciously good from you. Thank you for reading it and telling me what you enjoy.

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