| In 2004 the Atlantic Provinces Chambers of Commerce (APCC) Innovation Council reported to its board that several innovation-driven regional companies were at risk of leaving the region. They needed new rounds of financing and VC’s wanted these companies to relocate.
The APCC board began drafting a business plan for what today is called the APCC Capital Initiative. Under the leadership of Dianne Kelderman of Truro, N.S., who was the APCC’s chair in 2004-05, a committee brought this initiative to life. The group met, debated, researched, interviewed, consulted with private firms and legal counsel, and eventually developed a program that would employ the Community Economic Development Investment Fund (CEDIF) structure that has a track record of success in Nova Scotia. The APCC’s role would be to lobby the other three regional governments to offer the same legislation after the pilot projects were up and running.
The ACOA representatives offered great insight into how the capital pools might be managed and grown. These pools could create a strong economic development opportunity for the region. Atlantic Canadians would invest in their own capital pools, which in turn would invest in qualified regional companies. For the first time in 140 years, local investors would exert greater influence on growth and competitiveness.
The strength of the program is in the ownership and partnerships that would drive the growth of the funds. The APCC, through a subsidiary company, will provide the expertise, services, credibility, and financing of administrative costs. Part of the service will be providing due diligence to protect investors. The capital pools will be locally owned, as defined by the CEDIF legislation, and in partnership with chambers of commerce and boards of trade. The chamber / board will help |
set up the funds and will be the promoter and marketer of the funds, thus providing a ready-made constituency of investors and prospective target companies, a great starting point.
The APCC’s leadership and its consultants believe that one to two pools could be created every year for the next 10 years. At a target of $10 million each, the network pools would reach about $100 million in capital under management. The pools are intended to target the $100,000 to $1 million equity levels but would not be restricted to that amount. As well, the business plan calls for a focus on deals that can be syndicated, bringing in angels, government and Crown-corporation investment partners, VCs, charter and development banks, investment bankers, and, hopefully, capital pool corporations.
This is a capital initiative that can and should be successful. It requires that ACOA prime the pump with roughly $8 million. This will provide the working capital to hire a capital pool manager, who will be responsible for day-to-day administration, and to hire professional fund managers for each of the funds, so the invested businesses will have the greatest chance of success, thereby offering investor protection.
The business plan is in place. There are several chambers in Nova Scotia lining up to participate in the pilot project. There is just one person left to step up to the plate: The minister of ACOA, Peter MacKay, must give his approval.
And what is “the ask,” exactly? An investment of $8 million that will leverage hundreds of millions of dollars of local capital investment in regional growth firms. To invest in business-driven, economic prosperity. Do you think Mr. MacKay will say yes?
Let’s not take chances. Contact him and urge him to do the right thing. |
