Sat | Jun 6, 2020

Branson Centre hunts cash as funding runs out

Published:Friday | September 20, 2019 | 12:12 AMHuntley Medley - Senior Business Writer
Philanthopist Sir Richard Branson participates in the relaunch of the Branson Centre, at its relocation from Montego Bay to Kingston in June 2017.
Philanthopist Sir Richard Branson participates in the relaunch of the Branson Centre, at its relocation from Montego Bay to Kingston in June 2017.

Over the past eight years, the Branson Centre of Entrepreneurship Caribbean has invested more than US$1 million to help scores of entrepreneurs launch and grow their businesses.

That has largely been money from its initial 10-year grant – the size of which has not been disclosed – from billionaire Richard Branson’s Virgin Holidays and its non-profit foundation Virgin Unite.

With that endowment almost at an end and only a few other donors having signed up over the years, the entrepreneurship acceleration outfit is on a drive to ramp up funding for the next phase of its work.

The goal is to help small business scale up to become large operations within more dynamic economies of the Caribbean, but the Kingston-based Branson Centre, for the past two years, has put the brakes on funding start-ups, opting instead to help entrepreneurs who have already amassed $25 million or more in revenues to scale up, better structure their operations, and hunt equity and/or debt investments.

These ventures are also provided with an advisory board to provide mentorship and corporate governance support.

In making the change in its target clientele, the organisation reckoned that there were many entities funding start-ups and not enough focused on growing small enterprises with the potential to break into the big revenue-earning league.

Start-ups are now referred to other funding and support entities, while organisations refer scale-up cases to the Branson Centre.

“There are too many companies that start small and stay small. They get stuck. We really want to see more IPOs, more transactions, more deals and more momentum being generated, and we are getting that with the size of the companies we are targeting now,” CEO Lisandra Rickards told the Financial Gleaner in an interview.

Helping to propel those businesses to break the multi million-dollar revenue ceiling is now a big part of the Branson Centre’s mission.

Rickards concedes that the number of funders supporting start-up businesses has not been consistent because of the high cost of providing financial and business support service to enterprises that are just getting off the ground. With more funds, the Branson Centre could make a return to that space.

“We are trying to bring new donors to the table both – locally and overseas – to be able to expand and do more,” the CEO said. Proven Investment, National Commercial Bank, JMMB, PanJam, Norbrook Equity Partners and GK Investments have come aboard to help fund the Branson programmes and assist the organisation navigate its scale-up business model.

Identifying a stable source of funding is key, Rickards said, to determining the success of any accelerator business such as the Branson Centre.

Another important factor is talented people, and the organisation has been able to recruit and retain some the best and most qualified in areas such as programme management, business and financial training. It recently added a programme in blue economy development and retained a consultant in that area. The centre also invests heavily in technology, with much of its services and training delivered through technological channels.

The focus on helping to grow established small businesses factored into the decision to relocate the centre from its previous base in Montego Bay to Kingston two years ago. The Branson Centre is not providing small business grants at this time, but focusses on preparing entrepreneurs to pitch their business to equity investors.

The last grant-funding window from Arthur Guinness has been fully utilised and awarded as grants to several start-ups and scale-up businesses. Scale-ups tend to request between US$500,000 and US$1 million in equity and possibly some loans, Rickards said.

She declined to divulge details of the Branson Centre’s annual budget but says 60 per cent is allocated to programme delivery and 40 per cent to administrative costs, the main component of which is salaries for a staff of 10.

The centre’s work in Jamaica and the British Virgin Islands is said to have resulted in 180 entrepreneurs; being helped, with each creating an average of four jobs. Online training has been delivered to another 2,500 businessmen and women. Average profit growth experienced by Branson Centre entrepreneurs over the past two years has been estimated at 45 per cent.

“We are very proud of what we have been able to do and we hope that we will be able to raise the funding to be able to continue this important programme working with top-notch entrepreneurs and providing the deal flow for angel investors,” said Rickards.

She is upbeat about the economic climate in Jamaica, describing it as exciting for many entrepreneurs.

“People are looking at investing in entrepreneurs. This should have happened a long time ago. It is now happening. More capital is looking at the space than ever before, which is exciting for the entrepreneurs.”

Rickards is concerned, however, that financial institutions are still far too risk-averse and that venture capital is still limited.

“The conservative approach to risk is a real roadblock at the institutional capital level. So even though they are expressing interest they are really slow in pulling the trigger in investing from an equity perspective. They want to give the entrepreneur debt. Debt is very available; but equity, which is the real driver for economic growth, is hard to come by,” she said.

“All of us operating in the venture capital space are trying to create a venture capital industry, but it is taking a long time. There is still a lot of room to grow. Our frustration is the slow pace in changing the terms on the term sheet of venture capital in terms of how risk-averse we are. There is still a hangover of risk aversion.”

A Harvard Business School graduate in general management, Rickards believes all professionals working in the entrepreneurial space should develop practical business and entrepreneurial skills.

Inspired by her work and the examples of the entrepreneurs she works with, Rickards is building out her personal business, Soul Career, an online portal matching persons with careers they are passionate about and suited for. She is encouraging her staff to do the same and launch business projects of their own.