Thank you.
First of all, we'd like to express our thanks for having the opportunity to address the standing committee on the topic of biotechnology in support of agriculture.
The agriculture-biotech economy is one of the fastest-growing and innovative sectors in this province, a combination of public and private entities networked to incubate scientific advancement and develop commercial opportunity.
Organizations such as Ag-West Biotech represent a unique model of capitalizing on the commercial opportunity resulting from research developed in these clusters.
The structure of Ag-West Biotech Inc. is that of a not-for-profit, international membership-based organization that promotes and facilitates the application of life sciences and technologies for the benefit of Saskatchewan and Canada. Ag-West Biotech is an independent, arm's-length organization that supports the commercialization of biotechnology, which makes us unique.
We actively seek funding from the Saskatchewan Ministry of Agriculture and federal, and other provincial, sources. Ag-West operates on a $900,000 per annum operating budget, which is a contribution from Sask Agriculture.
Our commercialization activities are centred around agricultural biotechnology, human health and wellness, animal health and nutrition, and biofuels and bioproducts. Ag-West serves as a catalyst to build partnerships and develop alliances among industry, research, and producer groups, with the objective of commercializing innovative products or processes.
We're able to provide direct investments. We have a $4.6 million seed capital fund that facilitates co-investment and provides venture support to start-ups or expanding small- and medium-sized enterprises. We're able to lever in other funds from other areas.
The company champions equitable regulatory policies that allow companies to remain competitive.
So we're pretty much a full-service organization in the commercialization train for the technology.
We have a track record that goes back to 1989. Ag-West has invested $10.4 million in 57 projects involving 45 companies, creating approximately 1,268 person-years of employment during those 19 years. Ag-West investments have allowed investee firms to leverage an additional $74.3 million from other sources.
The total aggregate GDP-impact of Ag-West Biotech in those 19 years and $10.4 million in investment was approximately $760 million since 1989. In our time of existence, we've generated an economic ratio of return of $55 for every $1 invested, and we produce a tax-recovery ratio of approximately 8.3:1. Those returns do not reflect the fact that most of the start-up biotech firms do not make a profit for the first 7 to 10 years; so we have another 7 or 10 years of investments coming to fruition.
The challenges of technology commercialization, from benchtop to profitable company, are many—and we try to deal with as many of those as we can. Early-stage technology companies require financing, some mentoring, path-finding, and the support of an equitable regulatory environment.
Early-stage technology companies are usually under-capitalized, and in fact are almost always under-capitalized, both in terms of human and financial support. They rely on risk capital and granting sources for funding their research and development activities. Small firms rely on family members, grants, and venture capitalists.
Those organizations that rely on venture capital often lose control of their company by the second or third round of financing, or will sell their emerging company to a larger entity with patient capital behind them. Often these processes mean that the full value of the commercialized technology is not captured within Canada, but taken to another jurisdiction.
The federal government can be instrumental in facilitating a higher level of success through strengthening the existing non-partisan organizations, such as Ag-West Biotech Inc., and partnering with them to strategically provide financial support to start-up companies. The mechanism for support already exists within such organizations to administer programs and projects.
The availability of risk capital, particularly at the pre-beta site testing stage, and going on into scale-up operations, needs to be increased. With additional federal support, networking opportunities will obviously increase.
Each year, Ag-West reviews 25 to 30 investment prospects, but due to limited resources, it can only invest in one or two per year. We feel that the hit ratio could be much greater; it could be 20% to 25%, if the resources were available for us to do that.
Ag-West's future strategy is to facilitate a continuum of investment to support SMEs, small and medium-sized enterprises, to develop technology from laboratory to commercialization. We want to get the technology as near to commercialization as we possibly can without seeking venture capital and other public sources of investment.
Our recommendation is that the federal government departments have an opportunity to provide much-needed incremental financing to the growth and development of biotechnology, based on SMEs. Ag-West Biotech Inc. recommends that incremental financial investment capital be provided on a long-term basis, that is, for 10-plus years, using existing mechanisms and infrastructure with a proven record of success. Investment capital should apply to beta testing and early commercialization activities specifically used to support proof of concept, scale-up, and development of manufacturing processes.
I thank you for the opportunity to make this presentation.