Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact
This idea has never been explored before. However, similar idea minus the government capital injection has been explored before and met a high degree of success for one firm in the financial sector. Other firms have been borrowing larger financial entities and subletting to micro businesses.
Venture capital operations have been very beneficial in Jamaica in the past. The Jamaica Money Market Broker – JMMB is one such invention. The Braco Hotel (Rio Bueno, Jamaica) is another venture capitalist intervention that has made it. These venture capitalists have been able to recoup their investment many times over by either taking the firm public or taking their share of the profit. Also, some of these firms continue to enjoy low cost financing by giving their employees shares in the companies. A recent 2007 study of two Jamaican firms that started out small and have grown to be leaders in their business sector found that:
Technical competence, low financial risk, building a solid capital base, dividend, international benchmarking, technology and interest rate policy were the significant variables in leading these firms to successfully embrace transition and to survive the financial crisis of the 1990s. The results also show that while managers and directors are concerned about building equity, reducing debt and financial risk, shareholders were concerned with increasing wealth, realizing profits, and collecting dividend. The findings suggest that family firms that have gone public have low financial risk (Perry, 2008).
Therefore, if we couple government funding for start-up operation with venture funding then many more SME could get the added boost to positively jolt Jamaica’s GDP and lead it on a path to sustainable growth.
How many firms do you expect to reach?
I expect to reach over 10,000 firms over a 10-year period.
What is the volume of private SME finance you aim to catalyze?
Year 1 = J$100B; Year 2 = J$150B, Year 3 = J$200B
What time frame will be required to reach these targets?
Four years would be required to see the first set of recipients to transition into venture funding.
What would prevent your solution from being a success?
If the government is not able to provide the funding needed and if the private partnership aspect is not successful.