Shark Tank has sparked a craze amongst people in the entrepreneurship and venture capital world. The reality show features a panel of uber-successful entrepreneurs and executives, like Mark Cuban, who consider offers from start-ups seeking investments in their businesses. Jamaica too has caught on to the hype and panels of “investors” are popping up everywhere who listen to pitches by nervous entrepreneurs.
I was invited to represent the Branson Centre on a panel at the Jamaica Stock Exchange (JSE) Conference last week to judge a group of eight entrepreneurs as they pitched their businesses to a crowd of over one hundred people. We were instructed to be Shark Tank-like, and aggressively question the entrepreneurs after their pitches to the crowded room. I thought this was a bit unfair to the entrepreneurs for a number of reasons.
First, we were primarily a judging panel who scored the entrepreneurs on elements of their pitches, with the winner receiving a trophy at the end of the conference. If they did well enough, they could possibly be invited to meet with an investor. The aim of the pitch therefore was to do well on the elements we scored, not necessarily to seek investment. This inherently changes the stakes of the game.
Additionally, there was only one true venture capitalist (i.e. with money to invest) on the panel – Chris Williams of Proven Investments Ltd. The other panelists were Garth Walker of Wealth Magazine, Robin Levy of the Jamaica Stock Exchange, and myself. We were not investors.
Finally, the entrepreneur selection process was obscure. Based on cash flow and growth potential only two or three of the entrepreneurs who pitched could have given an investor any return on investment – but this is also true of Shark Tank.
Jamaica’s entrepreneurial sector was decimated by our financial crisis in the mid-1990s. Most of our entrepreneurs at the time had taken out variable rate loans at commercial banks. When the banking sector crashed, interest rates spiked to 60-100% and very few could pay. When the government sold the non-performing loan portfolio to an American debt collection company, entrepreneurs soon found the police knocking at their doors with guns, forcing them to vacate their offices and their homes without recourse. We have no bankruptcy protection in Jamaica. Our entrepreneurs were destroyed and our economy never recovered.
So I find it distasteful to publicly pummel the courageous few who are taking a chance on our country again and tentatively venturing out into the world of entrepreneurship. We should ask them the hard questions, yes, but above all support them in their efforts. Thankfully, our panel was not too hard on them (I think), and the JSE Conference was a great platform for exposure. Hopefully some of our entrepreneurs got new customers, if not new investments.
Whenever we are tempted to be Shark Tank-like in Jamaica, we need to remember that our debt, plummeting exchange rate, and fragile interest rates should deter any sane person from trusting in the local capital markets again. Thank goodness for the intrepid few who are willing to take on our economic beast and try to build something new.