Posts Tagged ‘ CVCA ’
The Fall 2011 issue of PRIVATE CAPITAL Magazine was mailed out to CVCA members last week. And the electronic version has been posted on the CVCA home page and here is the link http://tinyurl.com/Private-Capital-Fall-2011 .
Enjoy!
Curated content – frst published by Eric Brooke, Startup Visa Canada
When polled 72% of Canadians stated that Canada needs to stay ahead of the US in attracting entrepreneurial talent and two-thirds of Canadians (66%) think the US have the right idea with the Start-up Visa Bill. *
The Canadian start-up visa campaign wants to upgrade the immigration program to make it easier for people who want to create science and technology companies in Canada by reducing the funding needed to enter the country on the conditions that they have Canadian investors and create new jobs within a couple of years.
Eric Brooke, a campaign spokesperson “The end result should be more jobs for Canadians, stronger economic growth and a larger number of science and technology companies in Canada both large and small”
“There is a opportunity here for Canada to get ahead of the game, as the US political system does not seem to have the collective will to take this issue by the throat and encourage technology or science entrepreneurs from other countries to create businesses and jobs in the US.
Boris Wertz, an investor and co-founder of GrowLab “ Its worth remembering that 52.3%** of start-ups in the Silicon Valley are founded by immigrants, with an effective start-up-visa program maybe we can convince foreign entrepreneurs and job creators to build their companies here in Canada instead of the US. We are already falling behind countries like Chile, Singapore and Britain who have already upgraded their programs, but I believe we can learn from their programs and make ours better.”
One of Canada’s’ leading venture capital associations (CVCA) is onboard with the idea. “The direct experience of a number of our member funds that have been launched by immigrants in Canada; these funds have made enormous contributions to our industry as well as to portfolio companies and to the economic well-being of Canada” said Chris Arsenault, Director at CVCA. “Our belief that we must promote a culture of entrepreneurship in order to successfully compete in the new global economy; Canada can become a beacon, attracting the best and the brightest from across the globe”
Danny Robinson, BC Innovation Council member, Entrepreneur and investor believes there is an opportunity for the provinces to step up. “It seems to me there is a possibility for one of the provinces to create a pilot using their Provincial Nominee Program (PnP). I believe the province that upgrades their PnP first will be able to pick the best entrepreneurs. ”
Notes
In a poll conducted by Vision Critical conducted on the Angus Reid Forum, earlier this year the following results were found:-
A large majority of Canadians believe Canada could become a real hub of entrepreneurial activity in North America with the right policies in place (86%) and 72% think Canada needs to stay ahead of the US in attracting entrepreneurial talent.
Two-thirds of Canadians (66%) think the US have the right idea with the Start-up Visa Bill being introduced, with 72% agreeing that it will attract entrepreneurs to the States and 70% seeing that there could even be a risk of attracting Canadian talent as a result.
Just over two-thirds (68%) would support a Start-up Visa being introduced in Canada. (Almost three-quarters of those with University upwards education, 74%)
The majority of Canadians agree that securing Canadian investment is a reasonable alternative to requiring large sums of money in personal funs, and approaching half, 44%, realise that most start-up entrepreneurs would not have $300,000 in personal funds as per current requirements.
Half of those with university education upward agree that current processing times are too long.
Three-quarters of Canadians believe that the entrepreneur should retain at least a third of the equity in the business.
** 52.3% is from the following report page 10 table 4
Curated content from Rick Nathan of Kensington Capital Partners, August 9th, 2010
Investors have been on a scary ride in the public markets through the past few days. With near back-to-back 500-point drops, all of the major North American stock market indexes have turned decidedly negative for the year to date. The historic S&P downgrade of US Government debt adds to the weight of worry on investors, alongside falling commodity prices and the continuing risks in Europe and Japan. Most investors have suffered from these rapid and severe declines in public markets.
Private equity investors have greater stability in their portfolios. Of course, all markets are affected by a weakening economy. And if access to capital becomes restricted, the effects will spread to private equity dealmakers soon enough. We saw this happen in 2007-2008, when banks stopped lending, public equity markets fell, and private equity firms found it difficult to buy businesses at realistic prices through 2009.
The correlation between public and private equities is indirect. Private equity portfolios will obviously be affected if the current market correction leads to a sustained period of lower valuations, or a new recession. But only after investors have connected this capital market activity back to the real economy. Private equity portfolios are not seriously affected by day-to-day gyrations in the public markets that do not lead to new economic conditions.
When public market turmoil does foretell a slowdown in the economy, the impact on private equity portfolios is typically muted. The chart below shows the Net Asset Value (NAV) of the Kensington Global Private Equity Fund measured against the major public market indexes in the period from August 2008 through July 2010.
Kensington Global Private Equity Fund vs. Public Market Performance
July 31, 2008 – July 30, 2010
As can be seen in the chart, the sharp declines in the public markets in September 2008 and following did not have as significant an impact on the Fund’s NAV. The values of private companies were re-set more gradually over subsequent months as it became clear that a recession had begun, with weaker prospects for sales and profits across the Fund’s diversified portfolio of more than 100 companies. During that period, the valuations of private companies declined, but nowhere near the levels reached at the depths of the public market panic.
Private companies are valued on Main Street, based on the real economy. Their prospects change with the economic cycle, but not every day or every minute. This can create a sharp contrast to the valuations of public companies established on Wall Street and Bay Street, so heavily influenced by rapidly changing market sentiment, program trading and other immediate distractions.
One reason for the different valuation approach is the lack of liquidity in the private markets. Investors cannot buy and sell at will, and so they see no need to continuously revalue their portfolios. When valuations are prepared, they are based largely on business fundamentals or completed corporate transactions (such as the sale of the company), which results in much less volatile pricing.
An allocation to private equity can therefore act as a shelter from stormy public markets, or at least as a shock absorber. Large institutional investors such as public pension funds have learned this lesson, and continue to increase their allocations in recent years, now in the range of 10% to 20% of total assets.
Individual investors can find similar shelter through a similar allocation to private equity in their own portfolios. A diversified private equity investment such as the Kensington Global Private Equity Fund can add real stability during times of market stress.
Of course, a diversified private equity portfolio such as the Kensington Global Private Equity Fund is not immune to public market fluctuations. Many private equity funds hold a small portion of their portfolios in publicly traded stocks, typically as a result of an IPO of one of their portfolio companies. For example, our Kensington Fund currently holds shares in a company that completed its IPO on the NYSE in June. These shares remain restricted under standard underwriters’ lock-up agreements for a six-month period following the IPO date. As a result, the Kensington Fund will experience some volatility based on this exposure. Public market stress may also reduce our ability to sell additional portfolio companies into the public markets for some time. However, since most of our portfolio companies are in the mid-market where company sales are primarily completed through strategic M&A transactions, this impact should be relatively less significant.
“We believe startups to be the driving force behind job creation and prosperity,” says [CVCA's] executive director Richard Rémillard. “We need to be more attractive to foreign entrepreneurs.” Thanks for supporting the Startup Visa Canada Initiative. It’s been about 5 months since we launched. During that time, the team has been busy reaching out to government officials, influencers and organizations across Canada to gather data and garner support for an alternative visa for entrepreneurs.
Here’s a quick update on our progress:
Chris Arsenault, iNovia Capital joins the Founding Team
Who’s In?
Supporting Organizations
Startup Visa Canada has also received some great coverage in CVCA Magazine, BC Business, Techvibes, StartupNorth and Hacker News. You can find links to more stories in the Press section on the Startup Visa website.
How You Can Help
- Tell your friends to endorse the Initiative, if they have not already done so.
- Tweet and blog about the initiative @startupvisaca
- Send your local MP’s a message with a link to the site and express your support for Startup Visa Canada
- Follow us on Twitter @startupvisaca and like us on Facebook
The Startup Visa Canada Team
by Chris Arsenault, iNovia Capital
No entrepreneur wants to start a business if he runs the risk of being expelled from the
very country in which it has been launched. This is the situation facing two Romanian citizens after embarking on a social network business in Vancouver. The two businessmen were participants in Vancouver’s Bootup Lab Seed Accelerator program last year, where they raised half a million dollars in venture capital for their company. They have already hired one employee and are now looking to hire a second one.
But despite their best efforts, the two men were unable to obtain an entrepreneur visa and will be forced to leave the country by the end of the year. One is in Canada on a business visa, which has already been extended twice, and the other has a work permit from another employer that lasts only until December.
“These guys were engineering interns at Google and Microsoft before they came to Vancouver,” says Boris Wertz, founder of W Media Ventures and one of their investors. “They could have gotten a job in California, but preferred to stay here and launch their own business. Instead, they have spent a third of their time trying to regularize their situation, without success.”
Current Canadian immigration rules require a foreign entrepreneur to own at least $300,000 in personal fixed assets and have no less than two years experience heading a company in order to qualify for an entrepreneur visa.
These rules do not reflect the new reality of startups launched by bright young entrepreneurs straight out of university, with little money in their pocket, like Mark Zuckerberg when he founded Facebook, says Wertz.
A new visa
That is why Wertz, along with Danny Robinson and Maura Rodgers from Bootup Entrepeneurial Society, issued a proposal to establish a new visa in Canada for foreign entrepreneurs in the knowledge-based sector.
Called Startup Visa Canada, the new scheme would require a foreign entrepreneur to raise seed capital of $150,000 from qualified venture capitalists in place of the $300,000 current personal assets requirement.
The entrepreneur would also need to get a one-third equity position in the company, be actively involved in its management and create at least three full-time equivalent jobs over the course of a two-year program period.
“There is so much talent out there, in Asia, in Europe, in Australia, (people) who might not have $300,000 in their pocket,” says Wertz. “We need to be able to attract these bright people so they can start their business here and generate wealth for Canada.”
The group began a petition and now has 400 signatures supporting the Startup Visa proposition. Signatories include more than 50 venture capital funds, such as iNovia Capital, Real Ventures and W Media Ventures, Canadian tech organizations, such as the Canadian Innovation Exchange, as well as leading Canadian entrepreneurs. A letter was also sent to Minister of Industry Tony Clement, calling on him to start a pilot-project with the new rules.
CVCA- Canada’s Venture Capital and Private Equity Association is behind the initiative as well. “We believe startups to be the driving force behind job creation and prosperity,” says executive director Richard Rémillard. “We need to be more attractive to foreign entrepreneurs.”
“We will run out of engineers, mathematicians, physicists and other knowledge industry people needed to spur innovation,” adds Jean-Sebastien Cournoyer, partner at Real Ventures,
a new $46-million seed fund created last year and backed by angels, entrepreneurs and the government of Quebec. “Innovation is global, and so is the talent. If we want to be a competitive hub for Internet companies, we must remove barriers such as this one.”
Canadian immigration rules do not reflect the new reality of startups launched by bright young entrepreneurs straight out of university, with little money in their pocket
Around the globe
Rémillard says Canada has to move quickly because aggressive legislation is being introduced elsewhere in the world to attract and retain the world’s brightest. On March 16, for instance, the British parliament approved changes to the immigration rules that came into effect on April 6.
Under the new rules, the standard investment threshold for an entrepreneur will remain at £200,000, but the government will allow high-potential businesses to come to the U.K. with £50,000 in funding from a reputable organization. As well, entrepreneurs will be allowed to enter the U.K. with their business partners so long as they have access to joint funds.
In addition, a new type of visitor visa will be created for prospective entrepreneurs coming into the U.K. They will be permitted to enter the country so that they can secure funding and make arrangements for starting their business before they transfer to an entrepreneur visa while there.
There will also be 1,000 visas per year available for “exceptional talent,” i.e. people who will be let in for three years and four months without requiring sponsorship by an employer.
Furthermore, the new rules give more flexibility to investors: they will be able to spend up to 180 days per year, rather than 90, outside the U.K. without affecting their right to settle there.
In Singapore, entrepreneurs can obtain their visas in only five weeks – compared to a year or two here in Canada – with a minimum US$50,000 investment.
In Chile, a new program lures entrepreneurs with a one-year visa and an investment of just US$40,000.
Closer to home, a Startup Visa Act was introduced in the U.S. in February 2010 by senators John Kerry and Richard Lugar. In the latest version of the bill, entrepreneurs living outside the country will get a visa if a qualified U.S. investor agrees to financially sponsor their entrepreneurial venture with a minimum investment of $100,000. Two years later, the startup must have created five new American jobs and have raised over $500,000 in financing or be generating more than $500,000 in yearly revenue.
The bill also addresses the situation surrounding workers on an H-1B visa, or graduates from U.S. universities in science, technology, engineering, mathematics or computer science. If these graduates have an annual income of at least $30,000 or assets of at least $60,000, and have had a U.S. investor commit investment of at least $20,000 in their venture, they get a visa. Two years on, the startup must have created three new American jobs and have either raised over $100,000 in financing or generate more than $100,000 in yearly revenue.
What’s more, foreign entrepreneurs whose business has generated at least $100,000 in sales from the U.S. can get a visa. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or generate more than $100,000 in yearly revenue.
With rules like these, one can easily think of a situation where a bright Canadian student would prefer to launch his company in California instead of in Canada.
Many well known investors and startup promoters are behind these changes, including Brad Feld (Foundry Group), Eric Ries (IMVU), Paul Graham (Y Combinator) and even Canadian Paul Kedrosky (Kauffman Foundation). They are launching a campaign to gain political support for the bill, using social-lobbying tools to gather tweets, Facebook posts and SMS messages and hand-deliver them to Congress.
Where will Canada be when the bill gets passed?
Check out the full Summer Magazine Edition of Private Capital Privé at http://www.cvca.ca
This post was originally written for the Private Capital Privé winter 2010 edition of the printed magazine. And was Curated for nextMontreal on November 22, 2010.
No point in letting a good crisis go to waste. Opportunity emerges during times of market challenge. At the tail end of perhaps the toughest decade that the global – and Canadian – venture capital industry has endured, a flurry of new fund managers has hit the fundraising trail in Canada and successfully raised first-time funds.
It takes guts, and patience, to launch a new venture at times like these. You may have heard that the venture industry in Canada has been declining for years, that LPs are ‘pruning’ managers rather than adding new ones, and that raising a new fund is nothing short of a suicide mission. Nonetheless, you can’t say that entrepreneurial spirit and guts are not alive and well in the Canadian venture capital industry.
Compelling market opportunities, good teams, and perseverance in a difficult fundraising environment is paying off for a new generation of emerging VC managers in Canada. In more than one way, we are witnessing the re-birth of the Canadian venture capital industry.
Canada has always been, and continues to be, a venture market that is dramatically underserved by capital, and so there is plenty of room for new entrants – indigenous, entrepreneurial and from outside our borders. Over the last year, against all odds, a new generation of emerging “entrepreneurial investors” teamed up around specific domains and market segments, built strong teams the same way a startup builds an A-team, and launched into a world of opportunities and chaos.
Impressive accomplishments on the fundraising trail by upstart GPs has created a dramatically changed landscape in Canadian venture capital. Not to belittle the effort, it should be pointed out that some of these debut funds were on the money raising trail for a few years. And now we have a whole new crop of opportunities being pursued, by a whole new crop of new venture investors. Global digital media funds, global water business funds, expansion capital where none existed before in Canada, to name a few.
Capital: $100M first closing
First Close: May 2010
Partner Locations: Vancouver and Shanghai
Investment Focus: Digital media
Sources of Capital: Numerous Canadian and foreign institutional, corporate and private LPs.
Team: Paul Lee is the former president of Electronic Arts responsible for the worldwide studios, as well as an active and successful angel investor. Glenn Entis is the former chief visual and technical officer of Electronic Arts and former CEO of Dreamworks Interactive. Divesh Sisodraker is the former CFO of Taleo Corporation, former CEO of Pivotal Corporation and former finance head at ALI Technologies (McKesson). Jason Chein is former general manager of EA China and former Asia developer relations with Microsoft’s Xbox group.
Capital: $100M+
First Close: February 2010
Partner Locations: Toronto
Investment Focus: Water technologies and water-related businesses
Sources of Capital: Canadian and International institutions.
Team: XPV’s team is a marriage of investment expertise, sector knowledge and deep industry operating experience.
“Tenacity, focus and an enormous team effort has positioned XPV to capitalize on the growing investment opportunities now present in the water sector,” said David Henderson.
Capital: $50M+, first closing
First Close: July 2010
Partner Locations: Toronto
Investment Focus: Growth equity firm investing in expansion and later-stage enterprise software and information aggregation companies.
Sources of Capital: Institutional investors form Canada and the U.S.
Team: Georgian Partners Justin LaFayette, Simon Chong and John Berton; all have hands-on experience in operating and managing expansion stage technology ventures.
Capital: $300M first close
First Close: November 2009
Partner Locations: Toronto, Montreal and Vancouver
Investment Focus: Later-stage Canadian technology companies
Sources of Capital: Anchored by commitments from BDC, EDC and Teralys, which sponsored the formation of Tandem in collaboration with two of Canada’s best- known business leaders.
Team: Tandem’s managing partners – David Bookbinder, Andre Gauthier, Christopher Legg and Alex Moorhead – all have significant investment and entrepreneurial experience domestically and internationally.
“Tandem is the only Canadian based growth equity fund, this give us a unique advantage in both sourcing and working closely with our portfolio companies,” said Christopher Legg.
Capital: $20M
First Close: March 2010
Partner Locations: Toronto
Focus: Invest in domain expert entrepreneurs who are building early stage mobile and Internet software companies, surrounding them with an ecosystem of experienced operators to get their ideas from conception to market.
Sources of Capital: A family owned commercial and residential real estate developer
Team: The main investment partners are Robin Axon and Duncan Hill. Robin is ex-Ventures West and Duncan was an EiR at Ventures West and previously founded Think Dynamics (acquired by IBM back in 2003).
“At MantellaVP we believe strongly in maintaining alignment between founders and investors. We work shoulder to shoulder with entrepreneurs to build their business, and provide the right capital at the right time. This ensures that at all stages of the company’s evolution, a good outcome for the founders is a good outcome for everyone,” said Duncan Hill.
Capital: $50M initial closing
First Close: October 2010
Partner Locations: Montreal
Investment Focus: Seed stage venture capital firm investing in Internet, software, mobile, digital media, social and casual gaming startups.
Sources of Capital: Invest Quebec, Fonds FTQ and private LPs
Team: John Stokes, JS Cournoyer, Alan MacIntosh, Mark MacLeod, Austin Hill and Daniel Drouet, who have all been entrepreneurs, angels and/or VCs.
“The Web and mobile web are creating major disruption, incumbents are being challenged and new markets being created. The productizing and commercialization of ideas can be done with significantly less capital and as innovation is becoming harder to realize internally, established companies are using acquisitions to fuel revenue growth…what a great time to be starting a business … or a venture fund!” said John Stokes.
Capital: undisclosed
First Close: Started investing in November 2007
Partner Locations: Vancouver
Investment Focus: Consumer Internet, social media, online commerce
Sources of Capital: personal investment fund of sole partner, Boris Wertz
W Media has completed over 20 investments to date, with a majority done in the Pacific Northwest. WMedia also has a unique connection with Vancouver based Bootup Labs.
Incubators 2.0 (aka “Accelerators”):
In the late 1990s, the first wave of private incubators arrived on the scene in Canada, emulating the models of their U.S. counterparts. A few short years later, precipitated by the technology and equity market implosion, this part of the Canadian venture and startup eco-system entered extinction. Various government programs attempted to fill some of the gaps in providing services (but usually not capital) to the new generation of post-bubble era technology startups. Now, nearly a decade later, with an explosion of new startup activity in Canada’s major technology clusters in Vancouver, Montreal and Toronto, a new wave of entrepreneurially driven accelerators – such as Montreal StartUp, Vancouver’s Bootup Labs, Ontario’s BaseCamp (Mantella-related), Extreme Ventures NeoTech, Bolidea and newly-launched Year One Labs – are taking the Canadian startup landscape by storm.
Newcomers such as these are helping build a more savvy roster of entrepreneurs eager to attract follow-on financing from VCs. Some are already generating exits before VCs have an opportunity to get a seat at the table; witness Extreme’s two visible exits, one to Google and the other to Electronic Arts, within its first few years in operation. All provide hands-on support at every stage of a company’s creation and growth – from business development and marketing to financing and team development – to help facilitate early market traction. Oh yeah, and some also have cash, which, not surprisingly, still matters an awful lot to most startups, even if the amounts they need are smaller.
Silicon Valley comes calling:
Not alone in their optimism for the Canadian investment landscape, the new crop of Canadian venture capital players are also joined by a number of new entrants from the Silicon Valley who are exhibiting keen interest in the Canada. In each case, there is knowledge of the Canadian market opportunity owing to one or more partners having roots in Canada.
Altos Ventures, Bridgescale Ventures and Panorama Capital – all Sandhill Road firms – have made investments in Canadian companies during 2010. All three firms focus on expansion-stage venture financing, while making selective earlier-stage investments on occasion. The deals being done by these Valley funds split quite evenly between Western Canada and central Canada. What is most striking is the visibly increasing commitment of partner time to the Canadian market. In the case of Bridgescale, two Canadian-based partners have been added, both in Toronto, including the October 2010 announcement that Derek Smyth – the final partner remaining at now defunct Edgestone Venture Capital – was joining the Bridgescale team. Bridgescale is the first Silicon Valley firm to locate partners in Canada. A betting man might wager that they won’t be the last.
This fall, Silicon Valley’s technology accelerator on steroids, Plug and Play Tech Center, announced expansion plans into Canada. CEO Saeed Amidi made the announcement at a private gathering in Vancouver (where he also happens to have a second home), stating a keen personal interest in “strengthening and leveraging the bridge between Canada’s technology sector and Plug and Play’s industry and venture capital network in the Valley.” Virtually every major technology company in the acquisition game, and a list of venture capital funds that appears only in the wildest dreams of most Canadian entrepreneurs, is partnered in some way with Plug and Play in Sunnyvale, California. Plug and Play plans to set up shop in Vancouver in 2011 and its venture arm Amidzad Ventures, which has seed funded dozens of Valley startups including major players such as PayPal, comes along with the deal.
Canada goes calling in China. Russia comes calling in Canada:
With only a few short years into a landmark fund structure involving a major corporate capital commitment from Research In Motion, alongside commitments from U.S. and Canadian institutional LPs, the Black Berry fund managers – a new partnership between JLA Ventures and RBC Capital – announced the first closing of a new Blackberry Partners China Fund. With $100M+ in initial commitments, this vintage 2010 fund represents a first in Canadian venture capital – a Canadian venture fund manager successfully establishing an international fund. Interestingly, VanEdge Capital, which closed during the same month as Blackberry China, also has designs on Asia, and one of its initial three partners is based in Shanghai. Previous attempts to establish funds with an Asian focus, including efforts over the past decade by private independent managers such as McLean Watson and even the Canadian government’s own BDC Venture Capital, have not taken flight.
More evidence of the growing international presence of Canadian venture capital is found in the Russian-Canadian partnership led by Rusnano, who has recently announced plans to partner with John Varghese, CEO and managing partner of Canadian venture fund manager VentureLink. Varghese plans on assembling a new nano-technology focused fund that will pursue investments from a Canadian base. Is this a sign? A new direction for Venture Capital? A new Canadian reality? The Fund will invest in Canadian companies that have the potential for global expansion. The wrinkle or added benefit of the partnership with Rusnano is that each investment will have a corporate sponsor in Russia prior to the first investment being made. Thus the go-to market strategy of each company will be established with a customer that can be referenced, facilitating global expansion. Can we say procurement assistance?
Domain expertise, cross-border partnerships, a growing network of valuable industry and private capital relationships, value-added support, seed acceleration facilities and teams: these are all trends gripping Canadian venture capital. A brave new world – with brave new leaders – is evolving, and fast.
Co-written by Chris Arsenault and Steve Hnatiuk
NOTE: this post was originally written for the Private Capital Privé winter 2010 edition of the printed magazine. And was Curated for nextMontreal.
This is a repost from the amazing video-blogger Kristina Tomaz-Young of Venture Cap TV
Welcome to our THREE part video cast series of the Canadian Venture Capital 2010 Conference. And, what an event it was! Check out the must see videos below, here for the link to file of all speaker bios and here for the link to the picture gallery.
Prominent leaders from the private equity and venture capital community participated in record breaking attendance! It’s speaks much to the energy that the CVCA passionately commits to the industry.
Sleeves were rolled up, ideas were churning….you could literally feel the exciting energy pulsating throughout the crowd at the panel discussions and in the hallways. Lessons & opportunities were shared, valuable contacts were made, and fun was also most definitely had at the evening gala with their Entrepreneur of the Year Award and the hilarious Rick Mercer show, not to mention the Scotch tasting event and great mingling!
This year’s theme was Driving Innovation. And we were privileged to learn from impressive keynote speakers like Glenn Hutchins co-founder and co-CEO of Silver Lake and red carpet panelists including Jacques Bernier (Managing Partner of Teralys Capital), Chris Albinson (Managing Director of Panorama Capital & co-founder of the C100), Paul V. Lee (Managing General Partner of Vanedge Capital and so many more who shared their perspectives and sector possibilities to explore. If you’d like a full line up of the presenters and their bios, please click here. Conference Chair David Adderley of Celtic House Venture Partners and his organizing committee certainly put on an unforgettable, valuable conference for the private equity and venture capital community.
So if you’re raring to go…come check out:
Before we dash, a few words of thanks for the accomplishments, kindness and generosity of our colleages..so:
And, thank YOU for visiting VC-TV. Come back again real soon!
(*Please note that out video casts are normally posted very soon after each event or interview. This was the first time we were delayed. We’re a start-up, and like many start-ups, we ran into some start-up challenges. But, solutions were actively sought, situations were co-operatively resolved, and we’re so pleased to share our coverage of the event with you. And this time, rather than one videocast released at a time, here’s all three! We hope you enjoy them!)
Following March 4th Canadian federal Budget, Deloite released a comprehensive summary (Link to full release) of the impact of the changes to the Taxable Canadian Property better knowned as Section 116, which is outlined below.
The CVCA Applauds Budget Decision to Remove Foreign Investment Barrier (CVCA release Link).
“The CVCA has long requested the elimination of Section 116 as it pertains to the venture capital and private equity industry and we wish to congratulate the federal government for taking action,” said Gregory Smith, President of the CVCA. “Many CVCA members, as well as a large number of individuals and organizations, have been actively encouraging the federal government to eliminate this section of the Income Tax Act which has had a dampening effect on cross-border venture capital and private equity transactions. Its removal provides an important signal to foreign investors that Canada welcomes their contributions to growing companies and employment.”
Note that there were also a number of highlight’s from the Canadian government’s Throne Speech and Budget that may have a direct impact on the technology landscape of Canada. TechVibes did a good job of summarizing the main Tech elements (Link to blog here)
Deloitte. SUMMARY
Government removes tax barriers and stimulates flow of capital across Canadian border
Canadian companies across the country are likely applauding today’s federal budget, which contains tax law changes that give them the advantage they need to compete on the global stage.
By amending the definition of “taxable Canadian property” to exclude shares of Canadian private companies (where not more than 50% of their value is derived from real property in Canada, Canadian resource property or timber resource property), the government has significantly reduced administrative and, in some cases, economic barriers to foreign investment in Canadian-based innovation and technology. This change puts Canada at the top of the list of places to invest globally.
“The changes in tax legislation announced in today’s budget are among the most significant changes to capital gains taxation since the introduction of taxation of capital gains in 1972,” explains John Ruffolo, Global Tax Technology, Media & Telecommunications Leader, Deloitte. “The Canadian government has listened to the financing community, understood the severity of the problem and removed the major tax barriers that have prevented critically needed international investment capital from crossing our borders.”
“At a minimal cost to the government, this amendment will have an immediate, positive and direct impact on Canada’s ability to grow a robust Canadian technology industry,” explains Terry Matthews, Chairman, Wesley Clover. “By sending a clear message to international investors that Canada is “open for business”, the government will make Canadian companies more attractive to foreign investors overnight. This will help Canadian companies raise the capital they need to achieve global leadership status.”
The change means a much more welcoming environment for foreign investors. In the vast majority of cases, non-residents who were not taxable on the disposition of their investments in such shares due to Canada’s broad international tax treaty network, are now exempt from tax under Canadian domestic law without having to apply for treaty relief. As a result, they are no longer required to comply with the Section 116 tax clearance certificate procedure or file a Canadian income tax return. The changes also remove what were perceived to be insurmountable barriers for many venture capitalists who considered the previous administrative requirements and economic delays for each investor to be strong deterrents to investing in Canada.
“The removal of the Section 116 tax barrier is a tax master stroke by the Canadian government enabling Canada’s emerging technology companies to access deep pools of international capital and the vast global customer markets to which those pools are connected,” notes Stephen Hurwitz, Partner, Choate Hall & Stewart LLP in Boston. “I predict that over time this farsighted tax legislation will help propel Canada’s extraordinary technology into global industry leadership in numerous markets, and will likely be viewed in the future as a defining moment for the Harper government in Canadian innovation.”
BACKGROUND INFORMATION ON THE SECTION 116 TAX BARRIERS
The following describes the tax barriers that were removed in today’s budget and that are no longer preventing international investment in Canada:
Why Canada was perceived by VCs as having an unfavourable tax environment
A 2007 survey by Deloitte and Canada’s Venture Capital & Private Equity Association (CVCA) of 528 VCs from around the world found that 40% of U.S. respondents and 28% of global respondents cited Canada’s unfavourable tax environment as a key reason for not investing in Canadian companies. This level of concern is five times higher than for any other country in the survey and reflects the current investment crisis within Canada’s venture capital industry. The survey also found that Canada is attracting the attention of just 11% of U.S. VCs as a primary country for expansion — behind China (34%) and India (24%).
Please find the full release by Deloitte Here. EAVB_THMQKZAOUO
Re-post: Mark McQueen and the Wellington Financial Blog of 12 January 2010
Good news abounds for the Canadian private equity industry.
Just last week, Onex just closed
on a new US$4.3 billion fund, called Onex Partners III, of which US$3.5 billion came from third party institutional investors. That US$3.5 billion is 75% more than had been raised for Onex II. According to CPP Investment Board’s website, it committed US$400 million to Onex Partners III in 2008; this commitment is more than double their US$150MM stake in 2003-vintage Onex Partners I.
CPPIB’s 2003 vintage investment in Onex I earned a 124.7% return on the capital invested (see prior post “CPPIB Canadian general partner Q2 2009 performance numbers” Nov 14-09).
Oncap, the small and mid-sized buyout arm of Onex, has also come through the recession with flying colours. $575 million Oncap II has been prudent about capital deployment during private equity’s “Golden Era”, and still has plenty of dry powder to invest. In a lower-valuation environment, having a chequebook is everything. Particularly when many U.S.-based PE funds are marketing their own new funds, and likely out of the market for new deals.
Birch Hill Private Equity Partners had a fabulous first close of $425 million in November. Considering the state of the pension fund universe and the negative impact that the drop in the public equity markets has had on the allocations that pensions have to “alternative assets”, this $425 million number is blockbuster. The fundraising target is $850 million in total. Their Sleep Country and Shred-It investments stick out as recent successes.
Clairvest Group Inc. had a $200 million first close on Clairvest Equity Partners IV, with one Ontario-based pension fund subscribing for $100 million at the outset. The balance of the $200 million comes from Clairvest’s own public company cash, a majority of which is owned by the management team and board of directors. Given their success with back-to-back PE “Deals of the Year” (see prior post “Clairvest makes it back-to-back “Deal of the Year” awards” Sept 23-09), you can be sure that $200 million figure will grow larger with subsequent closings in 2010. CPPIB’s $50 million commitment to 2001-vintage Clairvest EP Igrew by 51% in value as of the last reported quarter.
For its part, Torquest Partners has been busy closing new investments and financing tuckunders for portfolio company FirstOnSite. They even recruited the well-respected and popular Michael Hollend away from the excitement of the venture capital industry; Michael officially became a merchant banker in December. Every time I take my Nikon D300 on the road, I take a piece of Torquest with me via their Lowepro investment.
Canada’s private equity industry is definitely on a roll.
MRM
(disclosure – CVG is a partner in Wellington Financial and an LP in our fund)
After a long consultative process with ILPA members and other industry constituents, the ILPA has released a best practices document that outlines a set of guidelines regarding partnership governance, alignment of interest between GPs and LPs and reporting & transparency.
To endorse the Principles, please click here Please include your name, as well as the organization you are endorsing on behalf of in your e-mail. To view the Principles, click here
Below you will find the official press release issued today by the ILPA and supported by the CVCA.
The Institutional Limited Partners Association (ILPA) releases the ILPA Private Equity Principles
Guidelines intend to create framework for sustainability and growth of asset class through improved governance, alignment of interests and transparency
TORONTO, ONTARIO – The Institutional Limited Partners Association (ILPA) today introduced the ILPA Private Equity Principles, which establishes a set of principles and best practices for the private equity industry with the goal of strengthening the long-term viability of the asset class as an institutional investment strategy. Through enhanced partnership governance, strong alignment of interests and improved investor reporting and transparency, the ILPA believes the limited partner and general partner communities as well as other industry practitioners will mutually benefit from an improved set of guidelines that reaffirm a focus on investment value creation. This approach has historically served as the key tenet to the success of the asset class.
“Private equity has become an important strategy for most institutional investors from around the world as overall returns from private equity have outpaced those of other asset classes over the long run,” said Joncarlo Mark, Chairman of the ILPA. “This is primarily the result of a traditionally strong alignment between general partners and their portfolio companies and a focus on growing these businesses. A similar alignment between the general partners and the supporting institutions that provide them investment capital will help ensure successful returns in the future.”
The ILPA Private Equity Principles were developed through broad communication and coordination between a wide cross section of private equity investment institutions. This process included input from many of ILPA’s 215 member organizations from around the world, which provided feedback through roundtable discussions and a comprehensive survey that ultimately generated the concepts proposed in this document.
“The ILPA’s mission is to provide networking, communication and ongoing research and education – including the development of best practices – that will help our members and other industry participants improve their investment capabilities and performance,” said Kathy Jeramaz-Larson, Executive Director of the ILPA. “The ILPA Private Equity Principles will establish an operating framework for investors to engage in ongoing dialogue and to develop improvements that will benefit the industry for years to come.” In conjunction with the release of this document, ILPA has formed a new Best Practices Committee that will focus on continuing to strengthen private equity as an asset class by soliciting input from other private equity practitioners and by utilizing the Private Equity Principles as a living document to incorporate changes as warranted in the future.
In addition, ILPA encourages and welcomes the formal endorsement of the ILPA Private Equity Principles from both members and non-members, including general partners, fund-of-funds and industry consultants. The ILPA Private Equity Principles are posted on the ILPA website at www.ilpa.org. A list of institutions that wish to be formally recognized as signatories to the Private Equity Principles will also be posted and updated on a regular basis.
The Institutional Limited Partners Association is a not-for-profit association committed to serving limited partner investors in the global private equity industry by providing a forum for facilitating value-added communication, enhancing education in the asset class and promoting research and standards in the private equity industry. ILPA has over 215 institutional member organizations that collectively manage approximately $1 trillion of private equity assets. For a copy of the ILPA Private Equity Principles or for more information about ILPA, please visit www.ilpa.org.
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