Evidence of meeting #42 for Industry, Science and Technology in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was funding.
1:55 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
But for every one of those, how many fail? And that's probably what's discouraging investors right now. If you have one success story and 50 that fail, the odds aren't in their favour. I guess our objective is to try to increase that number.
1:55 p.m.
Managing Director, University of British Columbia
Definitely there is a large proportion that fail. When we look at what's happening in the U.S., particularly in some industries like drug development, there is more effort to develop the technologies further in the institutions, so that when they come out, they are more industry-ready and have been “de-risked”.
1:55 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
Thank you.
I think it was Mr. Volker who was talking about pumping up angel investors and venture capitalists.
1:55 p.m.
Director, University, Industry Liaison Office, Simon Fraser University
And pumping up the students.
1:55 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
Pumping up the students, yes; I like that as well, because we haven't talked about that a lot at this committee.
You also spoke about mentor panels, which is interesting. I don't think we've met with any mentors.
I think that's maybe an idea for us, Chair. We could invite some mentors here and see how successful they've been.
Can you talk to us about that mentor panel and what exactly it does? Are the mentors on the job with these businesses?
1:55 p.m.
Director, University, Industry Liaison Office, Simon Fraser University
Absolutely I can. It's a key component of the New Ventures BC business competition that Soren referred to and that we do jointly with UBC and the University of Victoria. What is consists of is accomplished, experienced business people—entrepreneurs and investors—who work with the start-ups. We have formal mechanisms for bringing those people together. The payoff is huge. The preparedness of these start-up companies when they come to make investor presentations is of an order of magnitude better than it was a decade ago.
1:55 p.m.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Good afternoon. Thank you for being here. Your presentations were very interesting.
Mr. Volker, you said you have technological innovation funds and I wonder where the money is coming from. Does it come from private investors or from the government?
Did you hear the translation or should I repeat my question?
2 p.m.
Director, University, Industry Liaison Office, Simon Fraser University
Were you asking about where the money came from within the fund?
2 p.m.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Yes, that is right.
On the one hand, I am wondering where these funds for technological innovation come from.
On the other hand, you referred to refundable tax credits. Were you talking about provincial tax credits? Unless I am mistaken, there are such credits from the federal government.
Those are my first questions.
2 p.m.
Director, University, Industry Liaison Office, Simon Fraser University
The answer to the first question is that currently there are about 150 investors. These are private individuals, typically accredited investors, and typically successful entrepreneurs. I have a list of over 500 of these people who are invited to our monthly meetings. They're all accomplished and experienced people who are willing to put money into new ventures.
The refundable tax credits come entirely from the B.C. government. They're very limited. There's a budget cap of $25 million province-wide on this, but it was recently raised to $30 million. There have been discussions about doing a joint provincial-federal tax credit, where the province would put in 15% and the federal government would contribute the other 15%. This is very important for pooling of capital.
Angel investors know that it's very, very risky. As was pointed out, many ventures fail. What worries me is that when I invite these accredited credited investors to meetings, they'll invest in three or four companies and those companies will fail. So they invested in the wrong three or four, but maybe the next three or four would be successful. The way to get around this is by pooling and investing in a fairly large number of companies.
Angel investors are realizing that it is very much a numbers game. So they are tending to pool their capital and do team investing, where maybe a group of five or ten or, in my case, a group of over 100, will invest in companies. We do about one investment per month. We've done 40 technology companies in B.C. in the last three years.
2 p.m.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Mr. Harbel was telling us that angel investors are more sensitive to risk.
Do you believe that what Mr. Volker has just talked about could be a solution to make them a bit less hesitant? How do you explain that they are more sensitive to risk? It seems to me that the economic situation is still quite good
2 p.m.
Vice-President, Innovation Development, British Columbia Innovation Council
It's certainly part of the solution to find more ways for people who have done well to participate in the development of science and technology companies and growing the knowledge economy. That's absolutely welcome.
The Government of British Columbia has put limited tools on the table to enable these entrepreneurs to get tax credits for the investments they make. If you look at the number of companies that come through the door looking for these dollars, it's oversubscribed and is used up within a few months of when it's launched every year.
So there is ample room to improve this. The model is certainly one that works. It's part of the larger solution that needs to take place if we're to bridge the gap.
2 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
I will continue on the same topic.
All these organizations at the table are into inventing new things. There are far too many inventions for the number of investors. Some kind of council might decide that a given invention has potential and would be a benefit to the community.
Could you pool your resources and, with a business plan, find investors to bring those inventions to fruition? In that way, we would avoid having everyone working on his own.
2:05 p.m.
Director, University, Industry Liaison Office, Simon Fraser University
I'd be happy to.
2:05 p.m.
Conservative
2:05 p.m.
Managing Director, University of British Columbia
It's certainly something we are doing now. We work quite collaboratively amongst ourselves, so when one institution is working on a project the other one gets behind it. An example is SFU and Michael from the angel network, which UBC takes good advantage of.
To speak directly to your point, a new initiative that has come out of the B.C. universities and hospitals is the Centre for Drug Research and Development. It has raised $70 million to date. It involves all the universities, health authorities, and health hospitals moving early-stage technology from discovery through to stage and pre-clinical development, where it then can be licensed and moved forward. It's about how to pool our resources and, more importantly, how to pool the expertise--that's really where we're being fragmented as well--so these things can get out the door at the other end.
2:05 p.m.
Director, University, Industry Liaison Office, Simon Fraser University
Another example is the New Ventures BC competition we run. We have the University of Victoria, the University of British Columbia, and Simon Fraser University working collaboratively on that. In fact, the three deans of business from those respective schools are on the board of directors of that competition. Another example is the WUTIF fund I mentioned earlier. It has invested in a number of UBC and University of Victoria companies.
There's a spirit of collaboration in the province, and we often meet with one another to look at ways we can maximize the output from our research institutions.
2:05 p.m.
Dean, Applied Research and Director, Technology Centre and Dr. Tong Louie Living Laboratory, British Columbia Institute of Technology
I just wanted to say--I only had five minutes--that BCIT collaborates with university professors and researchers fairly often. It's interesting when that happens, because as I've tried to explain to the committee, we're kind of like the infantrymen and women. We want to be in the trenches. For example, right now there's an NSERC I2I with one of the professors from UBC in mechanical engineering. He has a concept and has come to BCIT. We're doing the electromechanical steering mechanism. It's a surgical-vision positioning technology. We're doing the vision system and we're doing the industrial design.
I know that's not venture capitalism, but we're trying to get these product so that when they end up in front of the venture capitalists they're as ready as they can be, and those venture capitalists can make better decisions. So we work all the time with our university colleagues.
