Venture Capital Programs

BC Venture Capital

• BC companies are the fastest from founding to exit of any jurisdiction in North America at 41 months• BC companies have highest exist values per $1,000 GERD of any jurisdiction in North America at $494• 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

BC Venture Capital Update - 2008 • BC increased its share of venture capital invested in Canada in 2008 to 19% compared to the other provinces and territories• $259 million of venture capital was invested in 51 companies in BC in 2008• The Investment Capital Branch's Venture Capital Programs facilitated over $34 million of the above ‘venture’ investments• An additional $70 million of ‘angel’ investments was facilitated by the Investment Capital Branch's Venture Capital Programs in 2008

Venture Capital Programs’ Objectives

“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.” 

Access to Capital – ‘J-Curve’

{Venture Capital Programs}

Tax Credit Budgets

Equity Capital$14.5m

Cleantech$7.5m

New Media$5.0mCommunity

$3.0m

$30m tax credits available allows EBCs and VCCs to

raise $100m of equity capital annually

Direct Investment: EBC

• EBCs can raise up to $5M maximum • Raise equity capital directly from investors

in accordance with BC Securities Act• Investors receive 30% tax credits subject to

5-year hold period

Portfolio Investing: VCC

• VCCs raise equity capital from investors in accordance with BC Securities Act

• Investors receive 30% tax credits subject to 5-year hold period

• VCCs must invest 80% of capital raised within 2 years in ESBs

EBC/ESB Eligibility Criteria

• Permanent establishment in BC • Max. 100 employees• Min. 75% BC payroll• Min. $25,000 in equity capital• Substantially engaged in prescribed activity

Prescribed Business Activities

• 50% or more of companie’s assets and expenses used towards:

» Manufacturing and/or processing» Destination tourism » R&D of proprietary technologies» New media » Clean technology» Community diversification

Uses of Capital

• Equity capital raised must be used for business development expenses

• Prohibited uses include lending, repayment of debt, redemption of shares, and payment of dividends

Equity Shares

• Issued from treasury in consideration for cash• May or may not carry voting rights• May have warrants, options rights attached• Cannot create debt between shareholder and business• Returns from profits or gains

Eligible Investors • Individuals

=> earned income in BC

=> claim up to $60,000 per year in tax credits

=> carry-forward unclaimed tax credits for four years

• Corporations=> permanent establishment in BC

=> claim tax credits against BC taxes payable

=> carry-forward unclaimed tax credits for four years

• Eligible investors cannot own 50% or more of business’ voting shares combined with associates or affiliates

Other BC Government Programs

• Working Opportunity Fund => $180 million fund for investing in early stage companies

• Renaissance Capital Fund => $90 million managed by independent fund managers

• Innovative Clean Energy Fund => $25 million fund for innovative clean technology projects

Federal Government Programs • Community Futures BC => small business and pooled

investment loans • NRC Industrial Research Assistance (IRAP)

Program => technical and business oriented advisory services along with potential financial support

• Scientific Research and Experimental Development (SRED) Program => tax incentive program to encourage R&D

• Business Development Bank of Canada (BDC) => venture capital programs focused on technology-based businesses

• Sustainable Development Technology Canada (SDTC) => funding for the development of clean technologies

Contact

Dara Landry, B.Comm., CGA Portfolio ManagerInvestment Capital BranchMinistry of Small Business, Technology, and Economic DevelopmentToll free: 1.800.665.6597Direct: 250.952.0644Fax: 250.952.0371Email: dara.landry@gov.bc.caWeb: www.equitycapital.gov.bc.ca