ABCtech #50 Financing the New Alberta (2018)

ABCtech #50 Financing the New Alberta (2018)

The challenge for ABCtech in the present climate for change is to be positive when so many are suffering through the downturn and skepticism is high that the NDP will deviate from the party’s fundamental economic policies – as practiced in Ontario. We want to position ABCtech as positive: pro-“government” and pro-“industry”. We believe that working together is the only option for “creating the new Alberta!”  We all need to be seeking answers and solutions, offering help in digging out of the crisis and developing the future economy. And while we profess to be “positive” we know we cannot be naïve or personal, pandering or self-serving. That is not the stuff of visionary leadership! That is our promise, as we prepare for the November 30th Conference in Calgary: Creativity & Convergence – Creating the new Alberta!  for deriving resolutions advancing innovation and diversifying Albertas economy.

The following invited editorial on access to capital for Alberta’s SMEs was received just as the GoA announced funding for creating jobs and diversifying the economy. The associated links and articles add insight … and emotion. – Editor

The Next Steps to Address Accessing Capital in Alberta – by Tom Ogaranko, Co-Founder and Principal, Tessellate Inc., Director, Technology Alberta, Chair, CapitalRoad Foundation

Capital is the oxygen Alberta’s entrepreneurs breathe to build the engines of our economy. For most, however, it remains expensive and unavailable. The recent Alberta budget announcements for topping up Venture Capital investments through Alberta Enterprise Corporation and allocating funds for AIMCo to invest from the Heritage Trust Fund is directionally positive. However, the value from past investments is not widely known nor has it triggered action on other strategies that can improve Alberta’s SME access to capital. Continued and urgent action is needed, if Alberta wishes to truly diversify its economy and stem the loss of promising companies and entrepreneurs to other jurisdictions or leave potential investment capital in Alberta generating returns in other markets. There is much to do, but addressing four areas quickly can help.

1. Mobilize Albertans wealth to invest in our enterprises.  Alberta’s active angel investment networks are well kept secrets. We need to spread the word about our angel networks, their investment opportunities and education programs to build confidence in a new group of investors considering putting their capital to work at home.

Few Albertans qualify as accredited investors. Like Saskatchewan, the Alberta Securities Commission needs to allow crowdfunding in Alberta, passing regulations that would allow companies to approach retail investors to raise capital.  This would unlock access to almost $1 trillion in capital in Canada and approximately $2 billion per month in Alberta that is otherwise headed into global securities or low interest GICs.

An investor tax credit, like the 30% tax credit provided to investors and employees in British Columbia, puts their capital to work in their community and their companies. This simple credit created an angel investment culture in BC. Evaluated in 2010, the Hellmann Venture Capital Report showed that in BC’s venture capital industry, this program’s impact to the BC Economy was 2.8x greater than its cost. Alberta firms are increasingly moving to BC to take advantage of this credit.

2. Improve access to operating capital. According to the recent Abctech Study, Why SMEs Fail to Grow, access to internal investment capacity is a more critical barrier to growth than accessing external investors (70% v. 58%).

Traditional business banking methods for accessing operating capital are broken. Banks do more asset-backed lending based on owners personal guarantees than the business’s assets, yet more and more businesses rely on intangibles and talent to create value (Why SMEs Fail to Grow, p. 35).  Converting intangible assets into new collateral grade assets presents a way of growing new banking opportunities.

For many firms, programs like R&D Tax credits and Accelerated Capital Cost Allowances are critical to unlocking operating cash to commercialize innovation. These are the new assets for leveraging funding. Changes to them create uncertainty in the Alberta economy.

3. Develop more mentor programs.  According to a Harvard study, only 4% of the companies in a region drive 40% of the job growth (2011 High Impact Entrepreneurship Global Report). Capturing and sharing the learnings of these entrepreneurial, high-growth companies is key to replicating success in emerging companies and industries.  Strengthened mentorship support for entrepreneurs and investors will grow the skills critical to managing risk, creating jobs, growing a tax base and producing investor returns. Although Alberta’s startup communities and groups like the A100 and various associations are being built, much work remains to scale working models and test other successful global models that link large with small companies, experienced with novice executive talent, and new with old investors.

4. Openly report on the impacts of financing options. For too many Albertans the impacts and value of current financial options remain unclear — from the performance of angel and venture capital to the impacts of bank financing and crowdfunding. The merits of taxcredit programs or flow-through shares for stimulating innovation, productivity, and competitiveness deserve more open discussion between policy makers, investors and entrepreneurs. How do these programs influence investment and firm behaviour? Do either accelerate success or impede growth?  Alberta needs a report card to show tax payers where credits are working, and reveal to investors and entrepreneurs what tools to leverage.

A truly resilient Alberta economy is a vibrant, thriving ecosystem. Good policies, programs and practices focused on producing efficient capital markets and accessible and affordable capital are essential to building Canadian companies, hiring new staff and taking products and services to market. There remains much to do.

Q. Has the GOAs announcement of $s allocated to AIMCO, ATB, AEC for job creation and diversifying the economy nullified the urgency and relevance of assessing the adequacy and continuity of capital for Alberta’s SMEs?  Ans. Commentary responses received  CLICK HERE

Economic diversfication – The road to sustainable development – by Booz&Co. FOR MORE

US Security Exchange proposes to encourage more early stage investing.  FOR MORE 

Fiscal policy lessons for Albertas new government from other NDP governments – by The Fraser Institute FOR MORE

Conference Co-hosts

CONFERENCE 

Creativity & Convergence – Creating the new Alberta!

Calgary – November 30th

On November 30th we are co-hosting with the Alberta College of Art+Design at the downtown campus of the University of Calgary a Conference designed to advance innovation – core to diversification, and derive resolutions for diversifying Albertas economy. The Conference features:

 
AM – 10-Workshops addressing topics central to Albertas diversification FOR MORE
 
Luncheon –
      Presentation of the 1st Innovation Award to the engineers of Alberta
      Panel discussion re “Creating the new Alberta!
      Facilitator – Joni Avrams – Cause & Effect Marketing  BIO HERE
      Panelists – Jim Dewald, Dean- Haskayne School of Business, University of Calgary BIO HERE
           Daniel Doz, President & CEO -Alberta School of Art+Design BIO HERE
           Dylan Jones, President & CEO – Canada West Foundation BIO HERE
           Suzanne West, President & CEO – Imaginea Energy  BIO HERE
 
PM – 18 Focus Groups consolidated each hour down to 6 for generating resolutions advancing
         innnovation in Alberta and diversifying the economy
      – “U-Who” Reception – a unique networking experience – meet someone you want to meet again.
REGISTER HERE

A bright future – A message/video to Premier Rachel Notley – by Suzanne West, Imagenia Energy FOR MORE

Art, innovation & leadership. Changes in technology and competition require organizations to switch from managerial modes of running business to leadership models in which organizations act boldly with vision, imagination, enthusiasm and creativity. These traits can be borrowed – even inspired, from the world of art and artists.  Like the artist, the leader must draw on her or his unique personality, values and vision.  As with art, business leadership must arouse creative energy, provide inspiration and promote self-expression and out-of-the-box thinking.

Alberta, “Breakthrough ideas look crazy, nuts”– by Tad Fried FOR MORE

Bits about atoms can be more valueable than the atoms – by Victor Panlilio FOR MORE

Not so fast to judgement  – by Esir Prente FOR MORE