Atlantic Canadian companies struggle to access capital at all stages of growth. While some firms have seen success by attracting early investors, the region as a whole receives a disproportionately small amount of venture capital funding compared to its population. There is also a lack of public listings and collaboration between provincial efforts. New approaches are needed, including a harmonized regional tax credit, collaboration between banks and lending agencies, and the creation of an advocacy organization to improve the business environment across Atlantic Canada and help startups access funding.

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, the
amalgam of cultural, economic and regulatory issues. What is clear is that at
every stage of the growth cycle – from seed funding, to growth capital to public
and private equity markets – Atlantic Canadian companies have trouble raising
the money they need.
We have seen stunning success in Atlantic Canada of firms like Radian6, Q1
Labs, Ocean Nutrition Canada and GoInstant.
– Early investors have exited with market leading financial returns that, it is hoped, can be
reinvested back in the region.
– They represent what we can do, and have unleashed a wave of angel funding from
inside and outside the region.
The Important Issues

3. BUT
Atlantic Canadian companies have trouble raising the money they need.
– Most years, Atlantic Canada receives less than 2% of the VC funding in Canada, though
population 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 to
consider 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 or
no harmony among the various agencies.
– Equity tax credits offered only to residents of the particular province in which the target
company is based…and the credits’ effectiveness is blunted by low caps on dollar
amounts.
No industry association is speaking for the interests of start-ups and innovative
high-growth companies across the region.
The Important Issues (continued)

5. What’s Needed
This region requires a new way of looking
at how business is done which include tax
changes, partnerships and creative
funding models.
This region requires a new way of looking
at how business is done which include tax
changes, partnerships and creative
funding 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 one
government to move on this policy than four.
– individuals and corporate entities should qualify for the Small Business Investment Tax
Credit.
– 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 some
instances governments may be providing capital to companies who are good
candidates for bank and other private financing sources. This type of
collaboration may lead to additional government financing in the areas which
companies need to the most, the early stage of market and business
development.
Our “Big Ideas”

7. Create an organization that can speak with authority to government, private
sector finance partners and start-ups on the best, most efficient way to advance
start-up companies’ ability to access capital
Work with provincial governments to unify the four provinces’ securities
commissions, eliminating the four-tier fee structure for companies and brokers
Create a private-sector led organization develop an ecosystem of high-growth
companies across the region to create stronger linkages to external networks
such as Silicon Valley, angel investors, Canadian venture capital funds,
universities, and other players in the system
Build a kind of New East Partnership among the four provinces to support a
better business climate
– The idea is not to give up provincial autonomy, but to create a harmonized economic
zone to allow free flow of people, goods and capital.
Our “Big Ideas” (continued)

8. Push for more consideration of public listings. Both private companies and
governments must do more to ensure Atlantic Canadian companies exploit one of
the world’s best markets for capital – the Canadian public equity markets.
Advocate immigration policies to encourage entrepreneurs to adopt Atlantic
Canada as their home.
– Request governments in the region to extend the time period to set up a business to
give immigrants longer to assimilate.
– Lower the bar for assets and investable assets to allow more people with
entrepreneurial spirit to come.
Our “Big Ideas” (continued)

9. The big ideas outlined are appropriately ambitious, hopefully exciting, but they are
not “blue-sky impossible” – far from it.
They will flow from the collective product of thousands of personal actions taken
by committed, passionate individuals like us who want Atlantic Canada to
succeed in the changing and challenging world arena.
On the following slide is a list of some things you can do, as a business leader in
our region, to help create a better Atlantic Canada.
What You Can Do

10. Make an equity investment in a private company in your region
Contact your MLA/ Department of Finance to support the recommendation that
both 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 encourage
more events within the region
Organize or host an event to connect entrepreneurs and investors
Be a mentor to a start-up
Consider if you could be an angel investor in an Atlantic region start-ups
Include an Atlantic Canadian start-up in your RFP process
What You Can Do

11. Thank you for your help
with this important
initiative