A new generation of entrepreneurs who are steering the growth of small and medium-sized businesses are also helping keep Canada on the leading wave of global economic growth, says the head of the country’s business development bank.
“I am more positive and optimistic than ever, because I see a new breed of entrepreneurs . . . who are better educated, better motivated and more confident that they can be winners in a rapidly changing world,” Michel Vennat, president and CEO of the federally owned Business Development Bank of Canada (BDC), told Calgary business leaders in a recent speech.
Small businesses have proven to be a piston in the Canadian economy, helping pull the nation out of a debt-and-deficit mentality over the past decade to outperform, on average, all other G7 countries, Vennat said.
“The entrepreneurs are not only out-performing big business in this country at the moment, but they’re also poised to lead the recovery that has started,” Vennat said, during a talk at the Calgary Chamber of Commerce. “And nowhere is entrepreneurship stronger than in Alberta and particularly Calgary. You have more entrepreneurs per capita than anywhere else in the country. You have higher incomes, and more university-educated people . . . and I think there’s a direct link between these three factors.”
The Montreal-based BDC is a long-term commercial lender which is wholly owned by the federal government, and backed by $7.8 billion in assets. Recently, it has been building a stronger presence in Western Canada with offices in Edmonton, Calgary, Grande Prairie, Lethbridge and Red Deer, all of which provide financial services including term loans, subordinate financing and venture capital aid to entrepreneurs, with a particular focus on the technology and export sectors of the economy.
Vennat pointed to a recent article in The Economist magazine, titled “Canada’s New Spirit” which describes how Canada was once the ‘basket case’ of the industrial world, with spiralling debt and a separatist government simmering in Quebec. “We’ve gone from being a basket case to a leader,” Vennat said. “We’ve now had six or seven years of surpluses at the national level – and in Alberta you know all about surpluses,” he joked, “because you invented them.”
Noting University of Calgary president Harvey Weingarten in the audience, Vennat added that the close links being forged between the business community and universities is helping drive innovation across the country. “Calgary is the best example, where you see a great partnership between boards of trade, the business community, educational institutions and civic leadership at all levels,” he said. “I’m not sure how many university presidents would have attended a Chamber of Commerce meeting 20 years ago. But I’m seeing this happen throughout the country.”
About half of Canada’s GDP revenue is generated by entrepreneurs, who are also creating more than 50 per cent of all new jobs in the country. “Of the 600,000 jobs created in Canada in the last few years . . . two-thirds were created by entrepreneurs,” Vennat said.
In 2002, the BDC approved more than 500 lending transactions in Alberta for more than $16 million for businesses in several sectors, including manufacturing, life sciences, transportation, and oil and gas services.
But Canada still faces a challenge in keeping pace with the U.S. standard of living, as well as it productivity rate, said Vennat.
“This is no time to be complacent . . . the competition we face as Canadians is not going to abate, it’s getting more global and it’s getting heavier. We cannot rely on lower labour costs and the low dollar – which has been increasing recently – to ensure our future. And that means we have to become more innovative and more productive.”
For small and medium-sized business, he added, that means investing more in capital equipment, systems and technology, and training.
More than half of BDC’s loans are $250,000 or less. It also invests about $100 million a year through its venture capital group, including seed technologies emerging from educational institutions.
“Our job is to take risks and support businesses in both good and bad times,” Vennat added. “I believe the time for a banker to be supportive to its clients is when the going gets rough. It’s also smart for the bank – because if I help you through a rough spot and you improve your credit, you’re going to grow, and you’ll remember who your partner was.”
Also last week, the BDC unveiled the creation of a new $25-million fund for women entrepreneurs.
Canadian firms led by women are not only increasing at twice the national average in number, they are also moving into manufacturing, construction and new economy industries.
The BDC says close to 150 companies in Canada headed by women entrepreneurs are producing revenue of $2 million or more, “and will show significant growth in the years to come.”
The fund will primarily offer women entrepreneurs subordinate financing, which is a hybrid instrument that brings together features of both debt financing and equity financing.
