BRIDGETOWN, Barbados – At the Eastern Caribbean Central Bank’s 10th Growth and Resilience Dialogue I had a riverside chat with Dr. David Lowe, Managing Director of the Development Bank of Jamaica, focused on how to pool capital from the Caribbean Diaspora to invest back home and how the Organization of Eastern Caribbean States (OECS) could approach it.
As someone who has lived in the USA for half my life, has moved back to Jamaica to work on more than one occasion and served as the first Future Leaders Representative for the USA on the Jamaica Diaspora Advisory Board, I am intimately familiar with the problems faced by us in the diaspora wishing to invest back home.
I was first asked in the mid-2010s how to get people like me to invest back home. No one pursued the solution that I presented at the Jamaica Stock Exchange Conference: A pooled investment vehicle targeting the average person of Jamaican heritage instead of a fund only open to the wealthy diaspora. An inclusive approach instead of an exclusive one.
Government-backed Diaspora Bonds
My focus since 2018 has been to figure out how to pool capital from the Caribbean diaspora to invest in impactful opportunities back home that contribute to economic growth and generate a profit. I was tired of waiting on other people to solve my problem and had been repeatedly told at town halls that government-backed diaspora bonds similar to Israel’s approach were not the appropriate solution because of the trust deficit between the diaspora and their home countries in the Caribbean region due to the perception, and evidence in too many cases, of corruption.
I firmly believe that the democratization of access to investments thanks to mutual funds, index funds and exchange traded funds (ETFs) has been transformational for everyday investors. Therefore,I believe that the person with $100 to invest deserves the same access as the person with $1 million.
Some people do not share that belief or think that everyday investors are a pain to deal with because of the financial literacy gap. I say that we should educate them like what I had to do at Jamaica National Building Society. A more financially literate society is a good thing. In fact, we should teach the basics about money in high school!
I became passionate about solving this specific problem because we Caribbean people abroad have always carried home in our hearts and in our wallets. We send support for schools, do medical missions, help our families, and show up when it matters. But too often, we have not had the chance to own part of the economic future we help to sustain. The Caribbean needs to move from depending heavily on FOREIGN direct investment, FDI, to DIASPORA direct investment, DDI.
Financial Sector Work Experience
My financial sector work experience spans working for a building society designing savings and mortgage products for the Jamaican Diaspora, working in private equity, at a hedge fund and overseeing digital marketing for a large US mutual fund.
The alternative funds were limited to 100 investors and could only raise from the wealthy 1% and large institutions. The majority of us who live overseas are not in the 1% and would not be eligible to invest in such a fund managed by an investment manager.
In November 2023, Michael Lee-Chin asked me a simple question “What if Berkshire Hathaway had owned Blackstone?” to which I replied “Before Blackstone sold their stake in BlackRock” and now I had a clear recipe from someone who had built their wealth in the Canadian mutual fund industry, the mom and pop investors who I also felt should be included in the growth of the Caribbean (Blackstone is the largest manager of private equity funds in the world and BlackRock is one of the largest managers of public equity funds, though they are now dipping into each other’s markets in recent times).
I decided that instead of the Blackstone approach out the gate, private funds for the wealthiest, the BlackRock approach, pooled investment vehicles open to everyone, was the better path if the goal was truly to increase ownership rather than further concentrate amongst it the wealthiest. The Blackstone piece could come later, possibly as a partnership with an established fund manager who was interested in the Caribbean.
Private Funds
Funds are exclusionary and pooling diaspora capital needs to be inclusive. A fund does not address the key pain points that we in the Caribbean diaspora have:
1. Available to the general person
2. Easy to access
3. Easy to exit
The simplest solution is to use the ETF model as the role model and to then leverage their recipe to create a pooled regulated investment vehicle with strong governance at the board and management level, which must file quarterly reports so that investors know what is happening with their money, can invest in public and private opportunities and is publicly-traded on a major global market such as the NASDAQ or NYSE so that potential investors have easy access to buy into the vehicle and exit the vehicle when an investor desires, not when a fund manager allows them.
Caribbean ETF
We spent 18 months working on a Caribbean ETF and then hit a regulatory brick wall after overcoming all the other hurdles. That forced a shift and we found a pathway that worked under the existing regulations: A holding company. The most famous holding company is Warren Buffett’s Berkshire Hathaway, a company and investor whom I have studied since 2002. The most famous Jamaican holding company is Pan Jamaica Group. This approach now became the only path.
After becoming intimately familiar with the US securities laws due to the journey and significant legal expenses, I focused my team on building just such an entity with the goal of listing on the NASDAQ because their software powers the Jamaica Stock Exchange so there was no need to convince them of why Jamaica and the Caribbean or whether or not companies had good governance.
On May 4, 2024, Blue Mahoe Capital Inc, our US-based company, submitted an offering statement to the Securities and Exchange Commission to be qualified to sell shares to US persons at US$10 per share and the minimum investment was $500.
I leveraged my marketing experience with the mutual fund and the building society to market the opportunity and spent the next 12 months raising capital under the JOBS Act, a first for a US company focused on investing in the Caribbean.
NASDAQ Ticker Symbol Reservation: IRIE
11 months ago, I appeared on Bloomberg TV for the second time to announce the ticker symbol we had reserved, IRIE, not to imply that we had applied to list or were listed but as a statement of our seriousness about the goal. We know how we Caribbean people have a trust problem when it comes to putting our money anywhere but under our mattress! The Caribbean deserves a seat at the global financial table and we announced that we were pulling up a chair.
Next SEC Filing
The journey to date has taught our team some valuable lessons that we are applying to the next phase of Blue Mahoe which will be evident in our next SEC filing and it will benefit the OECS and other countries who wish to tap their own large diaspora population. If you want to get the person with $100 and not just $100,000 then a hedge fund or private credit fund does not work unless the fund is publicly-traded.
Dr. Lowe asked me what were the biggest challenges and the biggest lessons from the experience to date and I was honest about the surprise that your word is not your bond, that people could make commitments, sign paperwork and present timelines then never meet them, without any remorse.
I was also surprised at how many people claimed to be a supporter of the idea but then never lifted a finger or sought to steal the idea instead of partnering for the good of the Caribbean, only to flame out and change their plans. The biggest challenges were regulatory, team composition and gaining then keeping the trust of potential investors.
Journey of a Startup
No startup has a perfect journey. But a committed founder finds ways to avoid most potholes on the road less traveled. When they hit one and get a flat, they patch the tire. They keep the car running until the next milestone. Then they upgrade it for the next leg of the journey.
I closed by pointing out that bankers and investment managers too often are far removed from the pain points of the average person and they only design solutions for the wealthy investors.
Warren Buffett says that you should never ask a barber if you need a haircut so no one should be surprised when fund managers say that we should launch a diaspora fund that they can charge fees on.
Speak to the 99%, not just the 1%. Listen to their pain points, and then solve their problem. Stop treating us in the diaspora as a source for donations. Take time to understand what we need to invest back home with confidence. Do not ignore the person who sends $500 in remittances every month.
Watch the Riverside Chat
