Manitoba introduced a number of measures designed to revive the economy in its latest budget, including two announcements aimed at spurring venture capital investment in the province.
In the provincial budget tabled on April 12, the Government of Manitoba said it would allocate $50 million to privately managed venture capital funds, and incentivize further venture capital investments in the province with enhancements to the Small Business Venture Capital Tax Credit.
Venture Capital Fund
“Manitoba’s economic development path, like its competitors, will be paved by dynamic, high-growth companies led by new innovations and breakthroughs into new markets,” the budget document read.
The province said it was committed to creating a new venture capital framework to make Manitoba a more attractive place for entrepreneurship and new economic opportunities, noting that small and medium-sized enterprises are the fastest-growing business sector in the province.
To that end, the province has committed to establishing a $50-million venture capital fund of funds, to be dispersed to privately managed venture capital funds with the goal of developing a vibrant venture capital ecosystem in the province.
Small Business Venture Capital Tax Credit
The budget also included a commitment to improve the Small Business Venture Capital Tax Credit by making it permanent and expanding it to support venture capital funds.
Currently, eligible individuals and corporations that acquire equity capital in eligible Manitoba businesses will receive a non-refundable Manitoba tax credit of up to 45%. The tax credit has recently been enhanced by raising the maximum eligible investment to $500,000 from $450,000 and increasing the annual maximum tax credit claimable to $120,000 from $67,500, with a maximum tax credit that may be earned of $225,000.
The tax credit was originally set to expire at the end of this year, but will now be made permanent. The province also said the tax credit will be enhanced “to benefit Manitobans participating in venture capitals funds, thereby improving access to capital and supporting entrepreneurs.”
The budget document did not indicate how the tax credit would apply specifically to investments in venture capital funds.
Finding Opportunities in Manitoba
These announcements indicate Manitoba is serious about attracting venture capital investors to the province, which has lagged behind other parts of Canada in raising venture capital funding.
“The lack of venture capital options for Manitoba businesses puts the province at a competitive disadvantage compared to other provinces whose business communities have greater access to private and government venture funds,” the budget document read.
That could soon change with the measures announced in Manitoba’s budget. The MLT Aikins Private Equity and Venture Capital practice group has extensive experience advising investors on accessing world-class opportunities that are unique to Manitoba, from businesses in the industrial and agriculture sectors to Indigenous-owned enterprises, technology start-ups and emerging growth companies. If you’re looking to invest in Manitoba, contact us to learn more.
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