The economic reverberations of the outbreak of the novel coronavirus are still not yet fully understood. The OECD in September estimated that global GDP would shrink by 4.5 per cent for the year, and experts are predicting only a moderate rebound in the economy next year.
For the territory of Puerto Rico, the coronavirus marks the fifth dire emergency for the island in three years, having previously weathered Hurricane Maria, earthquakes, government bankruptcy and political upheaval that led thousands of Puerto Ricans into the streets in protest.
In an effort to support startups impacted by the economic crisis, tech accelerator Parallel18 (P18) and its parent organization, The Puerto Rico Science, Technology and Research Trust, have raised a $1 million Business Continuity Fund which will benefit 39 startups who are alumni of the P18 program.
“From the moment the magnitude of COVID-19 became evident, we had to reinvent ourselves as a program and, at the same time, keep fulfilling our mission to support entrepreneurs from Puerto Rico and the rest of the world,” explained Eduardo Padial, parallel18’s Director of Operations.
Padial said that after making the decision to reduce the number of startups in this year’s cohort due to the pandemic, the Trust agreed to redirect P18’s remaining operational funds to invest US $1 million in a special relief fund for startups.
A press release explained that, using standard convertible notes, the Trust invested between $25,000 and $35,000 into each startup. Each company will have the chance to repay the investment after two years, providing a direct ROI for Puerto Rico’s economy, according to the organizations involved.
The international accelerator program has drawn interest from around the globe. Because of this, startups that will benefit from the funding hail from Argentina, Peru, Uruguay, Chile, Mexico, Colombia, Brazil, the United States, the United Kingdom, India, Spain, Bulgaria as well as 13 companies from Puerto Rico.
“The fund allowed us to act immediately and develop an investment vehicle that could support a very diverse group of companies graduated from our program, both local and international, that needed capital to propel their accelerated growth or keep the business afloat in the face of the pandemic,” added Padial.
Parallel18 is a program backed by the Puerto Rican government that provides $40,000 grants to startups. Startups that complete the acceleration program and remain in Puerto Rico are eligible for Parallel18 Ventures — a follow-on fund of up to $75,000 as a matching to the investment they raise.
Part of the Puerto Rico Science, Technology and Research Trust, P18 aims to further the Trust’s mission of maximizing Puerto Rico’s participation and creation of jobs in the global knowledge economy by promoting the investment and financing of science and technology research and development.
With no economic alleviation in sight, entrepreneurs on the island will surely keep feeling the impact of the coronavirus well into next year. It’s P18’s hope that they can help relieve some of this pain for startups associated with their program.