What It Really Takes To Raise Capital In Emerging Markets
By Felicia J. Persaud
Raising capital isn't just about having a compelling idea - it's about demonstrating discipline, preparation, and a deep understanding of investor expectations. This is especially true in emerging markets like the Caribbean and Latin America, where economic volatility and heightened risk perceptions make the few investors in this space, especially international lenders, particularly cautious.
🚫 The Myth of the Million-Dollar Idea
At Invest Caribbean, we often meet developers who don’t fully understand the difference between debt and equity financing - they just know they need “investors.” If you’re serious about raising capital, take the time to educate yourself before entering this space. Successful fundraising requires thorough preparation and financial literacy. It’s often best to start with an angel or seed investor - someone within your network of family, friends, or colleagues—before pursuing institutional funding, whether through Series A, B, or C rounds, or taking on debt.
Too many aspiring developers assume that a basic black-and-white PowerPoint filled with ideas is enough to secure millions in funding. It’s not. Whether you're approaching debt or equity investors, they expect a polished, concise pitch that clearly tells the project’s story - without wading through dozens of pages of fluff. More importantly, they look for thorough documentation showing that the project is shovel-ready or close to it, a capable and proven team, credible financial projections, and clear evidence of your personal financial commitment. Yes, this level of preparation takes time and capital—which is exactly where early angel or seed investors can help you get started.
💡 Equity Means Cash, Not Just Assets
A common misconception is equating equity with the value of land or existing structures. In the eyes of investors, equity typically refers to liquid capital. As highlighted by the OECD, equity in project finance denotes an ownership stake that entitles the investor to a portion of the project's revenues. Without tangible cash, securing debt financing in particular, is impossible. So if you can, try to get an angel investor first to tie up all the first phase steps you should before bouncing out to raise millions.
📉 The Current Investment Climate
The investment climate in Latin America and the Caribbean remains challenging. According to the Economic Commission for Latin America and the Caribbean, (ECLAC), bond spreads in the region widened by 78 basis points in 2024 - a clear signal of rising borrowing costs and heightened investor caution. This reality underscores the critical need for developers to present structured, risk-mitigated projects if they hope to attract serious interest. With relatively few investors and lenders who view the region as stable, many still perceive it as too risky or unregulated - what some bluntly refer to as "the wild west." Shifting that perception begins with how you present your project - both through a compelling, professional pitch deck and in the way you confidently communicate it during investor/lender calls.
✅ Essential Steps To Securing Capital
Assemble a Competent Team: Investors place significant weight on the strength and credibility of your team. Surround yourself with qualified professionals - legal advisors, financial experts, architects, and contractors - who bring proven expertise to the table. Highlighting successful, comparable developments is essential, as it gives lenders and investors the confidence that your team can execute and deliver.
Develop a Comprehensive Pitch Package: Spend time and some capital on being and getting prepared or as I said earlier, get an angel investor. Your pitch should include a detailed business plan, financial projections, market analysis, and a clear exit strategy. This demonstrates professionalism and a thorough understanding of the project's viability. Work with qualified consultants, including at Invest Caribbean, who can help you craft a world-class pitch deck, refine your presentation, and, once your project is investment-ready, even present it directly to our network of lenders.
Conduct Stress-Tested Financial Modeling: Engage a qualified accountant to build detailed, scenario-based financial models that anticipate potential challenges - like market fluctuations, cost increases, or project delays. This kind of financial foresight signals to investors that you're not just prepared, but also strategic in mitigating risk. Remember: raising capital takes capital. Just like buying a home, an upfront investment is essential to unlock larger funding. If your project involves acquiring land or a building, be sure to obtain a third-party appraisal from an accredited firm to validate the projected value uplift post-renovation - an important credibility marker for lenders and equity partners alike.
Establish Legal and Corporate Structures: Before approaching investors, make sure your company is fully registered and that all necessary permits, licenses, and approvals are secured. This legal foundation is essential for building investor confidence - whether you're pursuing debt or equity financing. Keep in mind, equity investments often require a more complex legal structure than debt, including shareholder agreements and regulatory compliance. Therefore its critical to determine your starting point.
Demonstrate Personal Investment: Debt lenders are far more likely to support projects where the developer has substantial “skin in the game.” A personal financial stake not only aligns interests but also demonstrates commitment and financial responsibility. Most debt providers expect developers to contribute 20–25% of the total project cost in cash—proof that you have the liquidity to weather unforeseen challenges. In some cases, lenders may enter as joint venture (JV) partners and take an equity position, but even then, they typically require the developer to contribute at least 25% of the capital, matching their 75% investment.
🚩 Red Flags for Investors
Overleveraging: Stacking additional debt on top of existing seller financing is a red flag for most investors. It complicates the capital structure and significantly heightens their risk exposure. If you're already overleveraged just to acquire the land, the obvious question becomes: how will you finance pre-sales - and more importantly, how will you repay not one, but two loans?
Lack of Permits and Approvals: Submitting a project without the required legal approvals signals that it’s not ready for investment. It shows a lack of preparation and raises red flags about project viability. Investors typically expect documented proof of zoning compliance, environmental clearance, and any necessary operating licenses before they even consider moving forward.
Inadequate Knowledge of Project Details: As a developer, you must know your project inside and out. Once you're in direct conversation with a potential lender, deflecting key questions to subordinates can seriously undermine confidence. Lenders want to hear directly from you—the visionary and decision-maker—that you understand every detail, from the number of units or keys being built to the pre-sales strategy and development timeline that will drive ROI. Mastery of your project is not optional - it’s expected.
📈 The Path Forward
In an environment where capital is scarce and competition is fierce, developers in emerging markets must rise above, by showcasing meticulous planning, financial acumen, and unwavering commitment. At Invest Caribbean, we specialize in guiding developers through this intricate process - ensuring their projects are not only investment-ready but positioned for long-term success.
But most importantly, developers must be willing to listen, learn, and educate themselves on the intricacies of the capital-raising landscape. This isn’t ABCs or a 1-2-3 dance. It’s a high-stakes game that demands grit, precision, and relentless attention to detail.
Felicia J. Persaud is the founder and CEO of Invest Caribbean, For further insights and assistance in preparing your project for investment, contact Invest Caribbean today.