Samuel J. Boyd, Jr. chief investment officer and director of program development of the office of investment and innovation at the Small Business Administration, visited Puerto Rico this past weekend to take part in a series of events hosted by Grupo Guayacán Inc. as part its ongoing efforts to promote a vibrant risk capital ecosystem on the island.
Boyd leads the team that manages the assessment of applicants to the SBA’s Small Business Investment Company program. SBIC’s are privately owned and managed investment funds that are licensed and regulated by the SBA. These funds use capital raised from private investors combined with capital from SBA guaranteed debentures to make equity and debt investments in qualifying small businesses, to help them grow.
For every dollar that an SBIC raises from investors, SBA provides two dollars of capital through guaranteed debentures, subject to a cap of $150 million. Boyd serves on the SBIC investment and divisional licensing committees and also leads all SBIC program’s outreach efforts, particularly as it pertains to engaging institutional investors and underrepresented investment funds.
“We are honored by Sam’s visit and excited to continue collaborating with the SBA’s Office of Investment and Innovation. These efforts are of strategic importance for GGI’s work in support of a vibrant private equity market in Puerto Rico,” said Laura Cantero, GGI’s executive director.
“Our ultimate goal is to contribute to the development of a robust risk capital ecosystem that provides a variety of alternatives for local entrepreneurs to access the capital they need to start their businesses or to grow. We believe that leveraging the SBIC program is key to building this landscape,” she said.
Boyd was the special guest at the 2015 Guayacán Venture Accelerator Demo Day, where companies graduating from GGI’s accelerator program have the opportunity to pitch their businesses in front of a panel of local and international investors. At this year’s Demo Day more than 10 local companies had the opportunity to gather feedback on their business models and growth plans, and establish relationships with potential investors while, at the same time, showcasing top entrepreneurial talent.
In attendance at the Demo Day were representatives from Banco Popular, FirstBank, Santander, the Economic Development Bank for Puerto Rico, and Advent Morro Equity Partners, and a host of other private equity investors. Notably, the panel also included representation from a series of newcomers to the local private equity market, including: Parliament Capital, Caribbean Basin Equity Partners, Bluhaus Capital, and McLarty Capital Partners. Investors from the United States, Canada, and Panama were also in attendance.
The GVA program is a GGI initiative designed to rapidly propel the growth of existing companies by combining an advanced education curriculum with feedback and mentoring from top-level professionals, world-class academics and seasoned investors. The program has brought to Puerto Rico a group of world-class resources never before assembled in a local program.
SBA expanding local investment
As a prelude to the GVA Demo Day, GGI hosted an exclusive networking event, “Tools for High-Impact Investing in Puerto Rico,” where Boyd was the keynote speaker. His presentation included an in-depth view of the SBIC program as well as updates on newer initiatives, such as the Impact Investing program, targeted at economically distressed areas like Puerto Rico.
During his remarks, Boyd stressed that the SBA is enthusiastic about the prospect of investing in private equity funds that target Puerto Rico. The event also featured a presentation of Puerto Rico’s new Private Equity Funds Act by Iván Marrero and Edgar Ríos from Pietrantoni, Méndez & Álvarez.
In attendance at Friday’s event was a group of senior stakeholders from the local and international financing and entrepreneurial ecosystems, including representation from institutional investors, banks, private equity firms, and angel investors, as well as a select group of GGI alumni companies.
During his stay, Boyd also held private meetings with senior leaders from the island’s top financial institutions where he discussed the critical role banks can play in fostering access to capital for small businesses by leveraging federal programs, such as the SBIC. Banks can play an important role, as investors or general partners for bank- owned SBIC funds. The SBIC program affords investor banks a number of benefits, including exemption from the Volcker Rule, which limits banks’ ability to invest in private equity funds, and eligibility for Community Reinvestment Act credits.
“SBA is excited about the important work that Guayacán is doing to harness the entrepreneurial energy resident in Puerto Rico. The SBIC program was designed to direct capital to small businesses in a collaborative way via public private partnerships. We remain committed to that ideal today,” Boyd said. “We look forward to continuing our work with Guayacán to identify viable avenues to fund small businesses in Puerto Rico.”
Boyd’s visit and the related activities mark an important milestone for GGI and the GVA program. For the first time since its creation in 2010 — and to serve growing demand — GGI will offer a second session of the GVA in fall 2015.
This year, GGI also launched the first edition of its GVA Alumni program serving the rising community of GVA graduates, which now consists of 54 local growth companies.
“This is the largest and most diverse GVA Demo Day that GGI has hosted. We are convinced that there is great value in helping intermediate relationships between serious investors and top entrepreneurial talent. Increasingly, we are turning our attention towards stimulating the local private equity market by leveraging our relationships with institutional investors, fund managers and other key stakeholders, such as the SBA, both in Puerto Rico and abroad,” said Cantero.