BC minister of jobs says new $500 million fund will support startups, scale-ups in province

BC minister of jobs Ravi Kahlon speaking at a presentation regarding InBC

Ravi Kahlon, British Columbia’s minister of jobs, economic recovery and innovation, said he expects the province’s new $500 million CAD strategic investment fund, InBC Investment Corp. (InBC), to open for business this fall.

Legislation Kahlon introduced this week aims to establish the fund’s structure and grant InBC’s chief investment officer (CIO) independence from both government officials and its government-appointed board. Once passed, Kahlon said he will announce the fund’s nine-person board of directors in May and then begin the search for a CEO and CIO.

“We’ve heard from companies in British Columbia, and I think it’s across the country, that there’s a need for access to capital,” said Ravi Kahlon, BC’s minister of jobs.

The Government of British Columbia recently unveiled the InBC fund as part of its 2021 provincial budget, which was released last week. Through InBC, the province aims to back startups and attract high-growth businesses, talent, and jobs to BC. The provincial government plans to support the fund with $500 million over three years.

Kahlon told BetaKit in an interview that InBC will support scale-ups and startups alike with “patient capital” and a mandate that reflects BC’s values: people, the planet, and profit.

“We’ve heard from companies in British Columbia, and I think it’s across the country, that there’s a need for access to capital,” said Kahlon. “And so for us, we want to make sure that we’re able to anchor and grow and scale up companies in British Columbia, but also ensure that startups have access to capital.”

“We are going to put an investment policy in place that has the values of British Columbians, which is people, planet, and of course, making a profit,” the minister added. InBC will make independent investment decisions based on criteria provided by the province, which may include how well a business promotes the decarbonization of the economy or reconciliation with Indigenous peoples. It will aim to achieve a financial return on investment.

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Kahlon said InBC, which takes after similar funds in Denmark and Ireland, will take equity stakes in companies but remain independent from the provincial government, leverage private and public sector investment, and operate based on a “triple bottom line,” measuring its performance based on social, environmental, and financial factors.

Although the fund is not specifically geared towards tech, Kahlon said he expects “a lot” of its capital will go to tech companies. According to recent analysis by HockeyStick, a funding gap might exist for early-stage BC tech startups.

“We’re going to be positioned to provide patient capital over a longer time, and then also pull in capital from other areas,” said Kahlon, who cited federal government grant programs and other investment funds as other potential funding sources.

InBC, which was initially announced back in September, began as a Crown corporation with a different name: the BC Immigrant Investment Fund. Kahlon’s legislation will convert InBC into a statutory Crown corporation.

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Before deciding to launch InBC, Kahlon said the province sought feedback from over 250 organizations ranging from business councils to tech associations. “It was a very deep consultation.”

“$500 million dollars is a huge investment by any measure and it was good to see Premier Horgan and Minister Kahlon talking about the need for the provincial government to [help] BC’s tech startups realize their potential and scale up,” Jill Tipping, president and CEO of the BC Tech Association, told BetaKit.

The BC Tech Association, an independent non-profit dedicated to growing the province’s tech ecosystem, was forced to close its 26,000-square-foot Vancouver Innovation Hub last fall after losing federal funding and, more recently, has been part of a group lobbying the federal and provincial governments for funding to bring a Scale-Up program to the province.

According to Tipping, a recent poll of BC Tech members found that their biggest challenge was a “lack of senior talent who have successfully scaled a company, closely followed by the lack of funding for the programs, services and organizations that can support and accelerate startups through the growth and scale journey.”

RELATED: BC tech orgs lobby federal, provincial governments for scale-up funding

“We hope the BC government will couple the creation of this $500 million fund with funding for the ecosystem supports needed to build a strong pipeline of companies, such as the ScaleUP BC platform,” said Tipping.

BC’s 2021 budget focused heavily on the COVID-19 recovery with support for businesses but had a limited focus on the province’s tech and innovation sector overall. In terms of new tech-related spending, the budget committed funding for cleantech and worker skills training, including $506 million for CleanBC.

“[The BC budget] reflects a province that is still focused on fighting COVID-19 and carrying citizens and businesses through the worst of the crisis,” said Benjamin Bergen, executive director of the Council of Canadian Innovators, following the budget announcement. “While the government’s efforts to help people weather the pandemic are critical, we were hoping to see a larger, more clearly defined vision for post-pandemic prosperity and economic recovery.”

Speaking with BetaKit, Kahlon called tech a key part of BC’s economic recovery plans. When pressed on the lack of specific measures in the budget to support that, Kahlon said this was because the budget “focused on the fact that we’re still in a pandemic, and there are a lot of variables that are still unknown. Our main focus was keeping our businesses afloat.”

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Regarding InBC, the minister said he expects the fund to open in the fall. The province is also currently starting consultations regarding its planned creation of a new innovation strategy, which Kahlon said will help guide future investments.

Kahlon said the government plans to put an investment policy framework in place to measure factors such as the amount of women-owned businesses that receive funding, the distribution of capital across the province geographically, and investment outcomes.

The government will table a report annually in the provincial legislature, and every five years, he said the province plans to commision an independent audit. Regarding the legislation he tabled this week, Kahlon said the province “wanted to make sure there was enough flexibility for the chief investment officer to make decisions accordingly.”

“There’s a ton of opportunity for us and you’re gonna see a considerable lot more, but we want to make sure that that we’re doing that, we have a plan, that everybody knows where we’re going so there’s some certainty in the market, and the dollars will flow after that,” said Kahlon.

With files from Meagan Simpson.

Photo of Minister Ravi Kahlon courtesy of the Government of British Columbia.

Josh Scott

Josh Scott

Josh Scott is a BetaKit staff writer who loves to tell Canadian business and tech stories. His coverage is more complete than his moustache.