Funding SME’s – Why should we care?
by Joseph Batty, CPA, CA
The first part of this series outlined several common beliefs and issues that plague and hinder investments into local small and medium enterprises (SME’s). ABCtech has joined a Joint Venture with an Alberta Credit Union and an Alberta private corporation to create TechInvest Alberta Inc.
TechInvest’s mandate is to first create, and then manage a large Technology Development Fund (TDF).
As mentioned, TechInvest has assembled a team of skilled and experienced people to implement this mandate. For more information on the team, ABCtech will provide a link to the TechInvest Offering Memorandum.
Now that we have determined there is no shortage of investment money available (Part 1 of this series), there are 2 overriding issues that TechInvest must resolve in order to ask for your support for this plan:
- “How” will TechInvest overcome the hurdles of “risk” and “size” of an investment into early stage small and medium enterprises (SME’s).
- “Why” is such a plan so important for Alberta and Albertans?
This particular article will deal with “why” ABCtech and TechInvest consider that making these kinds of investments is important.
With over 40 years of experience in finance and accounting, Mr. Batty demonstrates a proven track record of helping business – large and small – set up financial systems in support of their strategic goals and objectives. The work Joe has done over the past many years has made him an authority on the identification, evaluation, valuation and (where appropriate) capitalization of “Intangible Assets”. His specialty is quite unique and rare. Every financial manager today needs to know and understand these principles: the success of their businesses depends on it. Joe currently sits on the board for TechInvest Alberta.
There are several ways to look at this question:
- One can take a very conventional approach and follow the advice of a financial planner.
- or, one can act individually and use the self-directed option that is available with any plan (whether it be a TFSA/RRSP or any unregistered investment).
- or, one could do a combination of these options.
Whatever option you choose, you must never lose sight of the fact it is your money and the decisions are yours to make.
From the ABCtech and TechInvest perspective, we encourage people to consider a societal or ethical approach. That being said, once you have been diligent (or fortunate) to save some money and then are able to invest that money into a 3rd party investment, you would like some of your money to be placed somewhere that it will do some “good”. The definition of this “good” is different for everyone, but more generally a common theme for this “good” is that your investment should benefit society. Considering that most people who try to forecast future economic growth are suggesting the majority of growth and new jobs will come from SME’s, it may not be too much of a stretch to agree that investing in SME’s could benefit society (it could expand and diversify Alberta’s economy and provide more jobs for our children).
Another factor worth exploring is more emotional. Many people may dream of being on the ground floor of the next major breakthrough for a medical cure, or an electronic gizmo, or a clean-tech invention, or an energy-saving device, etc. Or find the next Microsoft or Amazon or Facebook to invest in. It may sound far-fetched that a group from Alberta could find such an opportunity, but in reality, if you examine the origins of these new economy giants you will see they all started from humble beginnings. In fact, the experiences that ABCtech and TechInvest have garnered would show several potential world class technologies within our grasp. They include:
- a significant breakthrough in magnetic levitation technology for urban transport,
- a methodology to improve the efficiency of bio-fuels,
- an application of artificial intelligence that will analyze social and economic trends and provide a pension fund manager an early warning of impending portfolio losses,
- an early warning diagnostic for breast cancer.
Each of these requires the finishing capability that TechInvest has amassed and a capital base to cover the cost of the last stages of development.
With the support of a large group of small investors (the 15,000 to 25,000 planned in the TDF) we could be on the inside of these new technology breakthroughs. We could turn this emotional connection into a reality.
We encourage you to think carefully about placing a small amount of your savings into this TDF.