Increasing Deployment of Private Capital

EACOS is an advocate for Edmonton’s tech-enabled startup community. We are comprised of 13 individuals from scaleups, startups, seed companies, students, and investors. Our mandate is to be a voice for our peer-startups, activating and aligning resources with the needs of our technology community at large.

Mayor Don Iveson’s 2018 State of the City Address expressed the dynamics of deploying private capital into Edmonton companies:

“As it stands right now, we don’t have enough local investment committed to our local innovation ecosystem. Our entrepreneurs are usually having to look outside Edmonton and often outside Alberta in order to get it. And, at the same time, we have a lot of local money being sent out of Edmonton to be invested in funds managed outside of Alberta…“A lot of early-stage companies in Edmonton don’t require cash in the millions. Their needs for seed funding are usually in the tens of thousands. A magnitude that’s entirely accessible within Edmonton.”

Edmonton entrepreneurs have expressed the challenges of attracting local and outside capital into their companies. However, we recognize that without attractive deals to be had, investors will rightfully choose to deploy capital elsewhere. EACOS’s objective is to not only identify levers for action which may increase private capital deployed in Edmonton, but to address the underlying issue of increasing the number of investment-ready companies in Edmonton. A focus on forming companies, developing MVPs, raising seed (founders, family, and friends) capital and preparing for (and setting expectations for) external private capital (Angel, early VC) will result in both the unlocking of local capital and the attraction of external capital - money follows good deals. We believe that focusing on “top of funnel” and creating investable opportunities will result in the growth and maturity of the entire ecosystem.

We believe that increasing the pool of investable early stage companies and enabling them to fundraise as effectively as possible, is critical to ecosystem growth.

Critical levers for this increase may include:

  1. Developing an accelerator in Edmonton. Ideally, this will include a pre-seed fund that can commit follow-on seed rounds. Ideally, this would be funded privately - the CDL model is Calgary is worth exploring.
  2. Create more opportunities, both formal and informal, for mentorship, education, training, and feedback for early stage entrepreneurs hoping to fundraise. Entrepreneurs need to better understand what investors are seeking, from product, market, team, valuation, and roadmap perspectives.
  3. Intensified efforts to engage local investors into investing into local technology companies. Investors who have built capital through traditional means, like real estate and energy, need to be effectively engaged, educated, and presented with the portfolio opportunities of technology investments.
  4. Increase co-investment vehicles such as via AB-Enterprise, through an Accelerate III fund. The scale of invested dollars into pre-seed and seed stage companies must increase significantly so as to stimulate further co-investment and the success of early stage companies.

We believe that nurturing angel investment activity will enhance our business community.

Critical levers for this may include:

  1. Alberta Investor Tax Credit is a useful vehicle to encourage private investment by local investors. We believe that further enhancements can be made to AITC to further improve access and full life cycle value of the credit, including derisking startup failure or divestment within AITC policy.
  2. Attract new tech investors and community mentors and educators via entities like U of A VMS, the A100, and the NAIT Mawji Center.
  3. Valhalla and Sprout are local Angel Funds. We encourage further investment into these funds, as well as the creation of new funds and the expansion of efforts to include entrepreneur education, mentorship, and pitch practice.
  4. Develop a strong pipeline of investor roadshows, events, education, and social opportunities. Service providers, C100/A100, and others can assist by enabling these activities for both local and external investors.

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