There is no point in re-inventing the wheel. The existing time-proven British Columbia Equity Capital Program (BCECP) provides excellent blueprints to be adopted by the Government of Ontario following its election promises (see this post).
The program provides individual investors (angels) incentives by way of a refundable tax credit when they invest in eligible small business. The highlights of this program include:
- 30% refundable cash credit (good as cash) with a maximum of $200,000 investment for a maximum annual tax credit of $60,000 per individual investor
- Ability to invest directly, or in a holding company known as a Venture Capital Corporation (VCC), which in turn can invest in one or more eligible businesses
- RRSP eligibility for VCC shares which can drive max tax savings up to 74% !
- Hassle factor – low; apparently administration of the program is fairly smooth with a minimum of red tape
More details on the BCECP program can be found in this succinct overview.
As a support document for the policy-makers there is an excellent recent study published by the Ministry on the effectiveness of the BCECP program.
A program like this implemented in Ontario would do wonders to re-invigorate our stagnating high-tech ventures, resulting in great economic benefits for everybody. There was an initiative earlier this year involving Terry Matthews of Wesley Clover and Bruce Lazenby of Invest Ottawa to have this included in the last provincial budget but it fell through. Now is the time to try again.
So, what are we waiting for? Let’s push our elected politicians to fulfill on their promises and provide support for startups, small business, and new ventures.