Millions To Support Technology Sector
The Multilateral Investment Fund (MIF) will provide us$4,226,600 in grants and financing for a program to promote entrepreneurship and support the creation of small and medium-size technological enterprises in Costa Rica, the Inter-American Development Bank announced today.

The program, which will also be backed by the Andean Development Corporation (CAF), covers the incubation of new software business ventures, access to international markets, the creation of a network of Costa Rican angel investors and the development of private sector mechanisms to finance dynamic enterprises in Costa Rica.

The MIF resources comprise us$1.4 million in reimbursable financing and us$2,826,600 in grants. CAF will provide us$750,000 to the program while Costa Rican counterparts will contribute a total us$2,564,800, including up to us$400,000 in financing from Financiera Desyfin.

“The program will apply a comprehensive approach and international best practices to promote wealth and job creation in Costa Rica through the establishment and accelerated growth of high value-added technology ventures and small enterprises,” said MIF specialist Lorena Mejicanos.

MIF project team leader Miguel Aldaz added: “The program addresses demand and supply issues. On one hand it will nurture new entrepreneurs and startups as well as help existing entrepreneurs to develop their full potential. On the other hand it will launch financial vehicles suited to the needs of technology-based businesses.”

The program will strengthen and expand Parque-Tec, Costa Rica’s first private sector software business incubator. This venture, which draws from a successful experience in Colombia, will help local professionals, technicians, researchers and university graduates develop their business ideas and become entrepreneurs. It will also promote entrepreneurship as a model for developing a business-minded technology sector.

Another component of the program, to be carried out by Costa Rica’s Chamber of Information and Communication Technologies (CAMTIC) with sponsorship from the PROCOMER trade promotion agency, will encourage new entrepreneurs to focus on exports. It will provide startups access to information on foreign markets, help establish export alliances and facilitate their participation in international trade fairs.

Fundacion Mesoamerica will contribute resources and expertise to the program component addressing the lack of business experience, commercial contacts and financial backers among fledgling entrepreneurs. Resorting to angel investors, it will help develop a private vehicle for providing seed capital to technology-based small businesses. The INCAE business school will provide access to the best practices on establishing and managing angel investor networks.

To develop alternative financing mechanisms for new technological firms, the program will set up a trust fund with resources from MIF and CAF. One of the mechanisms, the Seed Co investment Fund, will help finance deals backed by angel investors.

Applying a methodology similar to factoring, the Intangible Contracts Discount Fund will provide access to working capital to entrepreneurs who obtain their first big contract but lack assets or credit histories. Financiera Desyfin, a leader in SME financing in Costa Rica, will manage this fund.

Costa Rica’s representative on the MIF’s Donor Committee, Alberto Franco-Mejia, commented that his government expects this program “will help the structure of Costa Rica’s technology cluster become more dynamic by fostering the creation of a significant number of new ventures and assisting many small firms in their efforts to develop into medium-size enterprises.”

The MIF, an autonomous fund administered by the IDB, supports the development and modernization of the private sector in Latin America and the Caribbean, with an emphasis on microenterprise and small business.