The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A long-time crowd funding advocate says it is “6,000 percent important” that another platform replace ArawakX if it is wound-up, adding: “The void has to be filled immediately.”

Mark A Turnquest, the 242 Small Business Association’s founder and an adviser to the sector, told Tribune Business he had two clients “ready to go” and seek millions in investor equity financing via ArawakX when the Securities Commission’s bid to wind-up the platform for alleged insolvency and regulatory breaches broke.

While ArawakX’s fate remains to be decided by the Supreme Court on November 13, he argued it was vital that crowd-funding in The Bahamas not die with it because the concept provides an alternative mechanism for solid companies and business plans with “high growth” potential to raise much-needed financing for expansion.

Branding the commercial banks as “too risk averse” when it comes to financing start-ups, entrepreneurs and small businesses, Mr Turnquest told this newspaper there is nothing wrong with crowd funding as an idea and this nation needs such a structure to marry investors with solid corporate prospects that can help create and spread wealth.

“If they are suspended or their licence is revoked by the Supreme Court it’s going to be a tremendous loss,” he added of ArawakX. “They were a major contributor to the collaboration between investor and small business owners who want to grow their business exponentially. It was structured properly to bring owners and investors together, and initially it was successful.

“I had two clients of mine who were getting ready to be investment sources and investor ready to go into the platform this year. One was $12m, one was $5m. I was schooling my two clients. I was finalising their business plans in reference to financials so they could be ready to give their applications in to ArawakX for perusal and all the paperwork.

“Those two clients would become big, large companies if they could get the funding necessary and they’re ready to go. They’re battle tested, and meet all the requirements for crowd funding. All they needed to do was produce and send the paperwork to ArawakX, so they could do all the checks and balances.”

Mr Turnquest said one of his clients was based in Nassau, the other in the Family Islands, although he declined to name them. “I was getting them ready to go,” he reiterated. “These guys want millions. They are ready to go, and they are Bahamians ready to go. It was a big disappointment. I can tell you one thing: Both of them are service-oriented organisations.”

Turning to the broader picture, the small business consultant argued that ArawakX needs to be replaced swiftly if it is wound-up for the good of corporate Bahamas, the capital markets and the wider economy’s growth.

“It’s going to be a tremendous loss if they are not in what I call the arena but, of course, the chips will fall where they may,” Mr Turnquest told Tribune Business. “If they are not in the arena, someone has to replace them. It’s not something like FTX where you had monopoly money floating around the place. You had real money going to real companies.

“ArawakX was just a platform through which investor monies was put into companies, and the companies were responsible for information and financial reporting. When it comes to dividends and all that, the company is responsible; not ArawakX. ArawakX was the platform for collaboration between investor and issuer.

“The void has to be filled immediately if they do go. It’s very important. It’s 6,000 percent important. One hundred percent is not enough. I was an advocate for crowd funding for years, and when I say years it was before these people [ArawakX], “ he continued.

“It is a sad day because I was advocating for this for a long time; over ten years. We need something beyond the banking sector, which has limited risk appetite and involvement in the local business model. They are too risk averse.”

Mr Turnquest argued that the crowd funding’s continuation in The Bahamas, via a formal market structure governed by rules and regulations, is critical to the success and future prospects of companies with “high growth potential” in areas such as manufacturing because it enables them “to grow faster rather than through other means” by pairing their owners with local equity investors.

“It’s worked very well,” he said, “by the number of companies that have raised money successfully, and we need what I call a proliferation of crowd-funding platforms to continue. They must be highly regulated and sustainable, and must have a focus on Bahamian businesses when it comes to development. It’s a must.

“It’s [ArawakX’s fate] a dark cloud. I have different types of businesses - medium-sized, small and start-up - and those companies needing to move from medium-sized to big businesses. There’s many small businesses that are ready to go.

“One of my concepts is not to keep businesses small but to grow them at a sustainable rate. As a small business advocate, I want them to grow big. That comes with preparation, commitment, accountability and financial prudence.”

Four companies met their minimum target equity capital raise via ArawakX, namely Pinnacle Franchise Brands (Red Lobster); Dr Daniel Johnson’s Foot Rx; Tropical Gyros; and Nassau Gas. However, two others failed to meet the required threshold and investor monies had to be returned.