Finance Committee on Oct. 23rd, 2006

[The Chair, Conservative, Brian Pallister]

We'll go over to Mr. Pacetti now, for five minutes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

Thank you to the presenters. I missed some of them, so some my questions you may have answered in your briefs.

I have a couple of quick questions to the GrowthWorks people, to Mr. Hayes. Who's your competition here in Atlantic Canada?

[Thomas Hayes]

We don't really have competitors, in a sense. From a fundraising perspective we have lots of competition, and investors can invest in a variety of mutual funds. But in terms of VC, when we look at deals, we always like to co-invest, we like to syndicate, because we find that a second set of eyes validates the argument and it spreads the risk, so we're always looking for partners. The Business Development Bank of Canada has a venture capital division that's active in Atlantic Canada, and we work quite closely with them. There's a private VC firm here in Newfoundland and Labrador called Killick Capital, and we like to work with them.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So your objective is to try to spread out the risk.

[Thomas Hayes]

Absolutely.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

In terms of commercialization and investment, we're hearing there's a bit of problem there. Is there a certain amount that is contributed for commercialization projects, or how is your portfolio when it comes to investment? How do you decide what the percentage is?

[Thomas Hayes]

We are very much early stage investors, so in fact we are supportive of companies that are commercializing technology. We've done a number of companies pre-revenue, so we are operating at that end of the spectrum

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What happens with companies that need a second or third round of funding here in Atlantic Canada?

[Thomas Hayes]

That's why it's extremely important that we develop a fund in the $100 million range so that we have a stable source of supply. We recognize when we go into deals that there are likely to be second, third, and fourth rounds of financing before the companies mature and succeed. And you really need to stay in play.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Does GrowthWorks participate in the second and third rounds?

[Thomas Hayes]

Absolutely. That's part of our philosophy.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So it won't just affect a project because that's not your company—

[Thomas Hayes]

The worst thing you can do is run out of money, because if you do that and somebody else comes in and there's subsequent financing, you're going to get blown out. So you really need to stay in play, and in order to do that you need funding.

I would like to come back to your first question. There are no other labour-sponsored retail funds registered here in Newfoundland and Labrador; we're the only one in Nova Scotia. In New Brunswick I think there are a couple more, but we're really the only ones raising any money.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Great. Thank you, Mr. Hayes.

This is for the Association of Cultural Industries. Ms. Irvine, I didn't hear your presentation, but I have this one-pager. It's funny because last year almost every group that came before the committee was asking for an increase in the Canada Council funding, from five dollars per capita to ten dollars per capita. We're not hearing much of that this year; I don't know whether it's because of the change in government. Basically, all you're asking for if just to keep what you have, because you're scared you're going to be losing it, or is it because you've found a solution to your problems? We're not really seeing a request for more money, or is it just me?

[Danielle Irvine]

Oh, it is a request for money, but it's a request for investment in the social economy. It's a huge request, because it requires a new way of thinking. There have been cuts to museums, there have been cuts left, right, and centre in the social economy and the voluntary sector. That is affecting thousands of Canadians—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Do you have an amount for how much you're looking for, even for the social economy? I think there are loads of other interests, and $5 million or $10 million is not going to be enough to go around.

[Danielle Irvine]

I can't give you an exact amount, because it depends on the programs per subsector. If you wanted to look at the Canada Council for the Arts, for example, we would like to see that increased to five dollars a head per person per capita.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So that request remains the same.

[Danielle Irvine]

That request remains the same, absolutely. That's to be very specific. What I'm asking for is quite broad, because it's a new way of thinking.

To give you an example, I've got a degree from university, a master's equivalent; I've got two national awards and have trained with the foremost director internationally in the world, and I cannot break the poverty line as an artist in Newfoundland. That's a problem.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

From what I hear, you're not the only one.

[Danielle Irvine]

I'm definitely not the only one. That's what I'm saying; I represent thousands of people in Newfoundland and across Canada. This is what I'm saying. Look at my face; I am trying to say that I'm one of so many people.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But most of the social economy projects, should they not be in conjunction with regional or local development—

[Danielle Irvine]

They are, very much. Luckily, here in Newfoundland we have a very supportive premier and a very supportive government for the arts, but we don't federally. We'd love to see more federal support.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you.

[The Chair, Conservative, Brian Pallister]

Mr. Wallace.