I’m confused. Every time we write about the country’s entrepreneurship ecosystem, our researchers and fact checkers conduct extensive investigations in an attempt to once and for all classify central bank circular 331 in the right policy framework. They always come to the same conclusion: it’s an equity guarantee. The whole purpose of this policy instrument is to mitigate the high risk of the “valley of death” or when there is a high probability that a startup firm will die off before a steady stream of revenues is established. With all due respect, the handful of venture capital (VC) funds currently deploying guaranteed capital are not serving that purpose. They’re thirsty for revenues such as private equity (PE) funds, not value creation such as VCs. They’re all looking at ticket sizes of $1 million or more in companies that are past the proof-of-concept stage and starting to see some real cashflows.
