The securities regulators in Alberta and Saskatchewan recently adopted a new measure designed to provide greater access to capital for businesses and broaden investment opportunities for investors in the region.
“This new exemption should expand the pool of potential investors in early stage businesses.”
The Alberta Securities Commission (ASC) and the Financial and Consumer Affairs Authority of Saskatchewan (FCAA) have adopted a new prospectus exemption that allows investors who self-certify to having certain financial and investment knowledge to invest alongside accredited investors.
“This new financing tool will allow investors who have financial or investment education, such that they can appreciate the risks of investing, to invest alongside accredited investors,” said Stan Magidson, chair and CEO of the ASC.
“This new exemption should expand the pool of potential investors in early stage businesses but with conditions designed to mitigate the risk,” added Roger Sobotkiewicz, chair and CEO of the FCAA.
The exemption is being implemented on a three-year pilot basis. It limits self-certified investors to investments of $10,000 in any one issuer and $30,000 across multiple businesses, in one calendar year. The investment limits won’t apply to an investment in an issuer listed on a Canadian stock exchange.
The new measure is a notable one for both Alberta and Saskatchewan’s startup ecosystems.
In Alberta, the provincial government is working to attract global technology firms and investment in order to bolster the tech ecosystem. Alberta’s tech sector has been growing in recent years. 2020 proved to be a record year for venture capital in the province with the CVC reporting $455 million, double the amount invested in 2019.
Saskatchewan has its own burgeoning tech ecosystem. In 2019, the province pulled in around $100 million in venture capital, according to CVCA, which represented more than the previous five years combined. While 2020 pulled in just $65 million, the province has still been working to build out its startup ecosystem. In 2018, the Saskatchewan Technology Startup Incentive (STSI) was created, becoming known as the most aggressive angel investment tax credit in Western Canada.
Like Alberta of late, the Government of Saskatchewan has made tech a key part of its strategy, including a goal to triple the growth of the province’s technology sector by 2030. Following a shakeup of innovation minister in November, newly appointed Jeremy Harrison told BetaKit he and the Saskatchewan government plan to continue prioritizing the sector, calling startups and innovation policies “extremely important” to the government’s approach in growing the provincial economy.