1. UNDERSTANDING VENTURE CAPITAL AND ITS ROLE FOR THE PAST 20 YEARS IN TRINIDAD & TOBAGO

2. IMPORTANT MILESTONES 1994 - 2014

3. WHAT VC IS NOT No lending or borrowing; No interest costs A LOAN Investors demand substantial ROI as well as accountability, transparency and arms-length transactions A GRANT or GIFT No winner takes all mentality aka Donald Trump mentality. Valuation is key but all parties must win for a successful investment VULTURE CAPITAL Risk mitigation strategies include a) Tax Credits b) Portfolio Diversification c) Balanced Investment Mix INHERENTLY RISKY

4. WHAT VC IS Cash investment in exchange for part ownership of company for a finite (limited) time Equity Capital Can be long term in nature (up to 5 – 10 years) Patient Capital More than cash; access to markets; know-how; co- investors; deep industry expertise & experience Value Added Not a passive investment; investors typically have say in major policy & strategic decisions; board representation Hands On Private Equity; not listed or traded on public stock exchange Illiquid

5. PENSION FUNDS INSURANCE COMPANIES FOUNDATIONS / ENDOWMENTS WEALTHY INDIVIDUALS ANGELS (Usually successful entrepreneurs) CORPORATIONS GOVERNMENTS SOCIAL MEDIA NETWORKING (Crowdfunding, Kickstarter) COMMON SOURCES OF VC

6. VC EXITS Get listed on a public stock exchange IPO Third Parties, Mergers & Acquisitions BUYOUT By other investors; next stage of VC; other sources of financing TAKEOUT Owner(s) buy back company stock from VC BUY BACK

7. IT SERVICES ENTERTAINMENT CARNIVAL MANUFACTURING DOWNSTREAM ENERGY VALUE –ADDED SERVICES CRITICAL MASS DOMESTIC - Local CARICOM - $800 M TOURISM -Niches EXPORT – Intl Markets INCUBATORS ENTREPRENEURIAL DEVELOPMENT RESEARCH & DEVELOPMENT SECTOR BUSINESS DEVELOPMENT LATTER STAGES VENTURE CAPITAL – MEZZANINE, ETC PRIVATE EQUITY PROJECT FINANCING GOVT GRANTS ANGEL INDIVIDUAL INVESTORS (EQUITY AND LOANS) – PRE-SEED STAGE TOBAGO VCEFL – SEED & EARLY STAGE INVESTMENTS PRIVATE VC FUNDS (ASPIRE) DIASPORA INVESTMENTS CREDIT UNION BANKS OTHER Financial Institutions Missing Elements Portfolio Companies/ SME Sectors Target Markets FINANCIAL ECOSYSTEM

8. Typically very limited access to debt financing VC can literally make the difference between success and failure Improved operational structures & systems including accounting and record-keeping Well researched marketing strategies Sound and persuasive business plans Strong management team structures BENEFITS TO SME COMPANIES

9. Create & Develop Innovative Systems and Applications Ability to Scale to Critical Mass and Attain Significant Growth Within the Investment Period Ability to Provide Profitable Returns Job Growth Access to New Markets and Development of Existing Markets Wider Economic Benefits SELECTION CRITERIA FOR PORTFOLIO COMPANIES

10. INVESTMENT ASSESSMENT Management / Controlling Shareholders Integrity – Integrity and reputation of the business partners must be unquestionable Entrepreneurial Passion/Enthusiasm – Existing Businesses with a passion to grow or New Businesses with an entrepreneurial person Track Record – Quality and experienced owner, sponsor and management team with proven track records in relevant industries Financial Partnership – Business Owner/Entrepreneur must have a significant financial stake Congruent Goals – No conflicting goals or interests

11. VALUATION

12. GOV’T OPERATED FUND MODELS

13. KEYS TO YOZMA SUCCESS IN ISRAEL

14. Sustained Quality Deal Flow o There must be pools of entrepreneurship development and stimulation to provide continuous sources of deals o SME sector is the largest source for potential deal opportunities Effective Professional Fund Management o There is a lack of Professionals with Private Equity/VC Expertise and Experience o Need for Intermediaries – Lawyers; Accountants; Business Consultants & Experts WHAT MAKES FOR SUCCESSFUL VC

15. 1.Raise Capital 2.Generate Deal Flow 3.Pick Winners 4.Create Successful Portfolio - Management Fees / Carried Interest 5.Risk Management/Compliance 6.Have Representatives on Portfolio Companies’ Board of Directors 7.Work Closely with Intermediaries 8.Recommend/Advise on Investment Strategies Direction & Structures 9.Provide Access to Other Financers/Investors FUND MANAGER ROLES

16. 1.Business Builders - Typically Serial Entrepreneurs or Industry Veterans 2.Idea Investors - Identify new industries; create new markets for technology; identify gaps in an industry 3.Common Traits/Personal Assets Include: A genuine enjoyment of working with people Having a great network Humility - Investment Acuity - Sharing “Best Practices” learned from other portfolio companies CHARATERISTICS OF FUND MANAGERS

17. Making Intermediaries Advocates Provide Value-added Services to Portfolio Companies Various Roles as Fund Advisors e.g. Directors of Portfolio Companies Source of Technical Studies and Market Analyses Intake for Generating Deal Flow Direct Investment, Co-investors and Exit Mechanisms with other Parties, e.g. Private Funds, IFC, BDC, Pension Funds and Credit Unions Provide Transparency, Objectivity and Consistency to Investors and Potential Investee Companies INTERMEDIARIES VALUE

18. CHALLENGES What Went Before Insufficient Deal Flow – Companies not Properly Prepared or Structured No Follow-on Investments – Need for Many Players and Co-Investors Very Limited or No Exit Mechanisms – No Realization of Value Historical & Cultural Skepticism – Ignorance (Lack of Knowledge); Indifference; Antagonism

19. OPPORTUNITIES The Promise of Today Entrepreneurship– Now Being Recognized at Home Professional Support & Development for Entrepreneurs and SMEs – Lok Jack GSB; THA VCEFL; Incubators; Min of Labour & Micro Enterprise, IDB’s ConnectAmericas, MPSD – Global Services Promotion Program Myth of the Risk Averse Mindset – Continually Being Dispelled Knowledge & Access is Power – Social Networking; Understanding Your Options; Competition (Local Globalization) Availability of Multiple Financing Options – It’s Relative but Getting Better

20. RECOMMENDATIONS Things We Can Do Now Government Must Take The Lead – Direct Investor & Facilitator Development of Capital Markets – More Listings & Activities; Incentives To List (Junior Stock Exchanges, Second & Third Tier, Tax Incentives for Listed Companies) Pension Funds & Insurance Companies Inclusion – Assets of Pension Funds in T&T as of July 2014 are $46B (An Increase of 654% from 1996’s Total of $7B Linkages & Development of Key Sectors – Sources of Viable Deal Flows; Transfers of Know how & Expertise; Incubators and Educational/Technological Institutions Regional Focus – Critical Mass; Diaspora, Trading Partners Just Do It! – Don’t Be Afraid to Make Mistakes; Flexibility; Long Term Focus