Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 20 - Evidence - March 24, 2011
OTTAWA, Thursday, March 24, 2011
The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:35 a.m. to examine the present state of the domestic and international financial system (topic: the financing of innovations in Canada).
Senator Michael A. Meighen (Chair) in the chair.
[English]
The Chair: Good morning, colleagues. I call to order this meeting of the Standing Senate Committee on Banking, Trade and Commerce. I am Michael Meighen. I am a senator from Ontario, and I have the honour to chair the committee. Allow me to introduce the senators who are present. The distinguished deputy chair of the committee is Senator Hervieux-Payette from Quebec. Senator Gerstein is from Ontario; Senator Kochhar is from Ontario; and Senator Oliver is from Nova Scotia.
[Translation]
Nova Scotian senators are always very proud of their origins. To my left, we have Senator Ringuette from New Brunswick, Senator Dawson from Quebec, who is visiting, at least for today if not longer.
Senator Dawson: In the Liberal Party we do not use the expression just visiting.
The Chair: Rightly so. I understand.
[English]
Senator Moore is from Nova Scotia, and Senator Banks is from Alberta. He is another distinguished visitor who we hope might be a member of this committee one day. Those are the people who will be interested in our witnesses' testimony today.
[Translation]
Allow me to remind those watching our proceedings at home on CPAC, the public affairs cable channel, that they can consult, online, the transcript of previous committee meetings and reports by clicking on the ``Committee Business'' link on the Parliament of Canada website, at www.parl.gc.ca.
[English]
Colleagues, our hearing today falls within the context of our study of the present state of the domestic and international financial systems. Specifically today, we will look at the financing of innovation in Canada.
[Translation]
This morning our witnesses are representatives from the Business Development Bank of Canada. Earlier this year, in February, the Business Development Bank of Canada published a document entitled Venture Capital Industry Review. This report is the result of a strategic review conducted in the spring of 2010 on the Business Development Bank of Canada's venture capital activities.
[English]
Joining us from BDC, to give us their insights into their special study topic, is Edmée Métivier, Executive Vice President, Financing and Consulting, who has already appeared before us. We are glad to have you back. She is accompanied by Mr. Jérôme Nycz, Interim Executive Vice President, Investments and Senior Vice President, Strategy. Welcome to you both.
If either of you have opening comments, we would welcome them. We hope that you will be prepared to answer questions from senators afterwards.
This is a very general opening session. We hope to embark in due course on a specific study of the financing of innovation in Canada, comparing it to schemes that are present abroad to see if the situation warrants recommendations for improvement. This is a preliminary meeting. Given the fact that BDC did undertake this study earlier this year, we would be interested in your findings and comments on the subject.
Edmée Métivier, Executive Vice-President, Financing and Consulting, Business Development Bank of Canada: Mr. Chair, with your permission, I will make a few comments, and then after that we are open for discussion.
[Translation]
Honourable senators, Jérôme Nycz and I are very pleased to be here before you this morning in order to represent the Business Development Bank of Canada. Our president and CEO, Jean-René Halde, could not be here this morning, but he sends you a warm greeting.
You requested us to focus on innovation. I would like to share with you both our opinion and observations on what is occurring in our market. Our market knowledge is based on our relationships with 29,000 client entrepreneurs. According to our most recent data, these clients supported approximately 500,000 jobs and had exports totalling $21 billion. They also have to face numerous competitors from other countries, competitors that have international ambitions, are very innovative and often can tap in to direct support from their governments.
[English]
My first observation is that we often confuse innovation with invention or define it too narrowly. This is a mistake. Innovation is very broad and applies to all firms, not just high-tech firms, and Canada needs far more of it.
When experts talk about Canada's productivity problem, many of them, notably the Council of Canadian Academies, CCA, point to weak business innovation. We believe this link is accurate. To become more productive — to create the prosperity Canada wants and needs — we need individual entrepreneurs in all sectors of the economy to make innovation their business strategy.
Germany is a good example of a nation that uses innovation as a business strategy. Their recipe is simple: family- owned firms, dedicated to continuous improvement, that seek to dominate global niche markets. It is working: Germany has many mid-sized companies that occupy the top three global positions in many industry sectors, such machine equipment.
The good news is that we also have examples of similar success in Canada. We have clients in traditional sectors who are successfully innovating by creatively improving existing products, services, processes or business models. The breadth of these innovations is worth repeating: products, services, processes and business models.
I will tell you about one of these innovators. His name is Jim Hogan, from Nanaimo, British Columbia. His story is instructive.
Jim's company, VMAC, sells mobile air compressors, which construction workers use to power tools such as nail guns and jackhammers. There is nothing high tech or glamorous about air compressors. However, many people use them.
Jim looked at these heavy, bulky compressors and saw a problem that everyone else had stopped noticing. He realized — even if his clients did not — that they would prefer a lighter, smaller one and that they would also — and this is key — pay for it.
Therefore, he decided to create a new product by improving an existing one. He made this innovation goal his business strategy and invested in research and development. VMAC has 70 employees, 10 of whom do R & D.
Jim succeeded. VMAC developed a technology that made the air compressor lighter, smaller and more powerful. Previously, clients had to tow their compressor behind their truck like a trailer. VMAC's product is small enough to be placed under the front hood.
You can find VMAC's compressor in thousands of trucks around the world. Actually, Jim did not only innovate but changed an industry and created an international market worth millions of dollars.
If you were to meet Jim, you would not see a scientist in a white coat. You would actually see an ambitious entrepreneur with an eye for opportunity. You would also see managerial skills and competence. You would see someone who was able to get the financial support he needed.
When we observe Jim and others like him, we also see that innovation does not happen by accident; it takes a conscious, purposeful decision. We see that those who succeed are those who have made it a central part of their business strategy. Also, it is far more likely to succeed when it is based on knowledge or insight about what clients want and need. Finally, it requires investment, both in terms of financing and also in terms of expertise.
The main thing to remember is that innovation is broad: new ways — often incremental — of improving existing products, processes, services and business models. Invention is different. It is narrower — the discovery and development, often through technology firms, of strikingly new and different products and services resulting from R & D. We need both; it is not either-or. Our challenge is to pay greater attention to innovation and support both of them.
[Translation]
As you know, Canada has not been able to convert its significant investments in research and development into a corresponding number of large technology corporations. But contrary to what the vast majority may think, this is not simply about money. In addition, and unlike another very widespread belief, marketing is never as straightforward or as certain as one would think.
Jérôme Nycz, who is here with me, recently supervised a complete analysis of Canada's venture capital sector. Copies of his report have been made available to you. The findings are not very heartening. This sector is much more hampered by a range of deep-seated structural problems than it is by normal market fluctuations. The lack of venture capital investment, despite how important this obviously is, is not the only main problem.
Indeed, there are many issues at play. Canada does not have enough entrepreneurs and financiers able to provide capital and advice. Nor does the country have enough venture capital funds of adequate size managed by experienced professionals with connections throughout the world.
Finally, too much capital is allocated to funds with average or mediocre yields, to the detriment of funds that perform much better. On the whole, the industry is essentially caught in a vicious circle: poor yields, diminishing investments, sometimes non-functional investment banking groups, and, as a result, institutional investors are reluctant to put capital into this asset category.
To reverse this trend, we must restore investor confidence in that category of assets by ensuring that the industry can become profitable once again. The change most likely to help improve performance would be the emergence of a greater number of funds of the appropriate scope and scale.
At the Business Development Bank of Canada, we will support that objective through the implementation of a strategy that we would be pleased to speak about in greater detail, if you so wish.
[English]
On commercialization specifically, we feel it is important to emphasize the absolutely essential role played by entrepreneurs. They are the people who take risk to convert ideas into useful, valued things that consumers want to buy. If they fail, there is no economic growth.
From our conversations with entrepreneurs, we have seen and learned that it is important to distinguish between investments that push and investments that pull. ``Pushing'' means trying to commercialize technology born out of curiosity and research with the hope that someone will want to buy it. ``Pulling'' means trying to commercialize technology derived from applied research and directed by information about what consumers and businesses find valuable and desirable. We recommend more pull.
Before concluding, let me say that it is important to remember that risk capital is more than just venture capital. Entrepreneurs often find it very difficult to get financing for the many steps needed to bring products to market — some types of applied R & D and trade missions, for example. Many financial institutions hesitate to finance projects such as these simply because it is difficult to assign a value to them. Assigning value to intangible assets, such as intellectual property, distribution networks and branding, is still somewhat of an art and not a science.
In Canada, we pay much attention and care to the management of technology risk — the risk entailed in developing the technology. Our clients say that they would also welcome more support for managing market risk; that is, the risk entailed in bringing the technology to market. When we observe those who fail — and we do at BDC — and those who succeed, we see that overcoming market risk is critically important, as well.
In conclusion, at BDC, we see a gold mine of opportunity in defining ``innovation'' in a broader, more comprehensive way. It is any action that brings value to a company, its stakeholders and the community in which they are operating.
We believe that ambitious, innovative and internationally minded entrepreneurs such as Jim Hogan, for instance, are critical to building a more productive, competitive economy. Simply put, Canada needs more Jims.
Our aim is to find them, support them with the financing and advice that they say that they need and to hold them up as examples for everyone to see.
For the venture capital industry, we wish to do our part to improve Canada's track record on commercialization and supporting profitable ventures. We can only do this, though, by supporting the entrepreneurs who are trying to do it.
I thank you for your attention, and Mr. Nycz and I would be pleased to answer your questions.
[Translation]
The Chair: Thank you very much, Ms. Métivier. On behalf of the members of the committee, I can say that your brief is of extreme importance and it is very well written. You have addressed a number of issues that will no doubt be the subject of questions from members. In fact, I already have a list. I would like to ask you the first question.
[English]
I think I know generally the answer, as most members of the committee would. However, here in Ottawa, we hear much about the necessity for Canada to improve its productivity. It does not seem that any political party has found a way to make that sexy, if I can use that term, in political terms so that voters rush out and support it. However, I think we would all agree that it is critical; we have been led to believe that it is critical that Canada improves its productivity. What is the relationship between innovation and productivity?
Ms. Métivier: That is a very good question, and one that we have been wrestling with for the last decade at BDC.
When we talk to entrepreneurs about productivity, their eyes glaze over most of the time, as you know. We have had to try to talk differently to them. We mostly talk about how they can grow their sales. Throughout the process of growing their sales, they have to think about how they can become more global and enter new markets. They have to think about how they can extend their product lines. Innovation is linked to that.
We find that when going through the motions of trying to increase your sales, you are paying attention to your productivity at the same time. If you invest in information and communication technology, or any kind of technology, and you master it, then you start being able to innovate and look at different marketplaces. It is not something that you can disconnect from what entrepreneurs are seeing in their business plan. It has to be attached together.
When we sit with an entrepreneur, we do not talk about productivity. We talk about growth, extension of product line, new services and entering new markets in Canada or elsewhere. Chances are that we talk at the same time about ways for them to improve and be more efficient. That is how we link it in the discussion that we have with them.
Senator Oliver: Thank you for your overview. It was indeed just that, an overview. You have given us a skeleton, and there is not much meat on the bones; that is really what I would like to hear from you.
I do not necessarily agree with your description of the difference between innovation and invention. I am aware of your example of Jim Hogan. However, let us say that a man and a woman have been working for five years on something in their garage, not something new but taking something that already exists and wanting to improve it the way that Mr. Hogan did. Will you say that that is an invention out of their garage or that that is an innovation? It was not clear from what you said.
It seems to me that before we can have good, new public policy in Canada on anything, we need to have good research. I am hoping that we can get a list of good research from you that has been done in other countries, such as Germany and the United States, so that this committee can look at which countries are successful in funding innovation, what they have been doing and how they have done it. I would think that you would have that information available; that would be useful to the committee.
A number of senior people in Canada have looked at this, included the former Clerk of the Privy Council, Kevin Lynch, who had a major interest for decades in commercialization, innovation and start up. He had a number of studies done within the bureaucracy, and we still do not have a good policy in Canada.
I would like to know whether you have done any particular study of what they have done in Silicon Valley in California and how that is funded, because they seem to have a much better venture capital system there than we have ever had in Canada. What do we have to do to emulate that?
Ms. Métivier: Thank you for the question. I will address the first question, and then I will ask Mr. Nycz to talk about the research as well as the Silicon Valley question on venture capital.
You gave the example of someone who is taking something that exists and bringing value to it. We would, in our definition, consider that innovation. When we talk about invention here, we are talking about something that has never been done before. We make the distinction because many people think that innovation is not accessible to most companies. We have a million companies in Canada that employ people, and we have another million that are self- employed. If we were able to convince the million small and medium enterprises in Canada that they can innovate and continue to progress, we would have a lever that some countries are putting forward. That is what I am saying. That is why we distinguish between the two.
If you only talk about the inventor in his garage, it does not resonate for the million companies that are sitting next to it. That is why we make the distinction. When we talk to our entrepreneurs, we say that innovation is everyone's business. It is BDC's business and everyone's business.
Jérôme Nycz, Interim Executive Vice-President, Investments and Senior Vice-President, Strategy, Business Development Bank of Canada: I will be happy to look into the list of studies to support your work on innovation and supply a list of research that we have used for our legislative review document, and also our venture capital study. I will be happy to follow up on that.
On what is happening in Silicon Valley, when we did our study on venture capital, we reached out to advisers in Israel and the U.S.; Josh Lerner was also an adviser and Réal Desrochers from California State Teachers' Retirement System, CalSTRS. In the BDC portfolio, we also have over 40 U.S. investors involved with our investee companies, so we are in interaction with them constantly.
The value they bring is network to anchor companies. You will see in a study provided to you that very few anchor companies in Canada, large technology companies, are able to strike alliances with smaller nascent technology companies. Access to the client is key to growing technology companies, and we seem to have fewer anchor companies in Canada, so we have less access. What they bring and what the U.S. investor brings is that access.
They also come in with deeper pockets, so they can put more money in the company and grow the company faster. They put in twice as much money at the early stage in nascent companies and twice as much money in the later stage. Deeper pockets and network seem to be key to success in Silicon Valley.
Senator Oliver: How do we go about getting the anchor companies in Canada?
Mr. Nycz: That is an excellent question. We need to have funds that can support companies longer. I will give an example. In the early 2000s, the perception in the market was that you could invest in a company that was after the late 1990s bubble, and, within three to four years, get out of your company and recover your financing. Now the average age of our portfolio companies is 7.5 years, and it takes a lot of money to sustain a firm that has 50 employees and is burning $1.2 million to $2 million a year just in payroll. You need to have deeper pockets to grow the company and not do an early sale to a strategic partner or an early initial public offering, IPO. You will see in the study that Canadian IPOs are half the size of U.S. technology firms doing an IPO in the United States. Even Canadian companies doing IPOs on the NASDAQ average around $96 million versus $124 million for U.S. comparable companies.
We tend not to have enough money to support the companies for long periods of time, and we tend to exit too early so that the company becomes a bit of an orphan company on the stock market.
Senator Banks: You mentioned Germany as an example of a success story because it has a large number of relatively small but world-dominant companies — mostly family-owned I think you said. Is that an accident? Is it part of the German nature or is it a result of, in some way, a national program directed by someone?
The second question is that there is a conventional wisdom in Canada that Canadian banks are, relative to other banks in some other countries, risk-averse, and nothing will guarantee failure more than under-capitalization of a new venture to which Mr. Nycz just referred.
Is that perception true? I am talking about the normal banks — the chartered banks, I suppose. Do they need to belly up to the bar more in this respect?
Lastly, is there an improvement, in regard to your pull example, in the commercialization of those things that are innovative and are found at Canadian universities?
Senator Hervieux-Payette: You talk about the banks, and they have their investment branch, which is their security branch. The formal bank under the Bank Act is operating under certain rules and the investment bank, owned by the large bank, is another entity. Could you be precise about which one you are talking about?
We have allowed them to work as one unit. We do not expect a conventional bank to go very far in the risk management, but rather that is the other bank. Could you clarify so that we get an answer that is specific to which decision-making process we address?
Senator Banks: I am not sophisticated enough to know the answer to that question. I have been involved in a few small businesses. I am talking about the guy who walks through the bank door at CIBC or the Royal Bank and asks for help because he thinks he has a good idea.
I believe that is where most small businesses first go. They might be directed to a venture capitalist if they can find one somewhere, and that venture capitalist might be owned by a bank. However, I think most people tell their bank manager that they have an idea and need help with it. There is a perception about most bank managers in Canada. I think it was Ms. Roosevelt who said that the things that count the most are not necessarily the things that are most easily counted. There may not be a field full of pipes that you can count and to which you can ascribe a value. You talked about ascribing value to intangible assets or to an idea or to innovation. I am talking about those people because I was one, and I do not know about the other people. I just know that I will go to CIBC, Royal Bank and BMO, for example, to see if I can get a business loan.
Ms. Métivier: Senator Banks, Mr. Nycz will address the question about Germany. I will take care of the financial risk-adverse question. I am not entirely sure I understood the last question. Do you want to know how we improve the pull?
Senator Banks: Until relatively recently, universities were not, I think, actively involved in trying to commercialize some of the things that were developed at those universities. In fact, they had less interest in things being developed at universities that had commercial potential to them. I believe that has changed, and I am wondering if that is helpful with respect to what you are talking about.
Mr. Nycz: I can make a few points on the German example. What we understand from the German example is that it is part of their strategy. In family-owned businesses, many of those companies are older than 70 years. Intergenerational transfer is very important. They are also managed by external professionals. It is not always the son or daughter that takes over the company and manages; rather, they bring in professional management.
There is a very strong focus on continuous improvement, so they invest in productivity, enhancement and efficiency. They generate more money from the after-sale service than by the sale of the actual piece of equipment thereby creating a relationship with a client.
Ms. Métivier mentioned that there are 1,500 medium-sized companies that dominate or are in the top three of their niche market. They select the niche and create a relationship with the client and have subsidiaries in other countries that can service the client. An example that we know of is specialty ovens for a professional kitchen; they have 95 per cent of the world market.
It might not be a Silicon Valley example, but it is sustainable over time. There is a lesson for us to be able to support traditional companies but give them a long runway of investment.
Senator Banks: When you said that that was a strategy, was it a strategy of the German government?
Mr. Nycz: That is a good question. We have met with our counterpart in Germany. There is strong support from the development bank, KfW Bankengruppe, to support family-owned enterprise, so the answer is yes.
The Chair: Is that your counterpart in Germany?
Mr. Nycz: Yes. It is quite sizable.
Ms. Métivier: I will address the question about the financial institution.
Financial institutions in Canada, in general, do a fairly good job with the confinement of their risk appetite. When we are talking about intangibles, there are two components to your question. You can start a company, and that creates, in itself, a higher risk, normally, because it has no proven track record I would say. Therefore, a financial institution, when it is faced with an unproven track record, will perhaps be reluctant to finance that venture, depending on the kind of venture.
If it is a venture that has proven itself in the hands of other entrepreneurs, it may be less difficult. However, if it is something very new, that will require a different type of financing.
The other type of financing that is difficult is the one I was referring to earlier, which is intangible, meaning I am an established company, I want to enter a new market, and I do not have enough working capital to fund that new market going to China or going to another country, or even within Canada as a matter of fact. That also is somewhat difficult to finance simply because what value do you attach to the fact that you have a business plan?
In essence, that is why in most countries that have highly innovative companies, you will also see entities similar to BDC that help support those companies. That is why Germany, with KfW Bankengruppe, can do it. We recently conducted a study of many of the development banks across Canada to see how they were supporting their small and medium enterprises, SMEs, much more in that area.
You must have a balance with what the entrepreneur is bringing to the table in the venture. They have to put some skin in the game at the end of the day. You must consider what financial institutions can do for a country, because they also have their own shareholder requirements and their appetite for risk is predicated by the environment in which they operate. For instance, the Office of the Superintendent of Financial Institutions Canada, OSFI, will require certain things out of them. As well, there is the development organization present in the country. You have to look at that as an ecosystem and ask how we balance all of that.
On the last question about universities — and I will ask Mr. Nycz to add anything if I am lacking — I would say that universities are really trying to reach out to find ways of commercializing some of their research. Having said that, applied research probably needs to be reinforced in Canada. We do a lot of research at the very early stages. We need applied research to see if some of these concepts can turn into service products that the consumer wants. If there are no buyers, there is no business. It is as simple as that. We need to do more pull.
Mr. Nycz: BDC has extensive experience working with universities; 40 per cent of our portfolio companies emerge from university research. We do a lot of early-stage and seed investment, so we have met all the universities. Some models are working well. Many universities do licensing versus creating companies. There are many good revenue paths there.
The connection with the client is critical, as Ms. Métivier mentioned. To get the end client into the discussion early is critical to developing a product that will hit the market running and generate sales quickly. This is where a university can work with the entrepreneur and the business community to link the need of the client with the research being done to generate sales much earlier in the process.
Senator Banks: Thank you, chair, for your indulgence. I will provide a note of levity. It is about Mr. Nycz mentioning the difficulties of supplying funds over a long enough time and the gag around what Canadian banks used to be: They will give you an umbrella, but they want it back as soon as it begins to rain.
Senator Ringuette: I found your presentation stimulating and look forward to seeing our future direction.
You specifically mentioned your counterpart in Germany and the German way of looking at growth. Do you have any other examples that we should be looking at to increase our spectrum?
Ms. Métivier: Yes, we would be delighted to share the list with you. We looked at about 90 development banks across the world, some in Asia and in Europe, such as OCO Global in France. We would be delighted to share that with you.
Senator Ringuette: I would appreciate that.
In your German example, I would be interested to know what policies and programs have been put in place. What kind of support system is in place for investment in innovation and who provides it?
Usually, SMEs find it extremely cumbersome just to patent the innovation. Then there is the commercialization and the marketing. As of yet, we have not constituted a proper network for our innovator and entrepreneur community. It seems we are looking at it in bits and pieces and trying to fill in the dots. However, we do not have a constant supply of expertise or investors. There is a sequence to it all, but we do not seem to have put in place the proper network.
I have been in Taiwan, and I am amazed by what the government and the business community have put in place as a support network through all the phases. It is just amazing.
Ms. Métivier: If I may, I would suggest to you that we could provide a quick overview, or executive summary, of some of the development banks around the world that we looked at and what they offer. We compared BDC to some of them. We wanted to benchmark ourselves and understand what we needed to do in the next decade to continue to support our clients. We would be happy to share with you what we know about the top five or six organizations around the world, so that you can have an appreciation of what they are doing. We can help you with that.
Your points about a network are excellent ones. I will comment on two networks that BDC is working at putting together to support two things. One is venture capital, and I will ask Mr. Nycz to comment on the angel network and what we are attempting to do there. However, first, I will comment on the network of development banks.
This committee would know that we are going through legislative review. Therefore, we wanted to benchmark BDC with the rest of the world. We looked at various development organizations around the world and learned a lot about ourselves. We also learned about things we could do differently. While doing that, we made a connection with many of the development banks. Therefore, we are attempting to create a network, which we call the Union de Montréal, with development banks around the world to help SMEs when they want to go elsewhere or enter a new market. It is another way of looking at how we can support them.
You are right. The network and the knowledge have to be able to be transmitted. Today, technology allows us to do things that we could not even think about 10 years ago. With those networks, including the one with the development banks, we ask how we can help smaller companies, for instance, that want to enter a new market elsewhere in the world. Is there a development bank in that country that can accompany that client? The answer is yes, in some countries it exists already.
Do you want to talk about angels for a moment?
Mr. Nycz: Yes, thank you. I was happy to hear Senator Ringuette mention marketing because the end game is to generate sales. If there is a science that is under development in Canada, it is the marketing and being able to generate sales.
We have established with the Massachusetts Institute of Technology, MIT, an initiative in Quebec to help firms go from $5 million in sales to $20 million in sales within two or three years. It is all about being able to secure a client and develop the product in accordance with the needs of the client.
We are trying to put emphasis on the sale and marketing aspect to be able to create serial entrepreneurs.
On the angel-investment side, there is a bit of a renaissance in the venture capital market right now because of the lack of funding in the ecosystem. Many angels are getting together and generating tremendous value for technology firms. We have engaged discussion with First Angel Network in Atlantic Canada, and have we invested $5 million in the fund for Real Ventures in Montreal. They have a founder fuel program that does the training for the entrepreneur and helped them accelerate the development of their firm. They put in small amounts of money — $100,000, $200,000, $500,000 — to test the technology. They embarked on a training program so that they can develop the skill set to grow their company.
We are also involved in Ontario with several seed-stage funding, Venture Alberta, Alberta Deal Generator, and an angel forum in British Columbia. We are reaching out to those communities. We have a team of four people dedicated to that sector as an outcome of the strategic review. With those communities, they are best equipped to help the entrepreneur develop their company, reach out to their community and start generating growth for their company.
It is tremendously powerful. We are trying to help them organize, funding them, and funding the companies with which they are involved. It is a very important community.
Senator Ringuette: I understand that, but I want to go back to the different stumbling blocks that exist between the stages of investment, patenting, commercialization and marketing. An entire slate of expertise is needed. As the Germans recognize, your family-owned operation does not have all that expertise in-house.
What are the policies or programs that they have put in place to support those family-owned businesses through the different phases that are needed to generate the revenues?
Ms. Métivier: I would suggest, Senator Ringuette, that we provide you the answer in writing, if that is agreeable to you.
Senator Ringuette: Thank you.
The Chair: With respect to one of Ms. Métivier's comments, I cannot help but observe that the committee, in its report, recommended that the BDC be able to follow its clients.
Ms. Métivier: Absolutely.
The Chair: That would give Canadian entrepreneurs two opportunities for financing abroad, through you or through the equivalent organization in a host country.
Ms. Métivier: As you may suspect, if you arrive in a new country and have no proven records and no history, it is more difficult to get financing.
Senator Hervieux-Payette: Can I ask something about your report on Germany?
Ms. Métivier: Absolutely.
Senator Hervieux-Payette: Could you include in that the worldwide network they have with the chamber of commerce and the integration of the chamber of commerce with the department of foreign affairs? It is a mutual financing organization that has some antennae in the rest of the world. To meet the market needs, they have more or less a collecting organization that can support all the business people. When they are going there, they are supported by the chamber of commerce, but the chamber of commerce is doing a lot of research in the different markets where they are.
As far as I am concerned, nowhere in Canada can we see the role that is played by this hybrid organization, government export in fact, and the private sector, knowing that it is not voluntary that you finance the chamber of commerce; it is mandatory.
Ms. Métivier: We will try to include that in our research. Thank you.
Senator Greene: Thank you for your presentation; it was excellent.
I have two questions, which are not really related to each other. Can you tell me what you think might have happened to Mr. Hogan and his innovation had you not been able to support him? Do you keep track of people and ideas that you are not able to support?
Ms. Métivier: That is a very good question. Mr. Hogan has been a client of BDC for a long time. You are asking me hypothetically whether we would have known Mr. Hogan if we had not financed him, and the answer is no, we would not. Would Mr. Hogan have been able to grow like that? It would be presumptuous for me or for BDC to think that we were the only reason that he succeeded. I do not think so. Mr. Hogan is too much of an entrepreneur and a go- getter. He would probably have found another way to get his project off the ground.
To some degree, we are attempting to track the projects that we are not supporting. We now have a system that allows us to gather some information, understanding that sometimes it is impossible to see what happens with companies in particular. It is hard for us to track that over time.
Senator Greene: I am interested in the pulling and the pushing. You indicate that you recommend more pull. I think I agree with that, but it occurs to me that most of the Internet industry and the computer industry, at least initially, would have been on the pushing side of things. That is where the real money is and where the game changers are, et cetera. That side also carries more risk.
Ms. Métivier: That is why we say that it is not an either-or; it is an and.
Senator Greene: I understand it is not an either-or, but that side certainly carries more risk. I think the pulling side is easier for you, or for any other investor, to become involved in because the end result is easier to visualize and the risk is lower.
It seems to me that really the recommendation should be on the push side, the more I think about it, rather than the pull side because that is where real change can happen.
Ms. Métivier: My view is that you must have both. If you are focusing solely on a handful of companies to do dramatic innovation or game-changer innovation, there is definitely high risk attached to that.
Why are we recommending the pull? I am going back to the question that Senator Oliver asked earlier. We have a million companies in Canada, SMEs and a couple of large companies. They all have to be innovative in their way. However, when you are trying to innovate, you also have to ensure there is a market for it.
To your point, we have seen many technology companies started on the push. Some failed because of that, too, and were replaced by the next wave that came into the market and used part of their ideas. However, they actually went to the consumer and the market to understand the needs, and then changed the game. That is how they reacted, if you look back in history.
I do not know whether Mr. Nycz has any thoughts on the push and pull aspects.
Mr. Nycz: Ms. Métivier is correct that it is a balance. For many of the companies we back, it takes $10 million to $40 million to grow. Their first client is often in the U.S. Profound Medical Inc. is a company that is involved in treatment for prostate cancer, directed by magnetic resonance imaging, MRI. They are doing work with the Cleveland institute. The capability of some of those clinics to be able to test technology early is very good for our companies. If they are able to show strong results through clinical trials, they are able to sell everywhere in the United States.
The reason our companies often have success in the United States is that the market is just bigger there, and they are able to generate greater growth. However, it takes a lot of capital to go to a phase 3 clinical trial; and if it fails, you have $50 million in that.
We can build companies such as this, but the Canadian market is not good enough to absorb those new innovations and technologies. They have to look at the global market to generate growth.
If you are curious to see what other countries are doing, the United States might be a good example to look at, where 2.5 per cent of R & D spending has to be done with SMEs so that R & D is being pushed via the defence department via the health department to SMEs. Therefore, 2.5 per cent of the research budget gets pushed down. That generates an early partnership between government and small firms and risk sharing of the research. That seems to have generated good development for technology firms.
Senator Kochhar: Thank you for an excellent presentation.
Mr. Hogan's example and giving him a loan is a no-brainer because he is a successful entrepreneur, and you know his background. However, most innovations, as Senator Banks said, are done by one person, and most of the time they go to one of those five banks where they are doing their business. If they have the assets, such as a mortgage on a house or cash or whatever, they can easily get a loan. If they do not get a loan from there because they have nothing to back it up, they probably come to BDC, the bank of last resort. I know you do not want to call it that, but that is what it is in the public's mind. If they cannot get a loan somewhere, they go to BDC to see if they will help out.
I would say that 80 per cent of the innovation in Canada or any other country comes from individuals rather than big corporations.
It is difficult to make an assessment when a person is coming to you with an idea and tries to sell it to you when they do not have any assets and have been rejected by the five big banks, et cetera. I am interested more in percentages. Let us say, 100 people who have been rejected by the banks came to you for a loan, would you say you grant loans to 5 of them or 10 of them, on a percentage basis?
Ms. Métivier: The first point I think I need to rectify is that BDC has not been a lender of last resort since 1995; the act was changed in 1995.
Senator Kochhar: People's thinking has not changed.
Ms. Métivier: I would suggest that many people understand that we are in the business. We take higher risk than financial institutions. For instance, we provide more start-up loans at BDC than our fair share. Many companies come to us to start up a business — 25 per cent. Seventy-five per cent of our transactions at BDC are with very small companies, which are those with less than 10 employees. Many of our transactions are with smaller businesses.
As per the Business Development Bank of Canada Act, we must abide by what we are being asked. We ask that the entrepreneur has a vested interest in the business that they are starting and that there is a reasonable expectation that the business will succeed. ``Reasonable expectation that the business will succeed'' is an art and not a science. We have to look at the business case, the project that is there and the competency of the entrepreneur. The entrepreneur must be able to prove that they are able to start that business and achieve some success.
Essentially, we work in collaboration with financial institutions across Canada, and we try to assess to the best of our capability whether there is a reasonable chance of success in the venture. That is how we determine our financing. We have about 8,000 to 9,000 transactions every year with small- and medium-sized businesses in Canada. That is close to $3 billion.
From time to time, we have to decline a transaction. We will often do so because we do not see there being a reasonable chance of success.
Senator Kochhar: Do you have any percentages regarding how many companies you would say no to, out of 100 companies?
Ms. Métivier: The majority of the transactions we look at will attain some form of financing, but a group of them will be declined, yes. A high percentage is approved.
Senator Gerstein: Thank you, witnesses, for being before us. I want to add my compliments on your opening presentation. It was helpful.
My first question arises out of the first sentence in your last paragraph, in which you say, ``For the venture capital industry, we wish to do our part to improve Canada's track record on commercialization and supporting profitable ventures.''
Can you expand on ``our part'' a little more in terms of what you view BDC's part to be? The other side of the coin is whether you have any thoughts about what you view government's part to be?
Second, I recently read a book called Start-Up Nation in which I learned, among many things, that next to the United States, the greatest number of listings on the Nasdaq exchange come from Israel. Do you have any thoughts or comments as to whether we should look at the Israeli model?
Ms. Métivier: We may need an extra hour to answer your question bit I will ask Mr. Nycz to take this question.
Mr. Nycz: That is an excellent question. One of our advisers was Yigal Erlich, one of the founders of the venture capital industry model in Israel. We reached out to him on a number of occasions. He came to Montreal and we engaged him on how best to change our business model to address the market needs.
Israel has tremendous success on the NASDAQ.
As you may know, BDC is both a direct and indirect investor. We are invested in 23 funds in Canada, so we have a good view of what is happening in the market. One of the last funds we invested in was Vantage Capital, a multi-media fund. The investment was $150 million with ex-entrepreneurs of Electronic Arts. We have Tandem Expansion Fund, a late-stage fund. According to Josh Lerner, a good range for a fund is $200 million to $300 million. When I say ``deep pockets'' and being able to support your company longer, success seemed to be in the range of $200 million to $300 million. Tandem is a late-stage expansion fund, first close at $300 million. We did also XPV Capital, a water specialty fund in Toronto.
We see pretty well all the funds that are trying to be raised. Our part is being able to secure the success of fundraising activities of those funds with other partners, such Teralys Capital Fund in Quebec and Ontario Venture Capital Fund, OVCF, in Ontario. Those are the big funds. We consider ourselves a ``fund of funds'' in the indirect role.
Senator Gerstein: I did not realize you were in that area. How much of your lending goes directly to individual companies and how much are you putting into ``fund of funds''? What is the balance of your portfolio?
Mr. Nycz: In our strategy going forward we expect to do about $130 million in investments. Those investments are about $80 million to $90 million direct and the balance is indirect. In any given year, we will invest between $20 million and $50 million of indirect. Right now, we are looking at five funds in fundraising mode right now. That number is the shortlist, and the list gets longer. We invest in those funds.
As to our role in direct investment, when the investment activity level was at $4 billion, we had a smaller role to play. We had a strong role to play at the early stage. Now that the investment activity is about $1 billion, you can do the math at $80 million, $100 million or $130 million: We are about 10 per cent of the market.
Our role in those investments is to play a profit orientation role when we work with the entrepreneur and our partner. For each dollar we invest, we leverage about $4.50 with external investors. Therefore, we need to behave properly on the board. We need to bring value and net worth to the board. At this time of the cycle, often we have to be able to put a bit more money on the table because some of the investors — our co-investors — have run out of money. They may not be able to follow in the new round. Sometimes we are asked to put a bit more money post-pro rata of our investment, so that the company has enough money to execute the strategy.
Our role at that part of the cycle has increased somewhat because there is less money around the table and we are being asked to put a bit more in. However, traditionally we have been about 6 per cent of the market. We are leveraging about $4 for each dollar we put in.
Regarding the role of the government, there are a lot of challenges in the marketplace right now. I think the marketplace has favoured the creation of large-sized general partner, GPs. Right now we see the federal and provincial governments working well together. OVCF is from Ontario, Teralys is in Quebec, and Renaissance is out in British Columbia. There are a lot of provincial initiatives, so it is a coordination of federal and provincial initiatives to leverage each other's dollars in the marketplace. We work with the objective of securing the success of the entrepreneur and opening doors for them with clients. D-Wave is one company we have in our portfolio. Quantum Computer just sold their first quantum computer to Lockheed Martin in the States for $20 million. It has incredible processing capability. The question is whether there is a market in Canada for such computers. The procurement aspect of government perhaps could look at whether we can favour the development of some of those technology firms by early adoption of that technology in their procurement, for example. That is one area that the United States seemed to be strong on.
Senator Dawson: I could open a whole new world on the digital society and the fact that there is a world developing where kids from 16 to 25 live in a digital world, and we are only tourists passing through. They are citizens of that digital world. We see Facebook and the value of those investments. It comes back to the question: What does the government do? I think it is nothing to do with the existing government for the last 10 or 15 years. Canada used to be well ahead of the digital society, with telephone and telegraph, and we were innovative. I will advertise for my committee. If you look at planforadigitalcanada.ca, you will notice that we are now lagging behind in digital society and the digital world. You did not address the fact that there is a new kind of job that will be created in five years that we do not know about today. If we do not have a digital plan, if the government does not have an intervention for more bandwidth and if we continue debating last year's issues on the Internet, how can banks like yours be able to look at innovative planning if they are not encouraged to do it by a government that says, We have a plan for a digital Canada? We do not seem to have that plan, and you would need that kind of guidance if you want to know that the government will support you if you go into that digital society.
Ms. Métivier: That is a good question. You are absolutely right that I did not address that issue specifically. However, having said that, I touched on it when you asked your first question about how to define productivity. I will come back to what BDC is attempting to do, because I cannot answer for our shareholders, but only for BDC.
When we look at how we can help companies innovate, be more productive and grow their sales, we have to start with the first one, grow their sales; then innovate and be more productive, which is how an entrepreneur sees it. You are right that we made the link to information and communication technology. Information and communication technology includes digital.
We have been working hard over the last year to understand what entrepreneurs in Canada need to be able to invest more in those types of technologies. We found, through surveys, research and discussion with our entrepreneurs, something simple. There are many choices out there. Entrepreneurs see it as an expense as opposed to an investment, and they do not necessarily see the value. Furthermore, it is hard for them to choose, because there are many vendors out there. We have put together a strategy that is three-fold, and we will execute on it next year in support of what our shareholders have asked us to do.
The first thing is that we need to raise the awareness of the average entrepreneur that information and communication technology leads to greater sales, better management and so forth. For instance, I will give you a simple example: If an entrepreneur buys an application to monitor sales volume, which we call a customer relationship management, CRM, and they enter all their clients and they monitor the sales of their clients and go back and sell more to them, that piece of technology can help them monitor their sales progress in a way that is more productive.
Once they master that technology, they start to think about new clients and new ways of doing business development and so forth. I know, because at BDC we have done it ourselves. We want to raise awareness about how information and communication technologies can help them better manage their company and increase their sales. That is our number one focus. We are at the moment developing our strategy with respect to that awareness.
The second piece is that many entrepreneurs are telling us, I have two or three needs with respect to information and communication technology, but I do not know how to choose from what is available in the marketplace because the complexity has increased in the last 10 years. It used to be we would buy one application, and that is the standard one in the market. Now, I do not know how many devices one can find in the marketplace and how many applications.
It is complex, so, from a consulting perspective, we are thinking about how we can help an entrepreneur make the choice that is applicable for the size of their company, because if they are looking at a system for a large enterprise system, it may not fit their needs as a smaller company. They also have to look at the financing of it. Consulting and financing is what BDC is all about.
Third, we also isolated the fact that we have information and communication technology companies in our portfolio, and we are looking at them and asking how we can grow them bigger — not necessarily the numbers of them, but grow them bigger, because we do not have a lot of Canadian-based suppliers.
The fourth aspect is the fact that many of our customers and clients are also saying, I do not know who to go to, so can you integrate a little bit of that information for us?
A role at BDC could be to try to integrate the massive amount of information that is out there. Some of our clients are saying that to deal with smaller businesses, we need to aggregate their needs, and we are also looking at that role.
It is a fair question and one that is rapidly gaining attention, because one of the levers of productivity is information and communication technology, ICT, and the digital economy.
Senator Dawson: I could go on, Mr. Chair, but I will stop.
The Chair: That is considerate of you.
Senator Dawson: I notice he was asked to come back as a regular member, but you did not ask that of me.
The Chair: I was waiting to see how long you would be, but, since you limited yourself to one question, we will welcome your presence again.
Senator Moore: Is that a bonus we offer at the end of the meeting, depending on performance?
Thank you, witnesses, for being here. Mr. Nycz, I want to ask you about the angel investors you mentioned in your brief. You mentioned I think five: first angel in Atlantic Canada, something in Montreal, Ontario, Venture Alberta and Angel Forum I think you said in B.C. How many angel investment organizations are there in Canada?
Mr. Nycz: You have covered most of them. There are many angel investors, but there is not a national angel network. They have them south of the border, but here these networks are more regional. Angel investing is a local business. BDC is engaged in discussion with these businesses, and they know the community, they know the region and they know the companies. In the absence of having a national network, we can cover a lot of ground with these regional and local networks.
Senator Moore: In your work and analysis of the investments needed and sources of funds, do you have the total number of angel investors in Canada and the funds they might have available as a pool?
Mr. Nycz: I do not have it with me, but I can give it to you.
Senator Moore: Will you provide whatever you have to the committee?
Mr. Nycz: Yes.
Senator Moore: There is a pool they would have available, and can we find out how much of that they invest each year? What per cent do they invest in the marketplace? It would be interesting to know the rate or per cent of success versus investments.
I do not know where I heard this information; perhaps from a previous study. Something like two in ten investments are good. There is some kind of a number like that. Maybe you could provide that when you give us the other information. It would be instructive to know why. Is it super risky? Why is that the number, if it is the number, and how do we enhance that rate? How do we encourage more people to enter into this investing?
Mr. Nycz: We will look into that statistic and report back to you. With the angel investors, there is the technology and the non-technology side, so the spectrum is wide. However, we can report back as to who is involved on the technology side.
Senator Moore: Any information you have, on either side, would be useful to the committee.
The Chair: Our witnesses agreed to come here for an hour and they have already gone over time, so with their indulgence I will let our deputy chair ask the last question.
[Translation]
Senator Hervieux-Payette: For example, let us consider a situation where you invest 10 per cent in venture capital and that, tomorrow morning, the big banks were to do the same with regard to their venture capital. First, however, in your opinion, do the big banks invest up to 10 per cent in the SMEs?
Since the start, we have been talking about small- and medium-size businesses. If the subsidiaries that are involved in venture capital are to ask for $50 million, they will not talk to us. First, are they active? Could they be doing more? Is it because they do not have the expertise? Or is it because they are not making enough money?
I am asking because they can have clients who will wind up going to see you and if they go over to you, I think that this would significantly increase the pool of funds that could be invested in venture capital, were they to invest in this $100 million and $200 million dollar portfolio, along with others, when it comes to major investments.
Is our sector timid? Do they not have the expertise? Why are they not very active when it comes to small- and medium-size businesses and venture capital?
Ms. Métivier: I am going to try to respond to the best of my ability because venture capital, within financial institutions, has existed in the past, and I am not sure about the current status.
I think that, in general, we could quite simply say that venture capital, when it is not profitable, is obviously not in the interests of the financial institution. Because, ultimately, for a financial institution, the ultimate goal is profitability and ensuring a return on equity for shareholders. I know that there are some financial institutions that are still active in the area of venture capital, but I am not able to tell you what that ratio is. In order to be able to give you an adequate answer, a review would need to be done.
Senator Hervieux-Payette: With regard to the funds, do they get funding, in your opinion, or not?
Mr. Nycz: Some funds, such as BCF or even Teralys, have received funding from the Caisse de dépôt or other banks that remain somewhat active, through the funds. I can get back to you with statistics on contributions by financial institutions to such funds.
Senator Hervieux-Payette: The branch of banking that operates independently is venture capital. They are not insured. When they invest tens upon tens of millions of dollars, not to say hundreds of millions of dollars, they take greater risks than if they were investing with SMEs. What exactly is the idea of having both operations under the same act? Because you have the bank, which is the owner of this entity. They gave them that role, but they abandoned part of their banking clientele. Most of these companies don't deal with you as banks, but they also deal with a bank that is probably nearby. I can understand what my colleague said earlier, that when you go to a branch of the Royal Bank or some other bank, the manager is not there to administer venture capital. There has to be a corporate entity that specializes in that. So we will put that question to the banks when they appear.
Could you tell us who analyzes the international market's needs? Where is that found for your people? Where is the expertise in analyzing those risks? If our SME entrepreneurs go and see you about an investment, will they be able to find out what the international market needs? Where will they find the data, given that they are already working 16 hours a week? How do you go about analyzing the risk that your entrepreneur's new idea entails, in terms of both innovation and new products, inventions?
The Chair: Especially if your client's asset is something intangible. In other words, employee know-how; and the knowledge of employees who leave work at 5 p.m. every day. So where is your guarantee and your protection?
Ms. Métivier: The first question, if I understood correctly, was where do entrepreneurs get their information if they want, for example, to access a new market. There is obviously some information available from the Government of Canada, among others. They can also contact officials for Foreign Affairs or people with BDC. We work together with other institutions, be it Foreign Affairs or EDC, or other development banks. There are multiple sources of information. Ultimately, it's a matter of finding the right information. That is always the main thing. All that to say, it is not always easy. And sometimes, entrepreneurs will also turn to consulting firms or even go to other countries themselves to see what is happening. In some cases, for example, over the past two years, we have tried to help our clients to connect with the world in general.
In terms of how risk is assessed, it is important to take a balanced approach. When it comes to venture capital, we evaluate our transactions a bit differently than for more traditional financing. I am going to spend a few minutes on more traditional financing, particularly with respect to intangibles. A few years ago, we took a look at what kind of intangible brings value to our companies. We managed to identify around five or six key factors, which we included in our account manager training. It has to be simple for account managers, because you are right, the complexity of the surrounding world is such that a BDC account manager has to be able to sit down with an entrepreneur and ask questions about the entrepreneur's planning, and find out how much time it is going to take to develop the new product, how well it is going to sell, and so forth.
We will use that information to assess the strength of a project. If a project is carried out over a five or six year- period, and we do not have a time arising, then that makes things more difficult. Risk is incurred over a long period, and that is not a matter of traditional financing. There is a greater need for equity or quasi-equity. On the venture capital side, projects require a much more detailed assessment, and that requires both internal and external expertise.
In particular, venture capitalists will often conduct market research to determine the market's appetite for a given technology. They will rely on experts to assess the technology. We referred earlier to technologies that are more ``push'' than ``pull.'' Assessing such technology is much more time intensive than it is in traditional financing cases. Traditional financing can be arranged in a few days, but it can take weeks before coming to a determination on the merits of a venture capital project. Each type of project has its own intricacies, which require entrepreneurs to provide us with different information.
A request for a venture capital market study takes a bit longer. In order to gain an appreciation for a technology, we will call on an expert in the field to assess the technology for us. If we need to assess management capacity, we will call on another firm to help us do so. Given the higher level of risk, the research is more structured and rigorous.
Senator Hervieux-Payette: You have submitted a strategic plan. Does your plan come under the Canada Government's strategic plan for government agencies, including Industry Canada? Are you part of that comprehensive process? Does your strategic plan take into account other institutions and services? Are you connected to the other government organizations that have similar or complementary mandates to your own?
Ms. Métivier: My colleague is responsible for the corporate plan. I will let him speak to that.
Mr. Nycz: We have the legislative review document, our annual strategic plan and the venture capital industry review, given the impact on the BDC. Could you perhaps clarify your question?
Senator Hervieux-Payette: I am talking about your thoughts on the forecasts over the next ten years. Does that come under the federal government's strategic plan? After all, the federal government is your shareholder. The board of directors signed off on that plan, allowing you to go to market with it.
Does that fall under a comprehensive exercise? The government has done all it can to gather all the pieces. Earlier Senator Ringuette talked about having all the steps laid out. There are perhaps some things that do not fall under your purview?
Mr. Nycz: In developing the BDC's strategic plan, we conducted extensive consultations with our shareholder, clients and partners. We have 29,000 clients. We engage in discussions with our fellows investors in order to make judicious investments decisions. We have officials from the Foreign Affairs Department working in the BDC's offices. There is a high level of interaction with Industry Canada. We also conduct surveys and economic reviews. We do a lot of work with the Conference Board of Canada. Moreover, we commission specialized studies from various research groups and implement strategies that are heavily focus on meeting the needs of businesses, the Canadian market and government. ICT is a good example. How can we increase the use of information technologies by Canadian SMEs? We drop a strategic plan with the senior's executive team, submit it and engage discussions with our board of directors. They will share with us their views and comments, which will help us refine our plan. We will then interact with our shareholder, through Industry Canada and the Department of Finance, and submit the plan for discussion. As soon as that annual exercise is completed, we begin the whole process again so that we can properly identify the issues as they relate to businesses, the Canadian economy and our shareholders.
Senator Hervieux-Payette: Am I correct in concluding that you are starting from the bottom up rather than doing the opposite?
Ms. Métivier: A little of both. It is a dialogue that continues almost 12 months a year. Each time we conclude one, we start the next. The dialogue begins with Industry Canada, the Department of Finance and all our colleagues.
[English]
The Chair: I thank our two witnesses today, who have been helpful. Most senators have indicated how pleased they were with the clarity and breadth of the presentation. It has raised a lot of questions in our minds. You have been helpful with your answers. We appreciate your willingness to provide us with the written documentation that has been mentioned.
At this stage I normally indicate to colleagues when we will next gather, but, given the circumstances with which we are faced, who knows.
We will re-gather at one point, that is for sure. When we do, I hope we will be able to pursue, with the good start we have been given by our witnesses, this study of an important subject, the financing of innovation in Canada. We thank you and BDC for taking such a lead in this area.
We have become familiar with BDC, having filed a report on your activities. The report supported many of the initiatives that you were seeking. We were pleased to do so.
We thank you again for your presence before us this morning.
(The committee adjourned.)