By NATARIO McKENZIE
Tribune Business Reporter
Bahamas Striping was yesterday said to have given the Government-sponsored venture capital fund a 22 per cent return on its $300,000 investment in the company, financed through a mixture of debt and equity.
Atario Michell, president of the Bahamas Striping Group, “wholeheartedly” endorsed the Bahamas Entrepreneurial Venture Fund as a small business financier. He credited it with helping the fledgling business secure the necessary financing to grow.
“Three years ago we decided to move from a home-based business and begin construction of our very own head office and manufacturing plant,” Mr Mitchell said.
“We went to our bank having already invested $60,000 to purchase our steel building frame. We were told that our investment did not meet their requirements, and we had to come up with an additional $40,000.
“We did not want to exhaust our cash flow. They insisted that in order for them to help us, we had to either put up the funds or find 100 per cent of the collateral.”
Mr Mitchell added: “We found the bank’s position to be difficult because they held our company’s checking account, savings account and credit card account.
“We thought that after three years we would have been able to build on our relationship with our bankers. This is when we realised that something was seriously wrong with how banks view small businesses in our country. It seems, generally, speaking that banks find it easier to lend money for consumer goods, cars, furniture, vacation, but are less favourable when it comes to funding business ideas and expansion in our economy.”
Mr Mitchell said Bahamas Striping then approached the Venture Fund, where it was able to secure a $100,000 loan and $200,000 in equity financing.
Michael Cunningham, the Venture Fund’s chairman, said it had enjoyed a 22 per cent return on its Bahamas Striping investment.
“We’re very happy to say that within three years they have been able to pay back the equity of $200,000, and pay back the loan of $100,000,” he said.
“The fund has been able to enjoy the benefits of working with this group of companies in that we have received something like 22 per cent of our investment in the venture fund. It was high risk, so we had to seek a high premium.”
Michael Halkitis, minister of state for finance, said that when the Venture Capital Fund was conceived in 2004, the Government recognised that companies in the Bahamas were having tremendous difficulties, particular small start-up companies, in accessing capital.
“Even with the funding that comes through the Bahamas Development Bank there was still the need for the loans to be collateralised,” Mr Halkitis added.