The Way I See It… by Michael C. Volker
Bright technology future in B.C.
I often get asked by my colleagues back
East and in Silicon valley about the outlook for the
advanced technology sector in
Although the technology sector,
especially in IT, has been in a slump for the past few years, there are some
good reasons for feeling upbeat. The public markets appear to be breaking out
of the bearish trends we’ve experienced for the past three years.
In BC, the mood swung when
While the broader markets represented
by the Dow, the S&P500, and the S&P/TSX all gained approximately 25%
during the year, the Nasdaq – the technology
bellwether - advanced a cool 50%. BC’s T-Net20 index which tracks the top 20
public companies based in BC performed even better – up by 83% during 2003.
Even though we didn’t seen much action
on the IPO front, as soon as Crystal Decisions of Vancouver took the bold step
of announcing one at US$172 IPO, it was quickly bought out by Business Objects
for US$820 million at almost three times its annual revenue.
In October, Honeywell bought
Surrey-based and publicly traded Silent Witness Enterprises for $84 million.
And, numerous smaller companies such as ActiveState
and WestBay Semiconductor were also gobbled up by
foreign acquistors who appreciated the local talent.
These buy-outs add to the growing pool
of angel investors – entrepreneurs investing in, and mentoring, new start ups.
Indeed,
The innovation climate in BC got a
boost this past year from two very significant government reforms.
First, BC’s Small Business Venture
Capital Act was revamped last Spring to bolster capital formation – up to $200
million - by providing a 30% refundable tax credit to investors and making the
program more accessible to smaller investors. This created the formation of
numerous VCCs – Venture Capital Corporations
including a few publicly offered ones such as the BC Discovery Fund and the BC
Advantage Fund. Each of these is attempting to raise
up to $10 million by February, 2004 but by year-end, they were well on their
way to hitting that target.
Second, the BC Securities Commission’s
goal of eliminating red tape and simplifying regulations resulted in companies
being able to raise capital from arms-length investors by using new,
less-onerous (i.e. less costly) exemptions from full-blown prospectus
offerings.
Whereas these initiatives helped in
bringing more private investors to tech companies, traditional venture capital firms
showed promise as well. Ventures West, for example, raised $53 million in its
eighth Limited Partnership Fund. Newly formed Yaletown
Partners closed a $30 million limited partnership after tenaciously working
this goal since the 2000 blowout. The November IT Financing Forum which was
held in
The last piece of good news for 2003
was the launch of
The way I see it, there are many reasons to be bullish on the tech
sector. The increased investment in R&D (check out the building boom at
BC’s universities) by the Federal government, combined with a favorable local climate
for innovation, makes BC the place to build your technology venture.
Michael Volker is a high technology entrepreneur and
director of