Thank you very much, Mr. Chair.
It's a pleasure to present to the committee. I'd like to thank the committee for its support on the same issue we raised last year.
GrowthWorks Capital is the second-largest manager of retail venture capital funds outside the province of Quebec in Canada. We manage over $900 million on behalf of 250,000 Canadians in seven provinces.
I'm here today to talk about an important economic development issue for Canada. It really revolves around the purchase size for investors in retail venture capital funds like the Working Opportunity Fund here in B.C.; the GrowthWorks Canadian Fund in Manitoba, Saskatchewan, and Ontario; and the GrowthWorks Atlantic Venture Fund--increasing the federal labour-sponsored fund tax credit from $750 to $1,500.
In B.C. the Working Opportunity Fund has approximately $400 million in assets under management. We're the largest single source of venture capital in western Canada, and we account for a full 20% of the venture capital marketplace in B.C. In the past 14 years we've invested $450 million in 120 entrepreneurial B.C. companies. We have created over 10,000 jobs in the province. In addition, we partner with other venture capitalists in the majority of the deals we do, which means that for every $1 million we invest we bring another $4 million from outside of British Columbia. If you look at the 15% tax credit the federal government provides, this is equivalent to $20 million of investment in B.C. for every $1 million in tax credits provided by Ottawa.
On average, the companies we invest in have less than 15 employees at the time we do the deal. These companies tend to grow rapidly as a result of our financing and increase their employment levels to an average of 50 to 60 employees. The capital we provide allows them to invest in R and D, sales and marketing, and commercialization of the product. As such, we're an integral part of the commercialization process in Canada. We've been involved in 30 company spinoffs from universities allowing scientists to bring their research to life, given the federal government's support of basic research. These companies we invest in typically grow to become global competitors in their respective markets.
In Atlantic Canada we started a fund in 2005. We raise and invest money in four Atlantic provinces. It has local management and a local board of directors, along with offices throughout the region. We have broad support from all governments in Atlantic Canada and the four provincial federations of labour. The fund currently has $32 million in assets and 12 companies in its portfolio, and we're committed to investing in entrepreneurial Atlantic Canadian companies, helping to grow that region's economy and provide jobs there.
There is a real inequity in Atlantic Canada, which has 8% of the population yet only 2% of available venture capital. Every year $1.2 billion leaves that region during the RRSP season, and the vast majority of the money is invested outside of Atlantic Canada.
The first problem our industry faces is that there is fierce competition for RRSP investment dollars. You might think that the 30% tax credit given to our investors--15% from the federal government and 15% provincially--is sufficient. While it looks great on paper, there are more lucrative options for investors. Flow-through shares, for example, effectively give investors a 44% tax credit and allow them to transfer the shares into a registered retirement savings plan.
Our industry is not here to ask for an increase in the tax credit percentage. We're here to ask the federal government to increase the federal labour-sponsored fund tax credit limit to $1,500.
B.C., Manitoba, and Nova Scotia already have increased the provincial tax credit limits to this amount. The federal legislation was created in 1985, and over the past 22 years there has been no increase in the maximum purchase size for investors. RRSP contributions, by the way, have increased from $5,500 in 1985 to $15,500 today. As a result, the relatively small $5,000 purchase of our funds has become a nuisance trade for investment advisors, and these are our bread-and-butter clients who raise the money for these funds, which then get invested in entrepreneurial companies throughout the country.
In addition, the banks, which have taken over most of the brokerage firms, have created new compensation structures. These structures have resulted in advisors getting paid up to 75% less on a $5,000 purchase compared to a $10,000 purchase. A number of the largest investment dealers are proposing to remove small purchases from the compensation grid completely, effectively cutting off any source of income to investment advisors who purchase our funds. As advisors are increasingly no longer getting paid to make purchases in our industry, the amount we are able to raise, and therefore invest across Canada, has been steadily declining.
Increasing the maximum purchase size of our product in the marketplace will allow advisors to return to the level of sales they've done previously, effectively increasing the amount of venture capital available to grow and develop Canadian companies. We estimate the cost to the federal government to be approximately $20 million due to sales caps that exist in most provincial jurisdictions. We'd be happy to work with federal finance officials regarding the estimated costs.
Through the venture capital it provides, our industry has a large impact on the growth and development of the Canadian economy, in terms of commercialization, business development, global competitiveness, and job creation. To continue to have the same level of impact in the future, we need to have an increase in the maximum purchase size of our funds to $10,000, so advisors will continue to sell the product to their clients, raising money for investment in new technology companies across Canada.
Thank you very much.