The B.C. government’s commitment in the #BCTECH Strategy to improve access to capital is paying off as B.C. tech companies are taking advantage of the Province’s venture capital programs to reach new levels of growth.
The most recent example of a major announcement by a B.C. company is the Nov. 15, 2016 purchase of B.C.-based Bit Stew Systems by General Electric’s digital division, GE Digital.
“Through the #BCTECH Strategy, we have been working hard to make B.C.’s business environment as attractive as possible for the technology sector, and this deal shows that we are on the right track,” said Amrik Virk, Minister of Technology, Innovation and Citizens’ Services. “Bit Stew employs more than 100 people in B.C. When established companies invest in local companies, we could potentially see more job growth as they look to expand operations.”
Government supports B.C.’s innovative companies through programs like the Small Business Venture Capital Tax Credit program and the BC Renaissance Capital Fund (BCRCF), which has invested in 34 B.C. companies that employ 1,060 full-time equivalent workers. Bit Stew was a beneficiary of both programs.
“The BC Renaissance Capital Fund played a key role in helping Bit Stew reach the level of success that it has,” said Minister of International Trade Teresa Wat. “B.C. venture capital firm Yaletown Partners invested BCRCF funds into Bit Stew, making this one the largest success stories of the BCRCF fund so far. Yaletown also made an earlier investment into Bit Stew using the Small Business Venture Capital Tax Credit program.”
“Attracting venture capital from a mix of local and strategic sources throughout the growth of Bit Stew enabled us to scale from a start-up into an industrial IoT (Internet of Things) leader,” said Kevin Collins, CEO at Bit Stew Systems, from GE Digital. “We are extremely pleased with the backing we received from our investors, GE Ventures, Yaletown Partners, BDC Capital, Kensington Capital and Cisco Investments.”
The Small Business Venture Capital Tax Credit provides eligible B.C. investors with a 30% tax credit when they purchase shares in B.C. businesses. In 2015, the Small Business Venture Capital Tax Credit helped to raise $108 million in early-stage funding for 247 small businesses.
Another company that has benefited from the Province’s venture capital programs is Enterra Feed Corp., a Langley-based clean-tech firm that specializes in developing and manufacturing ecological insect protein for the animal-feed industry.
“The venture capital tax credit provides really good value for our investors and has significantly helped us with our financing needs, particularly early-stage financing,” said Enterra senior corporate controller Ivan Chan. “It’s easier to convince investors to support our technologies when they know they are receiving a tax credit.”
The tax credit and the BC Renaissance Capital Fund complement the new $100-million BC Tech Fund, which provides A-round funding to B.C. tech companies so they can grow and eventually move towards their own exits. The BC Tech Fund manager will also engage in activities to help grow the venture capital ecosystem in B.C. This work will focus on helping new venture capital funds form in the province, which will help attract more investment into B.C. tech companies. The fund manager will also explore options for addressing regional issues related to accessing venture capital.
“The BC Tech Fund is a significant milestone for the B.C. tech sector and one that will clearly complement the strength of the angel tax credit program,” said BC Tech Association president Bill Tam. “Many of B.C.’s biggest tech successes depend on venture capital at critical stages of their growth, allowing them to scale quickly, expand their markets and ramp up their hiring to take advantage of the market opportunity.”
The #BCTECH Strategy is a key component of the BC Jobs Plan to support the growth of B.C.’s vibrant technology sector and strengthen British Columbia’s diverse innovation economy. Along with the BC Tech Fund, the multi-year strategy includes programs to increase talent development and market access for technology companies that will drive innovation and job creation throughout the province.
- Venture capital is a form of financing provided to start-up and early stage companies that have, or are expected to have, high growth potential.
- B.C. outperforms all other provinces in venture capital investment per capita, with $450 million invested in 2015.
- The Small Business Venture Capital Tax Credit supports up to $116.6-million annually in local investments.
- In 2016, government grew the tax credit budget for the program to $35 million from $33 million, providing further incentives for venture capitalists to invest in B.C.’s small businesses.
- In 2015, investors used $32 million of the $33 million available in Small Business Venture Capital tax credits (97% usage).
- For a venture investor, success is often measured in terms of an “exit event,” where a small business has grown to a point where it is bought in a merger and acquisition, or it issues shares through a public offering. Successful exit events can allow venture investors to realize a significant return on their initial investment.
Learn More at:
To learn more about the Small Business Venture Capital Tax Credit, visit: http://www2.gov.bc.ca/gov/content/taxes/income-taxes/corporate/credits/venture-capital
More information about B.C.’s investment capital programs: http://www2.gov.bc.ca/gov/content/employment-business/investment-capital
BC Tech Fund and procurement materials: https://news.gov.bc.ca/files/BCTECHfund_doc_pkg.pdf
#BCTECH Strategy: https://bctechstrategy.gov.bc.ca/
Jobs Plan Update: http://engage.gov.bc.ca/bcjobsplan/economy/progress-reports/