Worth Reading: 6 reasons why Caribbean tech start-ups cannot access funding

Seed Money

The challenges of financing a start-up, and a tech start-up in particular, is a common lament across the Caribbean. Frequently this claim has also been a deterrent to many to develop their ideas and start a business. This post outlines six reasons why access to funding can be difficult in the region.

1.  Not much funding is available

This is a cold hard fact. In addition to limited Venture Capital and few Angel Investors being available in the region, conventional financial institutions consider most tech operations as risky ventures. Start-ups might have a better chance of securing funding if they are working with more tangible products, than trading in services. Nevertheless, commercial lending rates, which tend to be exhorbitant, are normally applied, along with considerable collateral provisions, which a young entrepreneur might not readily have at his/her disposal.

2.  The business model is not viable

Many tech businesses, especially those based on mobile applications, social media, or on developing a following, have been finding it challenging to develop viable business models. Traditionally, tech businesses built around websites generated revenue from advertisements (ads) placed on their sites.

However, based on the experience of wildly popular sites, such as Google, Facebook, Twitter and LinkedIn, profitability through advertising is not as easy as it seems. Hence, start-ups owners in particular, cannot afford to be naïve or complacent, believing that revenues from ads alone will be sufficient to cover their expenses. More rigorous thinking is necessary, which it is advised should be captured in a business plan, especially since preospective financiers – even Angel Investors and Venture Capitalists – would be more inclined to support a start-up that is likely to succeed.