Province Discovers Life Beyond the Oilpatch.

This is from the Edmonton Journal. As the article describes the situation Alberta Enterprise Corp. will actually allocate the funds to Venture Capital Funds. I assume that the funds attempt to make a return on invested capital. Anyway it will be a good injection of money into those funds. Alberta might even make some money. Of course it could lose as well as critics will no doubt note!
In spite of the mantra about government not intervening in the marketplace as a matter of fact few capitalists will turn down government money to retain their purity uncontaminated by government support! The relationship between government and capital is usually more symbiotic than antagonistic. However, since governments are voted into power something must be given to ordinary citizens to gain their acceptance of the domination of capital.


Province discovers life beyond the oilpatch
Tech funding meagre, but better than neglect

Gary Lamphier
The Edmonton Journal


Thursday, April 24, 2008


EDMONTON - As budget initiatives go, they're modest at best.

With Alberta's Tory government projecting record spending of $37 billion this fiscal year on revenues of $38.6 billion, the $100-million funding commitment to the soon-to-be formed Alberta Enterprise Corp. is a drop in the bucket.

Ditto for the estimated $60-million annual cost of rolling out Alberta's new scientific research and experimental development (SR&ED) tax credit, which will merely put this province on the same footing as other jurisdictions.

Still, after years of fruitless lobbying, arm-twisting and plaintive cries for support, Alberta's chronically ignored and underfunded high-tech and biotech sectors finally got some payoff in Tuesday's budget.

After more than a decade of thumbing their noses at the province's knowledge-based industries, the Tories have finally woken up and sniffed the coffee. Yes, there is more to a healthy economy than oil and gas.

So let's give credit where credit is due. Alberta Premier Ed Stelmach may not qualify as a bold thinker. But at least Stelmach and Doug Horner, Alberta's Minister of Advanced Education and Technology, are willing to listen, and act.

That marks a seismic shift from the approach adopted by Stelmach's predecessor. Ex-premier Ralph Klein

either didn't understand the importance of nurturing Alberta's tech-based industries, or he was unwilling to take the heat for backing corporate start-ups that might flop.

His oft-repeated mantra -- that Alberta isn't in the business of being in business -- was a laughable bit of spin aimed at justifying his government's unwillingness to support venture capital (VC), even as it owned its own bank.

Already, Stelmach's $100-million commitment to the Alberta Enterprise Corp. -- which is expected to allocate those funds to private-sector VC firms that will actually decide which start-ups merit support -- is paying dividends.

Today, Montreal-based iNovia Capital, which has already raised roughly $150 million of seed capital and early-stage funding for junior tech companies, including $107 million in its newest fund, will announce the formal launch of its Alberta operations at Enterprise Square.

Horner and a trio of iNovia execs -- including CEO Mark de Groot -- are expected to lay out the firm's investment plans and approach.

Like most VC funds, iNovia likes to reduce risk by co-investing with other VC funds in early-stage companies. Thus, Alberta's willingness to put its money where its mouth is signals that Alberta is no longer a venture-capital wasteland.

"I think it's great. We've been fighting for this for a number of years, and now, to actually get some attention, and see both the venture fund and the SR&ED credit come to fruition is just outstanding news for our industry," says Ryan Radke, president of BioAlberta, an industry lobby group.

Ashif Mawji, CEO of Edmonton's Upside Software, and another vocal proponent of the need for both high-tech venture capital and provincial tax credits to encourage more product development, also gives the government two thumbs up.

"I think this is a very good start. This is something we've been raising all along and the government listened," he says.

"With this move, I think we're giving ourselves a better opportunity in future to see companies like RIM (Research In Motion) develop in Alberta."

Of course, since Alberta's belated support for venture capital comes literally decades after the formation of what are now sizeable VC funds in places like Montreal, Toronto and Vancouver, it has a lot of ground to make up.

The top VC funds in California's Silicon Valley, which now manage billions of dollars worth of investments, are for the most part too large to be lured to Alberta, despite the government's funding commitment.

The most likely co-investors in Alberta startups are smaller, Canadian-based VC firms such as Vancouver's Yaletown Venture Partners or Ventures West Management, and Toronto's XPV Capital, which focuses on water-related investment plays.

Despite the generally upbeat reaction to the government's new VC fund, tech execs such as Mawji say it's just a start, and much more needs to be done.

In particular, he notes the City of Edmonton has yet to make any firm commitments to contribute to a local VC fund, despite Mayor Stephen Mandel's vocal support for the concept in recent years.

"I think the city now needs to ante up as well," he says. "It's been talking all along about the need for this, so I think city council and the mayor need to add some funds, and the feds need to put in their share as well."

To maximize its impact, Mawji says he'd like to see Alberta Enterprise Corp. partner with a single established VC house, rather than spread its investments among a large group of VC firms.

He'd also like to see Alberta's new SR&ED tax credit enriched, so it's superior to that of other provinces. Under Alberta's current plan, qualifying firms will receive a refundable credit worth up to $400,000 per year.

glamphier@thejournal.canwest.com