|Mauricio Salas, BLP Abogados|
The securities regulator of Costa Rica, the Superintendencia General de Valores (Sugval) is drafting new rules for venture capital funds, in an effort to bolster financing of entrepreneurial transactions. Several funds operate in Costa Rica on a private basis. Public offering of funds has not been authorised by the regulator so far, despite being expressly authorised by statute in Costa Rica's Ley Reguladora del Mercado de Valores.
Venture capital financing is key to Costa Rica's development model: 92% of the nation's active companies are classified as small to medium enterprises (SMEs). This sector employs 43% of Costa Rica's work force according to Cegesti, a local think tank. Research conducted by the national development report Estado de la Nación has identified access to financing as one of the crucial factors limiting the growth of these budding companies. SMEs in the software and agribusiness sectors could receive considerable benefits from venture capital investment. The country is also promoting a state-sponsored development banking effort, with limited success.
In a recent interview, Victor Chacón, the Executive Director of Costa Rica's Chamber of Investment Funds lauded the initiative as positive for the democratisation of the Costa Rican economy. Costa Rica employs more than 30,000 people in the cutting-edge IT and medical device sectors, but many of these jobs are offered by large manufacturers in the Free Trade Zone regime. The coupling of services and products offered by local SMEs to the larger agents in the local economy is a definite step in Costa Rica's road to development.
Sugeval has not yet revealed the content of the new regulation. Due to the risk profile of venture capital investment, the regulation will probably contain a definition of a sophisticated investor and minimum investment thresholds for the venture capital fund. Minimum investment is expected to be $50,000, but Sugeval declines to comment. The draft regulation will be sent in the next few weeks to the National Council of Financial Supervision, which will authorise the circulation of the draft for public comment.