Scared Capital: The Silent Killer of Caribbean Innovation

Enough is enough. Let's cut through the usual platitudes about "emerging markets" and "untapped potential." The hard numbers tell a story of stagnation that should alarm anyone invested in the Caribbean's future. Our region is being suffocated by indecision and fear.

That's just a fact.

In 2023, venture capital investment in Caribbean tech barely reached $215 million—an amount a mid-level Silicon Valley startup might secure without breaking a sweat. Our tech exports? A meager $100 million, according to UNCTAD.

These figures aren't just disappointing; they're a glaring indictment of our failure to engage meaningfully with the global tech economy. The tragedy here isn't just economic; it's existential. The Inter-American Development Bank estimates a fully realized Caribbean digital economy could inject $6-12 billion annually into the region's GDP. That's a lifeline for economies teetering on the edge of climate-induced catastrophe.

To truly grasp the magnitude of this failure, we need to look beyond our shores. Estonia, a country some Caribbean nations could swallow whole, exported €1.9 billion in tech services in 2022. That's 7% of their GDP. Uruguay, with an economy comparable to the collective Caribbean, pushed out $1 billion in software exports alone last year. Meanwhile, our ICT service exports accounted for less than 0.1% of GDP in 2023.

We're not just lagging; we're barely in the race.

And no. This isn't about size. It's about vision and guts. And that's where the Caribbean falls flat on its face. Singapore exported $84 billion in tech last year – a staggering 22% of its GDP. Israel, another small market, hit $67 billion. These countries didn't stumble into tech success; they engineered it, nurtured it, and turned it into an economic cornerstone.

So what's our excuse? It's not talent.

We've seen a 30% uptick in STEM graduates since 2020. And it's not a lack of ideas – I've personally witnessed the explosion of innovative startups across the islands.

No, our anchor is something I've come to call "scared capital" – a toxic brew of risk aversion, short-term thinking, and colonial hangover that strangles innovation at birth.

I've sat in rooms with investors who'd rather park their money in "safe" real estate than bet on the next big tech innovation. In 2023, a mere 15% of total tech investment came from Caribbean-based investors. It's a damning indictment of our risk appetite. Foreign capital, for all its talk of frontier markets, balks at the perceived instability of the region. The result? A self-fulfilling prophecy of underfunding and underachievement.

A Vicious Cycle of Underachievement

This capital paralysis spawns a vicious cycle. Starved for funds, our startups focus on small, local problems instead of global challenges. The average Series A round in the Caribbean was a laughable $3.5 million in 2023, compared to $15 million in Latin America. Is it any wonder that 45% of our tech graduates flee the region within two years? They're not leaving for the weather; they're escaping a tech desert parched of capital and ambition.

In my work, I've seen how technology can democratize content creation and level the playing field for small markets. The Caribbean could be leveraging these tools to punch above its weight in the global content economy. Instead, we're still debating the merits of basic digital infrastructure.

The cost of this paralysis is staggering. While we dither, the global tech race accelerates. Climate tech? Projected to be a $7.1 trillion market by 2030. Edtech? On track to hit $404 billion by 2025. Creative tech? A $2.25 trillion global opportunity. We remain dangerously dependent on tourism, which contributed 13.9% to Caribbean GDP in 2023. It's a precarious position in a world of climate change and shifting travel patterns. The World Bank projects climate change could cost us 10-22% of GDP by 2050.

Government initiatives, while well-intentioned, are band-aids on a hemorrhaging wound. Barbados's "Digital Nation" push, allocating $50 million over five years, and Trinidad and Tobago's $20 million tech innovation fund are drops in an ocean of need. And they're hobbled by bureaucratic caution and small-scale thinking, offering aspirin where major surgery is required.

The regulatory environment, despite some progress, remains complex. CARICOM's regional fintech sandbox is a step in the right direction, but it's overshadowed by the byzantine process of starting and scaling a business across the region. In an industry where speed is everything, we move at the pace of colonial-era bureaucracy.

The Outlook is Promising - But Progress is Slow

According to the OECD's 2024 Digital Economy Outlook, global venture capital investment in tech reached $675 billion in 2023, with emerging markets capturing an increasing share. The report highlights a shift towards "frontier technologies" like AI, quantum computing, and biotechnology, areas where the Caribbean has yet to make significant inroads.

The World Bank's 2024 Global Innovation Index places the top Caribbean nation, Barbados, at 49th globally, far behind innovation leaders like Switzerland (1st) and Singapore (5th). This ranking considers factors such as institutional frameworks, human capital, and business sophistication, underscoring the multifaceted challenges facing Caribbean tech ecosystems.

UNCTAD's 2023 Digital Economy Report emphasizes the growing digital divide between developed and developing economies. It notes that while e-commerce sales reached $26.7 trillion globally in 2022, the Caribbean's share remained below 0.1%, highlighting the urgent need for digital transformation in the region.

More Success Stories Needed

Despite the challenges, several Caribbean startups have shown promise, demonstrating the potential for tech innovation in the region:

WiPay (Trinidad and Tobago): WiPay was founded in 2017, and has become a leading fintech player in the Caribbean. The company provides digital payment solutions tailored for the region's unique needs, including support for the unbanked population. By 2023, WiPay had processed over $500 million in transactions across 8 Caribbean countries and secured partnerships with major banks and government agencies.

WiPay's success illustrates the potential for fintech solutions that address specific regional challenges. However, the company's growth was initially hampered by regulatory hurdles and limited access to capital, requiring the founders to bootstrap the business for the first few years.

EduFocal (Jamaica): This edtech startup, founded in 2012, has revolutionized test preparation in Jamaica. EduFocal's gamified learning platform has helped over 100,000 students prepare for crucial exams. In 2022, the company successfully listed on the Jamaica Stock Exchange's Junior Market, and raised J$130 million (approximately US$850,000) to fund its expansion across the Caribbean.

EduFocal's journey highlights both the potential and the limitations of the Caribbean tech ecosystem. While the company has achieved significant success, its funding rounds pale in comparison to global edtech startups, limiting its ability to scale rapidly.

Bitt (Barbados): Founded in 2013, Bitt has emerged as a pioneer in digital currency solutions for central banks and financial institutions. The company played a crucial role in developing DCash, the Eastern Caribbean Central Bank's digital currency pilot. In 2021, Bitt secured a significant investment from Medici Ventures, a subsidiary of Overstock.com , valuing the company at $50 million.

Bitt's success demonstrates the Caribbean's potential to lead in niche tech sectors. However, the company's reliance on foreign investment underscores the limitations of local capital markets in supporting high-growth tech startups.

Caribshopper (Jamaica/USA): An e-commerce platform, founded by Jamaican brothers Kadion and Tennyson Preston, connects Caribbean businesses with the global diaspora market. Since its launch in 2016, Caribshopper has onboarded over 500 Caribbean vendors and ships to customers in the US, UK, and Canada. In 2022, the company raised $5 million in Series A funding, led by a US-based venture capital firm.

Caribshopper's growth illustrates the potential of leveraging diaspora connections for both market expansion and capital access. However, the company's decision to incorporate in the US, rather than the Caribbean, highlights the challenges of scaling a tech business within the region.

The talent is here. The ideas are bubbling. The global demand exists. All that's missing is the courage to bet big on our own potential.

Breaking this cycle demands more than incremental change. It requires a seismic shift in mindset and policy. Here are a few thoughts:

1. Create a Regional Digital Single Market: CARICOM must accelerate efforts to unify the digital economy, and expand the addressable market for Caribbean tech firms from 7 million to 44 million overnight.

2. Establish a Diaspora Tech Fund: Leverage the estimated $120 billion in Caribbean diaspora savings. Even a fraction of this could transform our tech landscape.

3. Implement Regulatory Blitzkrieg: Slash through red tape with the urgency of a region whose future depends on it – because it does.

4. Launch Export-Oriented Incubation: Pivot programs like Jamaica's BIGEE to focus explicitly on nurturing globally competitive startups. Think global from day one, or don't think at all.

5. Initiate a Skills Revolution: Expand initiatives like Barbados' National Transformation Initiative region-wide. Aim to retool the entire workforce for the digital age, not just a select few.

Time to Dream Bigger

The time for half-measures and timid policies is over. It requires boldness, vision, and a willingness to fail fast and learn faster. We need to cultivate a startup mentality across our entire region – from government offices to university labs to corporate boardrooms.

As the Fourth Industrial Revolution accelerates, the cost of inaction grows exponentially. Every day we hesitate, we're actively falling behind. The global tech economy waits for no one, and it certainly won't pause for a collection of small island states still debating the merits of digital transformation.

It's time for the Caribbean to shed its digital timidity and roar onto the global tech stage. We must summon the innovative spirit that turned sugar cane into world-class rum and bauxite into billion-dollar industries.

The tools are at our fingertips. AI, blockchain, IoT – these aren't just buzzwords; they're the building blocks of our future economy. And make no mistake, someone will build that future.

The only question is whether we'll be the architects or the tenants.

The Caribbean has always punched above its weight in sports, music, and culture. There's no reason we can't do the same in technology. But it starts with believing in ourselves and our potential. It begins with shedding the mental shackles of our colonial past and embracing a future where we're not just consumers of technology, but creators and innovators on a global scale.

Our survival depends on it. Our potential demands it. And our people deserve nothing less.

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Paul Thompson is the Founder of HelloScribe A.I - AI AutoPilot for Strategy& Planning.