Our investment strategy at Advantage is comprised of five essential elements:
- identifying early stage companies / investment opportunities through our rich network of contacts in the BC technology industry;
- conducting thorough due diligence and investing in the most promising of these companies via venture or public financing rounds;
- “rolling up our sleeves” to help management build the business through active mentoring, assisting in the recruitment of key board and management positions, and advising on financing, M&A and corporate partnering strategies;
- following on with further investments in those companies that are meeting their milestones and creating shareholder value (“ride the winners”) while halting investment quickly in any weak companies; and
- actively managing the investment exits to fully maximize the returns to our funds and their shareholders.
This investment strategy has proven to be a winning formula in terms of generating portfolio returns in our first fund – the Advantage Life Science Fund I which was one of the best performing retail venture funds in Canada (as measured by globefund.com) prior to its redemption in 2008/2009. We believe it is a sound strategy that will serve us well with our other investment funds as their portfolios mature.
Advantage is a Venture Capital Corporation (VCC) registered under the Small Business Venture Capital Act of BC (the “Act”). The Act was established to encourage equity investment in eligible small businesses in British Columbia by providing a 30% refundable tax credit to investors who purchase shares in registered VCCs such as Advantage. Advantage then uses the capital raised to make equity investments in companies that qualify as an “eligible small business” under the Act. These companies must:
- together with their affiliates, have no more than 100 employees;
- pay at least 75% of the wages and salaries to employees who regularly report to work in BC; and
- be substantially engaged in a qualifying activity.
The website of the BC Ministry of Economic Development provides more information on Venture Capital Corporations and the requirements of eligible investments.
In addition to the investment criteria prescribed by the Act, Advantage seeks to invest in companies that have:
- proprietary products or services that create competitive advantage and effective barriers to entry;
- a unique value proposition that addresses a substantial unmet need in the market place;
- highly motivated and capable management; and
- clear exit opportunities in the future either via sale to strategic buyers, acquisitions by private equity groups, initial public offerings or redemptions.