May 28, 2015


Business

Venturing into big investment territory

New tax regulations boosting interest

NEW regulations for the province's small business venture capital tax credit program have only been in place for a month, but if the current level of interest is an indication, investment in Manitoba's small businesses might spike dramatically this year.

One company alone, Invenia Technical Computing Corp., has already been approved to raise $10 million, which is three times the total that was raised by about 10 participating companies last year.

In the last budget, the province increased the tax credit for qualified investors of approved companies from 30 per cent to 45 per cent.

The program has been well subscribed in the past, but ultimately undersold, meaning companies were approved to raise varying amounts but were unsuccessful in closing those offerings.

Matthew Hudson, the CEO of Invenia, a high-tech company that applies very advanced computer learning to electricity markets across North America, said the program's new regulations have made conditions more attractive for its efforts to raise money to grow the business.

"It's very targeted. What the province is trying to do is focus on organizations like ours doing innovative things and growing and have the need for capital, and there is just a bit of an alignment issue," Hudson said.

Ideally the realignment required is to bring the local investment community -- including a growing number of organized angel investors -- together with those growing companies.

Jim Kilgour, head of the financial service office of the Manitoba Jobs and the Economy ministry that runs the program, said that is exactly the purpose of the program -- to give more small business access to more capital.

"We are noticing a huge uptick in companies requesting approval to go out and raise money," Kilgour said. "Time will tell how much they actually raise."

Kilgour knows from experience that just because a company is approved to raise investment dollars, it's no guarantee they will be successful.

Last year, he said, about 10 companies were approved to raise just less than $10 million, but they were only able to raise a total of $2.7 million.

Invenia has been around for close to 10 years, building its capacity to analyze incredible amounts of data through specialized algorithms and to come up with increasingly accurate -- and valuable -- predictions about regional electricity transmission and consumption dynamics.

In addition to consulting and advising utilities, Invenia makes arbitrage investments in the day-ahead markets operated by independent system operators across North America.

It is in the process of expanding those efforts into the California and Texas markets and expects to use some of the capital it raises to cover some of the additional costs it will incur to do that expansion.

Invenia's offering is not a typical common-share scenario. The company is looking to raise funds through preferred shares with a dividend attached as well as a proposed share buyback in three years, which will all be dependent on the company meeting certain performance targets. It is ultimately a lower risk scenario for investors.

"How it settles will be based on how we execute but we feel pretty confident in our ability to execute," Hudson said.

martin.cash@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition August 1, 2014 B4

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective January 2015.

Scroll down to load more

Top