The Manitoba government is launching a new Manitoba Innovation Growth Sidecar Fund and proposing enhancements to the Small Business Venture Capital Tax Credit to help grow small business and create jobs, Jobs and the Economy Minister Theresa Oswald announced today.
“We will invest $4.5 million over three years in the Manitoba Innovation Growth Sidecar Fund, helping Manitoba companies that are ready to grow and create jobs,” said Minister Oswald. “We are also accelerating enhancements to the Small Business Venture Capital Tax Credit to help companies raise investment capital they need to turn good ideas into businesses and jobs.”
The fund will co-invest with private investors in innovative Manitoba companies that are ready to grow. Investments will range from a minimum of $200,000 to a maximum of $500,000. The investments will be guided by an advisory council of five private-sector business people with extensive venture capital experience. Government investments will be on the same terms and conditions as private co-investors.
“We’ve heard from business leaders that Manitoba companies at an early stage of development can’t always find the investment capital they need to grow, without leaving Manitoba,” Minister Oswald said. “The Manitoba Innovation Growth Sidecar Fund is an innovative way to improve access to capital right here at home for companies that are ready to expand, create jobs and help build Manitoba’s economy.”
“There are many Manitoba entrepreneurs with great businesses that need local sources of investment capital to grow and succeed,” said Sean Burns, president, VA Angels Manitoba. “The Manitoba Innovation Growth Sidecar Fund is a welcome new partner for private investors who want to support Manitoba companies.”
Proposed enhancements to the Small Business Venture Capital Tax Credit would help Manitoba companies raise needed capital by increasing the value of the tax credit to 45 per cent from
30 per cent. The maximum annual tax credit claimable would increase to $67,500, a 50 per cent increase. The total amount of tax creditable shares a company could sell would double to a lifetime cap of $10 million and eligibility for the credit would expand to existing shareholders who own less than 35 per cent of the company, up from 10 per cent. The proposed changes would take effect immediately after the 2014 budget implementation bill is passed by the legislature, Minister Oswald said.
To date, the Small Business Venture Capital Tax Credit has helped 22 Manitoba companies raise over $25 million in equity from 250 investors, the minister added.
Sidecar funds are used in many jurisdictions to provide early investment capital that matches private investment. These funds encourage private lenders and investors to increase their participation in projects, and encourage capital investment in small businesses.