Investment Future Forum: a capital idea for SME success.

FOR THE LAST 30 YEARS Canada has undergone a fundamental change in its economy from an emphasis on natural resources to technology and innovation. These days more than 85 per cent of the nation's gross national product (GNP) is being generated by small and medium-sized enterprises. They are, without dispute, this country's economic engine.

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The country's small to medium-sized businesses come in a diversity of sizes, sectors and growth stages. For the most part, small-to-medium enterprises, shortened to the acronym SMEs, are commercially driven businesses that are somewhere between the one-person "small office-home office" or SOHO, and a legally independent company with no more than 500 employees, and less than $50 million in gross revenues.

One thing is certain. The fuel for this multifaceted engine is capital.

From counsel to loans, grants to direct investment, Saskatchewan SMEs have access to a variety of business and capital resources.

business infosource, a no-charge service of the Canada-Saskatchewan Business Service Centre, offers entrepreneurs the information they need to start or grow a business in Saskatchewan.

"We've been known for helping Saskatchewan entrepreneurs get their businesses started, but we also have resources and tools that can help the developing business," says business infosource manager, Diana Matsuda. "From trade regulations and foreign market information to growth management and strategic planning tools, we have products and services to help Saskatchewan businesses thrive."

It's a great start--but something's missing. And that is the capital connection.

How do success-driven SME's meet their potential investors? Where do they go to learn the secrets of seeking capital? How do they connect with prospective investment partners?

Investment Future Forum 2004, hosted by Investment Saskatchewan and Saskatchewan Industry and Resources, is a springboard for the province's capital connection. The event is May 5 and 6 at the Delta Regina Convention Centre.

Showcasing 16 of the top SME's that applied to the Investment Future Forum selection team, the event promises to be a major step forward for many promising new and leading-edge companies.

These fast-rising stars are seeking $500,000 to $10 million in investment capital to start or expand operations, with the majority of their investment to be made in Saskatchewan. Prior to the Forum, the selected investees attended a two-day "boot camp," at which Deloitte and Touche helps them refine their business plan and target their investment needs.

Now in its second year, Investment Future Forum 2004 hosts about 175 participants, including venture capital companies, financial institutions and entrepreneurs, will attend the two-day Forum.

The Forum includes presentations by each investee company, high-profile business speakers such as Deidre McMurdry, host of Global TV's Moneywise, Blair Richardson, president and CEO of Bow River Capital Partners, Ilse Truernicht of Primaxis Technology Ventures Inc., as well as a trade show and networking receptions.

This year's list of selected investees represents a cross-section of Saskatchewan's most promising industry sectors--including biotech and life sciences, IT, manufacturing, and diamond and oil drilling.

It all comes together in an entrepreneurial showcase that highlights Saskatchewan as the investment destination of choice in 2004. For more information, visit the web site at: www.futureforum.ca

Investment Future Forum 2004 is just one mechanism in assisting SMEs seeking capital. A number of the Forum's participants, including host Investment Saskatchewan, are hard at work identifying means and ways to increase access to and the amount of venture capital in the province.

All agree it's critical to the province's economic growth strategy.

Located in Regina, PFM Capital Inc is a private investment management firm owned by a diverse group of deal makers, investment experts and business managers. Founded in 1989, PFM Capital focuses on equity management providing management to private venture capital funds, including Crown Ventures Fund and Prairie Ventures Fund. These Saskatchewan-focused funds have combined assets under management in excess of $50 million and have invested over $21 million in 14 Saskatchewan companies.

President and CEO, Randy Beattie says: "The continued growth of the Saskatchewan private venture capital industry is vital to small and medium-size businesses in Saskatchewan. These companies require the subordinated debt and equity capital to assist in the growth of their companies. It is well recognized that small and medium-size businesses are the driving force to strong economic growth in any economy."

Brad Munro, vice-president, investments at GrowthWorks Capital Ltd., manager of GrowthWorks WV Canadian Fund Inc., agrees.

"The private venture capital community must continue to grow and develop in order to provide the necessary capital required to commercialize and grow the technologies and business developed here in the province."

"The continued investment in the entrepreneurs of Saskatchewan will develop the business leaders of the future and enable them to further build and develop companies here in the province, which in turn provides significant employment and developmental opportunities for the residents of this province."

GrowthWorks WV Canadian Fund Inc. (formerly Working Ventures Canadian Fund Inc.) is one of Canada's largest labor-sponsored venture capital funds with approximately $260 million in assets under management. Over the past 12 years GrowthWorks WV Canadian Fund has invested approximately $64 million in 16 separate transactions in Saskatchewan. GrowthWorks seeks to invest in growth companies in three primary industry sectors: technology, life sciences and advanced manufacturing.

Golden Opportunities Fund Inc. is Saskatchewan's first and largest provincial labor-sponsored fund. As the No. 1-selling labor fund in Saskatchewan for the past three years, Golden Opportunities has raised more than $45 million in capital from 8,000 Saskatchewan shareholders. The fund is diversified across all industry sectors, having completed 35 transactions in 27 Saskatchewan companies to date, and sustaining thousands of jobs throughout the province.

"Saskatchewan growth companies historically have not had the opportunity to access private venture capital. As a result, Saskatchewan companies were forced to implement business plans and strategies that were more conservative in nature, impairing their growth," says Grant Kook, CEO/chairman of Golden Opportunities Fund Inc.

"By growing Saskatchewan's private venture capital community through labor-sponsored funds you accomplish two things: a growth of Saskatchewan's businesses you begin to see a positive attitude as residents become

aware of local success stories due to their investment; and secondly, a source of venture capital to growth-oriented companies managed by fund managers who understand the local economy and the opportunities at home. These accomplishments will ultimately move our province forward."

For Roland Duplessis, fund manager of the Clarence Campeau Development Fund, the objective is clear. "The availability of capital for new and expanding business in Saskatchewan is critical. The increase in Metis businesses over the past seven years is a clear indication of what can be accomplished when capital is made available."

The purpose of the Clarence Campeau Development Fund is to provide capital where currently there is a void for Metis clients. Established by the province and the Metis Nation in 1997, the fund has an asset base in excess of $10 million.

Ag-West Bio Inc. (AWB), a nonprofit organization involved in early stage investment in Saskatchewan's bio-based sector, has invested over $9.3 million towards 37 companies. The impact of AWB's investments includes sector expansion, economic growth, and highly skilled job creation.

"Recently, Canadian governments have invested heavily in life science research and development," says Dr. Ashley O'Sullivan, president and CEO of Ag-West Bio Inc. "Much of that innovation is now moving toward commercial reality. What is needed most is targeted pre-seed and seed-stage investment to enable Canada to maximize its return on investment and impact for the Canadian economy."

Armand Lavoie, VP Western Canada, Foragen Technologies Management Inc. is optimistic, "Saskatchewan's private venture capital community is rapidly growing both via labor-sponsored funds and via industry-specialized specialty funds," he says. "Companies looking to raise financing now have access to a diverse group of funds targeting companies at different stages of growth and in different industry sectors."

Foragen is a venture fund created to help commercialize early-stage, advanced agricultural and food technologies from Canadian sources. Their mandate is to support the creation of companies by providing seed capital, business and technology management expertise and networking opportunities.

Kevin McGarry, president and CEO of Western Life Sciences Venture Fund, a subsidiary of Lombard Life Sciences operating out of Winnipeg, says "Saskatchewan has some key advantages for moving the human life sciences industry forward--great infrastructure, a solid base of human resources and an innovation agenda within the government and university administration."

"Unfortunately, Saskatchewan is currently suffering from a 'capital chasm' in the human life sciences, particularly at the early stages of commercialization." Mr. McGarry believes Saskatchewan can be a major participant in the human life sciences industry, but increased focus and capital are required.

The $90-million Western Life Sciences Venture (WLS) Fund is managed by Lombard Life Sciences and has the mandate to create, acquire and develop emerging life sciences companies. Over the past eight months, the WLS Fund has helped launch two Saskatchewan companies based on technology developed at the University of Saskatchewan.

Investment Saskatchewan Inc. was restructured and renamed in September 2003 and is governed by an arms-length board of directors. It presently manages a portfolio of direct investments and investments in funds totalling $605 million.

Investment Saskatchewan's mandate is to improve the availability of private investment capital available in the province for Saskatchewan businesses and those proposing to do business here. The corporation is committed to finding new ways to ensure capital is available for businesses that will contribute to the economic growth of Saskatchewan.

"As a corporation with an independent board and a mandate for the future, we're doing what we can to grow Saskatchewan's economy through strategic investment--whether that is direct, or through investment funds," says Investment Saskatchewan board chair Maurice Delage. "Our vision is to be an acknowledged leader in the development of new ways for governments to work with private sources of capital and businesses that require capital."

"We're committed to facilitating the growth of Saskatchewan's venture capital community and Investment Future Forum is just one demonstration of that."