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  • 05/24/13

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  • 1. Access to Capital
  • 2. To push out into world markets, Atlantic Canada has to overcome its chronic,severe challenge in gaining access to capital. It is a complex problem, theamalgam of cultural, economic and regulatory issues. What is clear is that atevery stage of the growth cycle – from seed funding, to growth capital to publicand private equity markets – Atlantic Canadian companies have trouble raisingthe money they need.We have seen stunning success in Atlantic Canada of firms like Radian6, Q1Labs, Ocean Nutrition Canada and GoInstant.– Early investors have exited with market leading financial returns that, it is hoped, can bereinvested back in the region.– They represent what we can do, and have unleashed a wave of angel funding frominside and outside the region.The Important Issues
  • 3. BUTAtlantic Canadian companies have trouble raising the money they need.– Most years, Atlantic Canada receives less than 2% of the VC funding in Canada, thoughpopulation accounts for 7% of total.Atlantic Canadian companies rarely make use of certain kinds of available financing(e.g., subordinated debt or asset-based lending) – and companies tend not toconsider the public markets in their strategy.– Of the 3800 publicly listed companies in Canada, only 47 are based in Atlantic Canada(1.2%).The Important Issues
  • 4. The splintering of provincial efforts is particularly problematic in raising capital.– The region comprises four small provinces, with regulatory patchwork providing little orno harmony among the various agencies.– Equity tax credits offered only to residents of the particular province in which the targetcompany is based…and the credits’ effectiveness is blunted by low caps on dollaramounts.No industry association is speaking for the interests of start-ups and innovativehigh-growth companies across the region.The Important Issues (continued)
  • 5. What’s NeededThis region requires a new way of lookingat how business is done which include taxchanges, partnerships and creativefunding models.This region requires a new way of lookingat how business is done which include taxchanges, partnerships and creativefunding models.
  • 6. Create a regional equity-investment tax credit.– Change the federal tax code to create a regional ETC, because it’s easier to get onegovernment to move on this policy than four.– individuals and corporate entities should qualify for the Small Business Investment TaxCredit.– maximum income tax credit should be also increased from $75,000 to $150,000/year– Labour force restrictions on the tax credit should be removed.Banks should collaborate with federal and provincial lending agencies. In someinstances governments may be providing capital to companies who are goodcandidates for bank and other private financing sources. This type ofcollaboration may lead to additional government financing in the areas whichcompanies need to the most, the early stage of market and businessdevelopment.Our “Big Ideas”
  • 7. Create an organization that can speak with authority to government, privatesector finance partners and start-ups on the best, most efficient way to advancestart-up companies’ ability to access capitalWork with provincial governments to unify the four provinces’ securitiescommissions, eliminating the four-tier fee structure for companies and brokersCreate a private-sector led organization develop an ecosystem of high-growthcompanies across the region to create stronger linkages to external networkssuch as Silicon Valley, angel investors, Canadian venture capital funds,universities, and other players in the systemBuild a kind of New East Partnership among the four provinces to support abetter business climate– The idea is not to give up provincial autonomy, but to create a harmonized economiczone to allow free flow of people, goods and capital.Our “Big Ideas” (continued)
  • 8. Push for more consideration of public listings. Both private companies andgovernments must do more to ensure Atlantic Canadian companies exploit one ofthe world’s best markets for capital – the Canadian public equity markets.Advocate immigration policies to encourage entrepreneurs to adopt AtlanticCanada as their home.– Request governments in the region to extend the time period to set up a business togive immigrants longer to assimilate.– Lower the bar for assets and investable assets to allow more people withentrepreneurial spirit to come.Our “Big Ideas” (continued)
  • 9. The big ideas outlined are appropriately ambitious, hopefully exciting, but they arenot “blue-sky impossible” – far from it.They will flow from the collective product of thousands of personal actions takenby committed, passionate individuals like us who want Atlantic Canada tosucceed in the changing and challenging world arena.On the following slide is a list of some things you can do, as a business leader inour region, to help create a better Atlantic Canada.What You Can Do
  • 10. Make an equity investment in a private company in your regionContact your MLA/ Department of Finance to support the recommendation thatboth individuals and corporate entities should qualify for the provincial SBITC;and remove any labour force restrictions on the tax credit.Develop stronger links with other tech and start-up communities, and encouragemore events within the regionOrganize or host an event to connect entrepreneurs and investorsBe a mentor to a start-upConsider if you could be an angel investor in an Atlantic region start-upsInclude an Atlantic Canadian start-up in your RFP processWhat You Can Do
  • 11. Thank you for your helpwith this importantinitiative