Thank you, Mr. Chair, for providing me with this opportunity to present this morning. I am aware that two of my colleagues from the Canadian Venture Capital Association were here several weeks ago, providing some insight on the CVCA's recommended five-point plan to deal with the venture capital crisis in Canada.
I'm going to focus on one solution this morning, but first I have a few remarks about who GrowthWorks is.
We are one of the few national VC players still investing in new deals in Canada. We manage funds across the country totalling about $600 million in AUM. I think outside of Quebec we're probably the largest VC player in the country. Portfolio companies in our portfolio have won the deal of the year in four of the past nine years. We have offices across the country: Vancouver, Winnipeg, Toronto, Fredericton, Halifax, and St. John's. We have a team of 20 seasoned investment professionals. We're a top quartile VC manager. Our focus is on commercializing early-stage technology companies. Recently we did a scan to discover that about 40% of the companies we funded had their origins in R and D in Canadian universities. We've invested in over 250 companies in the country since we began operations in 1992.
I also want to define retail venture capital. Most folks are familiar with traditional institutional VC. They raise their capital from pension funds, institutions, corporations, and endowment funds. In the retail business we raise all of our capital from individual investors, and governments encourage investors to buy into this asset class through the provision of tax credits. The federal government offers a 15% tax credit, it used to be 20%, and the provincial governments, depending on which province, offer anywhere between 15% and 25% tax credit.
Retail venture capital accounts for about 50% of all VC raised and invested in Canada, and it continues to receive good support from both levels of government. In the past two years, many provincial governments enhanced the retail venture programs. British Columbia increased the tax credit; Saskatchewan increased its tax credit; Manitoba, Nova Scotia, New Brunswick, and Newfoundland and Labrador increased both the tax credit and the annual contribution limit; and Quebec recently introduced increases to tax credits for a particular retail fund.
In terms of the Canadian landscape--you probably heard this a couple of weeks ago--the Canadian VC investment is at a 14-year low. Canada's multi-billion dollar annual investment in R and D is at risk because of the dearth of venture capital available to entrepreneurs. Many private institutional VC funds have withdrawn from the marketplace. Canadian entrepreneurs are finding it much more difficult to access equity capital compared to their American counterparts. The reason that is important is the companies we fund here in Canada have to compete against those competitors in the U.S.
Retail venture capital investors have invested more dollars across Canada than private, independent investors nine out of the last 10 years, and as a result, retail venture capital investors are much more consistent suppliers of VC to Canadian entrepreneurs.
So in our view, the most cost-effective and quickest way to get VC funds flowing again to Canadian entrepreneurs is for the federal government to do two things. First would be to return the federal tax credit to the original 20% level for investors from the current 15% for a three-year period, and to increase the annual maximum contribution to $20,000 from the existing limit of $5,000.
The rationale for those changes is this. The tax credit was 20%. It was reduced in the mid-1990s to 15% when there were significant inflows of capital to this asset class. That's no longer the case. When the original retail program was introduced in the mid-1980s, the RRSP maximum was $7,500 and the venture capital maximum was $5,000. The RRSP maximum today I think is $22,000, but the retail venture maximum hasn't changed. It remains at $5,000. This is a problem for us because many of the bank-owned brokerage firms discourage their investment advisers from tickets of that size, so it has serious ramifications in terms of that distribution channel. The members of the IIROC channel virtually are no longer supporting the asset class.
In terms of cost implications, we feel that with these changes, the industry would raise an additional $300 million a year. That would bring the annual raise nationally up to about $1.5 billion. The investment on behalf of the treasury, in addition to its existing commitment, would be an additional $100 million a year.
Independent commissioned studies have shown that these tax credits are recouped by both levels of government within one to five years. A recent study that was just completed by the Sauder School of Business at UBC is going to report some very compelling statistics in terms of tax credits repaid to both levels of government and in terms of job creation.
Thanks, Mr. Chair. I'm happy to answer questions when we get to that part of the program.