The Honourable Gary Goodyear, Minister of State for the Federal Economic Development Agency for Southern Ontario (FedDev Ontario)
November 29, 2011
Check against delivery
Good morning. Bonjour.
To begin, I would like to express my appreciation to the National Angel Capital Organization for hosting this summit and inviting me here to welcome all of you to this great annual event.
The theme for this year’s summit is "Champions of Angel Capital." An appropriate theme, since as investors who take a great deal of risk in supporting start-up and early stage businesses, angels also frequently share a number of invaluable assets with the companies they invest in: experience, advice and business connections. This spirit of entrepreneurial collaboration is what makes you true champions of our business community. Thank you for taking time out of your busy schedules to participate, share and discuss your ideas with your peers through conferences like this one.
Business productivity and innovation is of utmost importance to our economy. As you know, the economic recovery in Canada remains fragile. Headlines about the economic situation that continues to unfold in Europe provide frequent reminders that there are serious fiscal dangers and that we all need to tread with caution.
Our government is providing a good example to the world of how to keep one’s economic and fiscal house in order.
Both the International Monetary Fund (IMF) and Organisation for Economic Co-operation and Development (OECD) forecast that our economy will be among the strongest in the G-7 this year and next.
Recently, Moody's reaffirmed Canada's triple-AAA credit rating based on our "economic resiliency, very high government financial strength, and a low susceptibility to event risk."
Canada stands out among G7 countries as having the lowest net debt burden, and we're on track to balance our books. As the IMF declared recently, Canada has a " sound and credible plan to return to budget surpluses."
Forbes has also recently announced that it ranked Canada the best country for business in the world, up from fourth place in 2010.
But Canada cannot and is not resting on its laurels – we continue to prepare for the challenges ahead. That is why jobs and economic growth remain the top priority for our government.
Even before the economy faltered in 2008, it was clear to us that our country's economic future depended on innovation. The best contenders were fast, knowledge-based and technologically deft.
Our government has operated with this in mind, making cautious decisions with targeted actions. Our efforts would not have been possible if we did not have a steadfast and strong financial structure that has stood firm while others toppled.
We remain focused on completing the economic recovery. As outlined in Budget 2011, our government is committed to keeping taxes low, reducing the deficit, and chief among our goals, creating jobs.
This means focussing on growing Canada’s business advantage and continuing to build financial confidence.
The approach that we’ve taken is multi-faceted. For example, we’re supporting the Canadian Youth Business Foundation so that our young entrepreneurs can be given a strong head start.
We continue to work on reducing red tape to lessen the compliance burden on small businesses.
We’ve also explored a number of measures to foster commercialization and business innovation across the country.
For example, in southern Ontario, FedDev Ontario has been delivering the Applied Research and Commercialization initiative, which helps post-secondary institutions provide their applied R&D and pre-commercialization expertise to businesses that do not have the capacity to undertake such activities themselves.
This program has enabled 24 colleges and universities to work with more than 300 small- and medium-sized businesses to bring promising innovations to the marketplace.
Another of FedDev Ontario’s initiatives, the Technology Development Program, was recently cited in a report by the Mowat School of Public Policy and Governance as an example of direct support for innovation.
Designed to bring together research and innovation organizations, the private sector, post-secondary institutions and not-for-profit organizations, this program accelerates the development of large-scale technologies that will result in game-changing business opportunities.
These types of programs help bridge the gap that exists between research advancements and the marketplace.
Mowat contends that this type of direct support has the potential to “produce more value-added, world-leading commercialized products and services.”
That’s exactly what’s we’re trying to accomplish, and I believe that we’re on track to tackling Canada’s innovation underperformance.
It’s through programs and initiatives such as these that our government is delivering on its promise to maintain Canada’s fiscal advantage and build the foundation for strong businesses.
And it’s the Next Phase of Canada's Economic Action Plan that is helping us move this agenda forward.
As Minister of State for FedDev Ontario, I have had the opportunity to see just how keenly felt the economic downturn has been in communities across southern Ontario. This province has seen its economy change almost overnight.
Businesses and innovators across the province have been doing their part to keep Ontario competitive but we all need to work together.
FedDev Ontario has been and remains a partner in those efforts.
As some of you might know, FedDev Ontario was launched in 2009 in reaction to the global recession. Aligned with the government's goals of creating jobs and growth, we aim to help southern Ontario innovate, adapt and grow, knowing that innovative ideas are the building blocks for long-term economic stability and prosperity.
Since its creation, the Agency has helped deliver locally on Government of Canada priorities such as investing in infrastructure and building a knowledge-based economy. We have invested in innovative projects to benefit the speed and volume with which businesses can reach the market.
In fact, the Agency has been working to address some of the major trends we’re seeing that may impact Canada’s future prosperity.
We know that science and engineering degrees make up only about a quarter of all new degrees in Canada.
That’s why FedDev Ontario has created programs designed to inspire young people to pursue an education in science and engineering, and also to prepare our scientists and engineers for the workplace through training and mentorships.
We also know that Canada’s productivity ranking has dropped from third among the 20 countries in the OECD in 1960 to 15th today.
That’s why FedDev Ontario has been working to encourage business productivity and investment as well as economic diversification through programs such as the Prosperity Initiative.
It’s through this initiative that we’ve invested in companies like Gedex, whose ground-breaking geological imaging technology may revolutionize mineral, gas, and oil exploration worldwide.
However, it’s Canada’s shortfall in scientific and technological innovations that has most impacted our productivity.
While Canada saw a brief resurgence during the tech boom of the 90s, our momentum has been slipping for nearly a decade, with productivity growth slowing to 0.7% per year throughout 2000 to 2009.
While the causes that underlie the productivity gap are complex, we know that our businesses often have difficulty accessing risk capital as the funding from venture capitalists has been on the decline for several years.
Between 2007 and 2009, venture capital investment in Ontario alone has dropped by 69% to $298 million. The latest report from the Venture Capital Monitor indicates that venture capital fundraising this year is headed for its lowest annual total on record.
Venture capital has traditionally backed many of what became Canada’s largest public and private technology companies. Typically, these companies have had growth rates that are significantly higher than the average of their sector, are R&D and innovation intensive, and are highly export-oriented.
This shift has resulted in an estimated $5 billion gap in investment capital for early-stage firms in Canada. And it has prompted our government to act.
Launched by the Prime Minister last fall, the Investing in Business Innovation initiative delivered by FedDev Ontario aims to provide improved access to financing for start-up businesses, boost private sector investment, and help accelerate the commercialization of new products and ideas.
It also provides targeted support for angel investor networks to attract new investors and develop new investment opportunities.
Since early 2011, we’ve announced a number of contributions for early-stage businesses that have been recognized by the investor community as having the potential for high-growth and long-term economic benefits for southern Ontario.
I was pleased to make the first announcement for the Investing in Business Innovation initiative in Stratford, Ontario. Powernoodle, a technology company that has designed an online collaborative brainstorming platform, was able to attract investors from a local angel network who matched our government’s funding contribution by 200 per cent.
Since that time, our government has announced support for start-up companies throughout the region: eSentire in Cambridge, Chango in Toronto, Ultimate Kiosk in Niagara, Miovision Technologies in Kitchener and gShift Labs in Barrie, to name but a few.
However, today, we’re turning our attention to the investor who is filling that critical venture capital funding gap: the angel.
As you all know, angels provide risk capital for small- and medium-sized businesses at their start-up and early growth stages. This is important to Canadians because 98% of our businesses have fewer than 100 employees and account for nearly half of our country’s GDP.
While less than a quarter of all small- to medium-sized businesses are high-growth, they create most of our new jobs. Since angels have become the primary source of capital for these high-growth businesses, angel capital is more important than ever for job creation in Canada.
In September, my honourable colleague, Rob Nicholson, Minister of Justice and Attorney General of Canada announced our government’s support for the Niagara Angel Network, which is already assisting local start-up companies with high potential for growth, profitability and job creation.
Today, I’m pleased to announce that our government will invest more than $2 million to four angel networks and two organizations representing angel networks across southern Ontario.
These investments will allow Golden Triangle Angelnet, Georgian Angel Network, PARTEQ Innovations and York Angel Investors to undertake outreach activities to expand their membership bases.
The angel networks supporting our rural communities provide a vital service to their business communities.
That’s because start-up companies in rural areas have little access to the ecosystem of incubators, technology parks and R&D labs that urban centres enjoy.
Angels, true to their name, help high-potential innovators in both rural and urban centres fly higher.
The National Angel Capital Organization, as well as their spin-off organization, the National Angel Organization – Ontario are also benefitting from today’s funding announcement.
This investment will help the organizations develop online resources, tools and services as well as promote outreach activities that support the angel community, and help attract new angels, particularly from out of province and abroad. Entrepreneurs will also now find it easier to connect with angels through networking and online matching tools.
We want to help bring greater visibility and knowledge about the angel investor community. Recent research conducted by the National Angel Capital Organization, in collaboration with the Government of Canada, has brought to light the impact of investments made by the angel community across Canada.
In fact, our government is working to support angels from coast to coast to coast.
First Angel Network, with more than 100 members, has been investing in Atlantic Canadian businesses, thanks in part to support from the Atlantic Canada Opportunities Agency. It was recently reported that the network’s $8 million investments in 18 companies has leveraged more than $50 million for those businesses – a significant coup for the region.
The BDC has a long history of investing with angels and building relationships with angel networks to build a stronger capital ecosystem in Canada. For example, in Western Canada, BDC sponsors Angel Forum Vancouver, which was founded in 1997 and has helped presenting companies raise more than $30 million in investments.
I think it’s clear that support for angel investors is a winning proposition: by unlocking investment capital, angels are helping us keep skilled workers and patents here, and helping to create sustained prosperity for our region and our country.
It is through strategic investments such as these that the Harper Government is working to ensure that communities and businesses can continue to grow now and into the future.
By strengthening relationships between start-up companies, investors and our government, we are equipping southern Ontario businesses with the tools they need to succeed. To ensure that these relationships continue to flourish, we are encouraging applications from other angel networks and start-up companies on an ongoing basis.
So, I encourage you to have big ideas and ambitious visions. The great ideas coming from talented Canadians are only one part of the equation. Your work to make these ideas a reality is key.
As Warren Buffet once said, "Someone's sitting in the shade today because someone planted a tree a long time ago."
It’s the seeds we’re planting today that are giving our businesses the investment and support they need to thrive tomorrow.
On behalf of the Harper Government, I would like to congratulate all of you on the great work that you are doing and the contributions you have made in helping our country's economy be a global example during this critical time.
I look forward to seeing how these projects our government is supporting will contribute to our region’s economic resurgence.