Alberta and Ontario Launch Tech and Venture Capital Initiatives

June 18, 2008

Last week, Premier Ed Stelmach of Alberta introduced a $170 million suite of initiatives to support high-tech economic development in the province. The government hopes that by providing support for commercialization from research to market it can attract high-tech entrepreneurs from other areas. Most of the province's investment will support the creation of the $100 million Alberta Enterprise Corporation to encourage venture capital investment. A press release accompanying the announcement states that the investment will improve access to both seed-stage and venture capital. The corporation is expected to begin activities this winter. Though venture capital investment in Canada increased by 21 percent in 2007 over 2006, investment in Alberta grew by only 3 percent. As in the U.S., the Canadian venture capital activity is largely centered in a few provinces, namely Ontario, Quebec, and to a lesser extent British Columbia. Private capital resources are harder to find in the more rural provinces like Alberta. Another $6 million will support various initiatives intended to draw young people into high-tech entrepreneurship through "technopreneur" programs. These programs will help train young entrepreneurs to bring new technologies to market through successful companies. The remaining $72 million will be dedicated to providing additional services and resources for companies. Efforts to be initiated later this year include:

* Improving access to services that strengthen companies readiness for investment;

* Hiring technology development advisors to assist companies with commercialization;

* Enhancing the province's product development centers;

* Creating a demonstration fund for testing new products;

and,

* Expanding the IVAC Capacity Building Program, which provides financial support for pre-commercial activities.

A new science and research experimental development tax credit will also be implemented to offset certain research-related expenses. Participating companies will receive credits equal to 10 percent of eligible expenses, up to $400,000, between 2008 and 2011. Read Premier Stelmach's announcement of the plan at: http://premier.alberta.ca/speeches/speeches-2008-June-11-Tech_Comm.cfm

Ontario

The Ontario provincial government also recently announced its own plan to strengthen the venture capital industry. Along with several private sector partners, Ontario will launch a $205 million Ontario Venture Capital Fund to invest in the province. Between 80 percent and 100 percent of this amount will be invested in Ontario-based and Ontario-focused funds. The remaining amount will be invested directly into local companies, particularly during the early stages of development. Ontario will contribute $90 million to the initial fund, which will be managed by TD Capital Private Equity Investors.

Although Ontario is Canada's most active venture market, local entrepreneurs have cited a lack of early-stage funds as a major impediment to growth. Between 2000 and 2007, early-stage venture investment fell from $1.5 billion to $236 million, according to Canada NewsWire. That drop reflects the massive global collapse of venture capital markets in the early 2000s, but Ontario's venture industry has not recovered as quickly as some U.S. markets. The fund is part of the $3 billion Ontario Innovation Agenda. Find out more about this plan at: http://www.mri.gov.on.ca/english/programs/oia/program.asp

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