Bryan Watson, a long-time player in Canada’s tech ecosystem and most recently a partner at Flow Ventures, has joined Venbridge as its senior vice president of business development.
“The goal, really, is to grow the company,” Watson told BetaKit.
Watson estimated that the majority of Venbridge’s business will come through SR&ED tax credit advances, an area he has expertise in.
In his new role at Venbridge, Watson will help attract companies interested in obtaining alternative lending, including through grants, SaaS revenue financing, and digital media tax credit financing.
But Watson estimated that the majority of Venbridge’s business will come through Scientific, Research & Experimental Development (SR&ED) tax credit advances, an area that Watson has expertise in. Watson’s previous employer, Flow, specialized in preparing and maximizing SR&ED claims.
SR&ED claim advances is a product that Venbridge launched in 2021.
Watson will be responsible for building the stable of clients, the network of partners, bringing in new business, and spreading the word that Venbridge is a viable complement to other funding strategies.
While Venbrdge is sector-agnostic when it comes to lending, clean tech is a particular passion for Watson. He still currently holds dual roles as the managing director of CleanTech North, an accelerator; and as the founding director of the Ontario Clean Technology Industry Association.
“I spend a lot of my time in clean tech because I like to breathe,” Watson said, only half-joking. “If I look at all my clean tech companies, for example, I know that they’ve classically been starved for capital. I know there’s interesting new tax credits and grants that are coming out, and I know if they can’t access that in a cash-flow efficient way, by 2030 we’re all going to be on fire.”
He hopes, for example, that Venbridge could help companies smooth out their cash flow in order to help them build two or three carbon sequestration plants, or get more electric vehicles on the road. “Those are the sorts of opportunities that I think really will have both the financial and environmental impact.”
Even so, Watson pointed out that Venbridge will not be limited to cleantech. “If there’s a SR&ED claim there, we are as diverse as the companies claiming SR&ED or accessing grants.”
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The SR&ED Tax Credit program is Canada’s single largest research and development incentive, according to the Business Development Bank of Canada (BDC).
Through SR&ED, Canadian companies can earn an investment tax credit of 35 percent on the first $3 million in qualifying expenditures, including salaries, capital, consulting fees and materials. The tax credit stands at 15 percent for amounts above $3 million. For most companies, these credits take the form of a cash refund.
The SR&ED program provides more than $3 billion in tax incentives to over 20,000 claimants annually, making it the single largest federal program that supports business R&D in Canada. The program is administered by the Canada Revenue Agency (CRA).
In its most recent budget, the federal government said it intends to review the SR&ED program over concerns that’s not effective in stimulating beneficial research and development in Canada.
Watson said in the current economic climate where equity is becoming more expensive or difficult to access, it seemed like a good time to join Venbridge in order to be on the funding side to assist companies with their cash flow.
“Venbridge works on the financing of alternative assets like your SR&ED claim that is being accrued throughout the year, so you don’t have to wait to file your taxes at the end of the fiscal year, then wait for CRA to come and process it, and wait for the cheque to arrive in the mail in advance against that accrued amount,” Watson said.
Venbridge is not alone in the SR&ED space. Vancouver-based Boast.ai secured a $100 million credit facility in 2021 for its own up-front SR&ED loans offering. Calgary-based debt and financing advisor OKR Financial launched a $150 million fund in 2021 that promised lending for SR&ED tax credits as well. Other Canadian operators providing advanced funding for SR&ED include: Easly, Finalta Capital, Fundsquire, and CAE Capital.
Watson noted that a United States-based, multi-billion-dollar hedge fund backs Venbridge.
He said the Venbridge team he is working with is small and nimble, and that while he comes into Toronto as needed, he is based out of Bobcaygeon, roughly 95 minutes northeast of Toronto, and immortalized in the Tragically Hip song of the same name.
Watson hopes that if Venbridge can help smooth out cash flow for companies or aid them in accessing their SR&ED credits or other receivables now, and that gives them the runway they need, then he will end up reading fewer stories about layoffs in the tech sector.
Featured image courtesy of Bryan Watson.