For many businesses, venture capital can be the key to success.
The ability to raise capital, which may be a challenge, can determine whether a good idea becomes a reality or if a successful local business can scale up operations to reach a global marketplace. It can also influence a company’s ability to attract and retain good employees.
The government of British Columbia has a role to play in encouraging investment in early stage businesses, to help them reach commercialization, grow and move into new markets. This supports innovation and creates and sustains jobs for people around the province.
- Venture capital is a form of financing provided to companies that have, or are expected to have, high growth potential.
- Venture capital firms or funds provide funding, plus mentorship and international connections in exchange for a share of ownership in a company.
- B.C. regularly outperforms all other provinces in venture capital investment per capita, with $646 million invested in 2017.
- B.C.’s tech sector is one of the fastest growing areas of the province’s economy. It is crucial to ensuring this sector’s continued growth, by helping innovators bring their ideas to life.
- B.C. tech companies use venture capital funds to commercialize ideas by developing and selling products and services. This creates revenue and increases the value of a business.
- These venture capital funds also help businesses rapidly scale up and grow their operations, leading to more jobs for people in B.C.
- A tech company provides a return to a venture capitalist by having an “exit event,” which can include: going public on a stock exchange, selling the business or merging with another company.
- Often following an exit event, the proceeds will be reinvested in new technology companies and many of the former owners and employers will go on to start new companies or help existing companies expand.
- For early stage companies, it can be challenging to access the capital needed to commercialize and grow. The B.C. government helps eligible B.C. companies access venture capital for business start up, commercialization and expansion through targeted programs, including:
- The BC Tech Fund – a $100-million venture capital fund-of-funds that invests in emerging B.C. technology companies and is managed by Kensington Capital. Kensington invests in venture capital funds in B.C. and also co-invests in B.C.-based technology companies in the life sciences, information and communications technology (ICT), digital media and clean technology sectors.
- To date, the BC Tech Fund has made investment commitments of more than $43 million to six B.C.-based venture capital funds: Yaletown Partners, Pangaea Ventures, Lumira Ventures, Versant Ventures, ScaleUp Ventures and Vanedge Capital. The fund has also invested in Eventbase, Foodee and Mojio, three B.C.-based companies.
- The Small Business Venture Capital Tax Credit program – a program that provides a 30% tax credit to encourage capital investment in eligible small businesses or managed funds.
- Over the last 16 years, over $1.3 billion in investment capital has been raised through provincial venture capital programs.
- In February 2017, the budget for the Small Business Venture Capital Tax Credit program was increased by $3.5 million, bringing its annual budget to $38.5 million, which can support annual equity investments of up to $128.3 million.
- B.C. is recognized as a leader for developing and growing the tech sector, attracting companies big and small, and being a destination for technology investment. Startup Genome’s 2017 global rankings named Vancouver as the 15th best place in the world to launch a tech business.
- The B.C. tech sector has more than 10,200 companies employing over 106,000 people.
Investment capital: http://www2.gov.bc.ca/gov/content/employment-business/investment-capital
Small Business Venture Capital Tax Credit program: http://www2.gov.bc.ca/gov/content/taxes/income-taxes/corporate/credits/venture-capital