Deal Flow – The Lifeblood of Investment
The lifeblood of the investor community is deal flow – the amount and quality of ‘investable companies’ that are available to them to invest in.
So, at the dinner with leaders in BC’s investment and finance community hosted by Foresight’s BC Cleantech Cluster team on Oct 16, 2019, much of the discussion centred around deal flow and investment in the cleantech sector.
One of the key challenges that finance leaders believe is holding back the cleantech sector is lack of investment, or more correctly, the lack of the right type of investment. In general, there was a consensus that we should be encouraging private investors to invest in BC cleantech, and to attract more 2nd/3rd round of funding into the Province.
Specific suggestions included:
1. Finding ways to expand programs like the Eligible Business Tax Credits, providing Flow Through Tax Credits to investors (like what we do for mining companies), and ensuring that these programs are available to private and public companies equally.
2. Reducing Capital Gains inclusion SHOULD be a topic for discussion as it would encourage more investment by changing the risk/return profile. We could also think about moving to a model like Australia, where you can roll Capital Gains over as long as the proceeds are reinvested within a limited time frame.
3. Engaging strategic investors such as Telus, Teck, LNG Canada, Mitsubishi, Petronas and Shell and family offices in and outside of Canada. While big players like Fortis and BC Hydro are important to the economic/investment landscape, they should be seen as partners, and could help in bringing in bigger and more strategic investments. Carbon Engineering was discussed as an example – they got the ball rolling in Cleantech investment with strategic investors that were not Canadian based.
5. Encourage BC’s local pension fund to be involved in supporting cleantech, and create a localized fund of funds, (to further leverage money into the sector).
Challenges & the Road Ahead
The finance community would like to see higher quality and more robust ‘deal flow’ coming from BC, and they see a need for strong entrepreneurial education and acceleration programs like Foresight’s Grow/Launch/Deliver in order to make sure the investors see high quality pitches and the entrepreneurs are ready to pitch, and positioned for higher funding opportunities.
The business models for cleantech have evolved, and market demand is growing, making even some of the largest capital investments more palatable – BC companies should not miss out on these opportunities.
A CLUSTER INITIATIVE THAT DRIVES LARGE INVESTMENTS INTO BC CLEANTECH
Strategic investors will be more interested if we put BC cleantech on the map, and the finance experts at the dinner all agreed that to grow the industry, we need to market ourselves – we need to attract investors both from outside Canada and at home.
There was a lot of encouragement around the idea of a cleantech cluster in BC. A cluster was seen as a way of creating meaningful linkages between strategic, financing partnerships and technology developers/ entrepreneurs. It could also play a role in drawing investment to the region.
A cluster could also take on sector specific Accelerator Activities, and develop a comprehensive international marketing and communications plan for telling the story of cleantech in BC, and provide a hotspot of linkages and activities around economic development.
A long term, strategic communications plan to put BC cleantech in the minds of global investors as a place to find high quality investment opportunities and to provide a cohesive voice for the cleantech sector in Western Canada was seen as crucial.
As the sustainable, green economy grows in BC, and more and more cleantech opportunities arise through macro-economic trends impacting us locally and globally, the investment and finance industry will play a huge role in determining and guiding the future of BC industry.
It was a pleasure to host this dinner, and see the enthusiasm and support for the rapidly accelerating cleantech industry in BC.