BC Venture Capital Programs


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Presentation from \'EBC Explained\' webinar on May 9, 2009. Includes info on all BC (and some Federal) investment programs.

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  • BC Venture Capital Programs

    1. 1. Venture Capital Programs
    2. 2. BC Venture Capital <ul><ul><li>BC companies are the fastest from founding to exit of any jurisdiction in North America at 41 months </li></ul></ul><ul><ul><li>BC companies have highest exist values per $1,000 GERD of any jurisdiction in North America at $494 </li></ul></ul><ul><ul><li>BC has highest exit values per $1 of venture capital investment of any jurisdiction in North America at 3.04 using a rolling 5 year average </li></ul></ul>
    3. 3. BC Venture Capital Update - 2008 <ul><ul><li>BC increased its share of venture capital invested in Canada in 2008 to 19% compared to the other provinces and territories </li></ul></ul><ul><ul><li>$259 million of venture capital was invested in 51 companies in BC in 2008 </li></ul></ul><ul><ul><li>The Investment Capital Branch's Venture Capital Programs facilitated over $34 million of the above ‘venture’ investments </li></ul></ul><ul><ul><li>An additional $70 million of ‘angel’ investments was facilitated by the Investment Capital Branch's Venture Capital Programs in 2008 </li></ul></ul>
    4. 4. Venture Capital Programs’ Objectives <ul><li>“ The Venture Capital Programs are designed to encourage investors to make equity capital investments in British Columbia small businesses that will enhance and diversify the provincial economy.”  </li></ul>
    5. 5. Access to Capital – ‘J-Curve’ {Venture Capital Programs}
    6. 6. Tax Credit Budgets $30m tax credits available allows EBCs and VCCs to raise $100m of equity capital annually
    7. 7. Direct Investment: EBC <ul><li>EBCs can raise up to $5M maximum </li></ul><ul><li>Raise equity capital directly from investors in accordance with BC Securities Act </li></ul><ul><li>Investors receive 30% tax credits subject to 5-year hold period </li></ul>
    8. 8. Portfolio Investing: VCC <ul><li>VCCs raise equity capital from investors in accordance with BC Securities Act </li></ul><ul><li>Investors receive 30% tax credits subject to 5-year hold period </li></ul><ul><li>VCCs must invest 80% of capital raised within 2 years in ESBs </li></ul>
    9. 9. EBC/ESB Eligibility Criteria <ul><li>Permanent establishment in BC </li></ul><ul><li>Max. 100 employees </li></ul><ul><li>Min. 75% BC payroll </li></ul><ul><li>Min. $25,000 in equity capital </li></ul><ul><li>Substantially engaged in prescribed activity </li></ul>
    10. 10. Prescribed Business Activities <ul><li>50% or more of companie’s assets and expenses used towards: </li></ul><ul><ul><ul><ul><ul><li>Manufacturing and/or processing </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Destination tourism </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>R&D of proprietary technologies </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>New media </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Clean technology </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Community diversification </li></ul></ul></ul></ul></ul>
    11. 11. Uses of Capital <ul><li>Equity capital raised must be used for business development expenses </li></ul><ul><li>Prohibited uses include lending, repayment of debt, redemption of shares, and payment of dividends </li></ul>
    12. 12. Equity Shares <ul><li>Issued from treasury in consideration for cash </li></ul><ul><li>May or may not carry voting rights </li></ul><ul><li>May have warrants, options rights attached </li></ul><ul><li>Cannot create debt between shareholder and business </li></ul><ul><li>Returns from profits or gains </li></ul>
    13. 13. Eligible Investors <ul><li>Individuals </li></ul><ul><ul><li>=> earned income in BC </li></ul></ul><ul><ul><li>=> claim up to $60,000 per year in tax credits </li></ul></ul><ul><ul><li>=> carry-forward unclaimed tax credits for four years </li></ul></ul><ul><li>Corporations </li></ul><ul><ul><li>=> permanent establishment in BC </li></ul></ul><ul><ul><li>=> claim tax credits against BC taxes payable </li></ul></ul><ul><ul><li>=> carry-forward unclaimed tax credits for four years </li></ul></ul><ul><li>Eligible investors cannot own 50% or more of business’ voting shares combined with associates or affiliates </li></ul>
    14. 14. Other BC Government Programs <ul><li>Working Opportunity Fund => $180 million fund for investing in early stage companies </li></ul><ul><li>Renaissance Capital Fund => $90 million managed by independent fund managers </li></ul><ul><li>Innovative Clean Energy Fund => $25 million fund for innovative clean technology projects </li></ul>
    15. 15. Federal Government Programs <ul><li>Community Futures BC => small business and pooled investment loans </li></ul><ul><li>NRC Industrial Research Assistance (IRAP) Program => technical and business oriented advisory services along with potential financial support </li></ul><ul><li>Scientific Research and Experimental Development (SRED) Program => tax incentive program to encourage R&D </li></ul><ul><li>Business Development Bank of Canada (BDC) => venture capital programs focused on technology-based businesses </li></ul><ul><li>Sustainable Development Technology Canada (SDTC) => funding for the development of clean technologies </li></ul>
    16. 16. Contact <ul><li>Dara Landry, B.Comm., CGA </li></ul><ul><li>Portfolio Manager </li></ul><ul><li>Investment Capital Branch </li></ul><ul><li>Ministry of Small Business, Technology, </li></ul><ul><li>and Economic Development </li></ul><ul><li>Toll free: 1.800.665.6597 </li></ul><ul><li>Direct: 250.952.0644 </li></ul><ul><li>Fax: 250.952.0371 </li></ul><ul><li>Email: [email_address] </li></ul><ul><li>Web: www.equitycapital.gov.bc.ca </li></ul>