Entrepreneurial Finance
MN50577
Case Study: Angels in British Columbia

Presented to

Dr. Christos Kolympiris

By

Kreangkai Suktavorn

ID: 159180705

Words : 998

Semester 2/2015-2016

Angels in British Columbia

The primary objective of this report is to provide a recommendation for change in existing British Columbia tax programs. The principle of these proposals is to increase qualifying angel and venture capitalist investment to encourage economic growth and development, as well as preventing market failure in BC. In this report, an analysis of the VC programs will be demonstrated, and it will select “Simplify” option as a recommendation for change.

BC's economy heavily bases on the creation of new small business and expansion of existing ventures. These SMEs represented 98% of all business in the province. To enhance and diversify BC’s economy, the Investment Capital Branch administrated Equity tax credit program. There were four major equity tax programs, which are (1) Employee Venture Capital Corporations (EVCCs), (2) Retail Venture Capital Corporations (Retail VCCs), (3) Angel VCCs, (4) EBC program (see Table 1).

Table 1: Overview of BC Tax Credit Programs

We conclude that Venture Capital programs are fundamentally beneficial to both federal and provincial governments. This conclusion bases on two reasons: (1) firms in VC programs generate more taxes than they utilize equity tax credit, and (2) firms continually create new jobs. However, the investment level in the BC market declined due to the economic recession. To attract more investment, therefore, reconsidering the budget allocation of tax credit across each ECP program could enhance the level of investment.

There are budgetary restrictions that block the use of fund across segments. As stated in the equity tax credit programs since 2008, the VCC and EBC were