A nationally owned business development bank that helps small businesses tap into start-up and expansion capital has opened its eighth office in Alberta in response to growing demand and the province’s strong economy, says its chief executive.

“There’s a greater concentration and vitality of entrepreneurs in Alberta than anywhere else in Canada,” says Michel Vennat, president and CEO of the Business Development Bank of Canada. “Our business has been growing (here), and we want to be partners in the development of small and medium-sized businesses in Alberta.”

Vennat was in Calgary last week to open the city’s third BDC office. The financial institution, wholly owned by the federal government, is backed by close to $7 billion in assets and a renewed commitment in the latest federal budget for $190 million to invest in venture capital projects over the next two years.

Vennat says beefing up the BDC’s presence in Western Canada, particularly Alberta, has become a priority for the Montreal-based bank, which offers financial services including term loans, subordinate financing and venture capital aid to entrepreneurs. It boasted a total of 21,000 clients across the country last year.

Michel Vennat

“I feel that our presence in Alberta should be greater,” Vennat said in an interview. “In fact, our presence in Quebec is relatively greater than the proportion of the economy in Quebec. A few years ago, we decided we would grow faster in Ontario and in Alberta, and we’ve adopted some strategies to make that happen.

“Our goal is to more fully reflect the relative weight of the different economies. We are growing faster in Ontario and out west, particularly in Alberta, than we are in Quebec. That balance is being addressed.”

The BDC already operates two branches in Edmonton as well as offices in Grande Prairie, Lethbridge and Red Deer. Last year, it approved 512 lending transactions in Alberta for more than $16 million for businesses in several sectors, including manufacturing, life sciences, transportation, and oil and gas services. Most of BDC’s lending transactions are for sums less than $100,000.

The need for venture capital in Canada is as acute as ever. A report released last week by the Canadian Venture Capital Association shows that VC investments in the fourth quarter reached $754 million, up from $500 million in 2001.

But the rest of the story lies in the bottom line – total venture capital investment in Canada dropped to $2.4 billion in 2002 from $3.8 billion in 2001, a 35-per-cent plunge.

The CVCA report noted venture investors are still feeling the effects of depressed public stocks, an uncertain economy and, as a result, reduced exit options.

Communications and networking attracted the lion’s share of all disbursements at 27 per cent, said the CVCA, followed by life sciences at 19 per cent.

The report also noted that much of the industry was less inclined to back innovative firms seeking venture capital for the first time, particularly those that could not demonstrate tangible revenue streams. New investment activity showed 264 companies secured about $646 million last year, compared to $2.1 billion in 2000.

It is in this daunting environment that the BDC feels it can expand. Vennat says the BDC is no longer thought of as the “lender of last resort” for entrepreneurs seeking to fast-track their ideas into businesses.

“We basically seek to support fast-growing companies that have a good potential for the future . . . industries that are worthwhile in supporting and making a good solid commercial contribution to the country, but that are not as easy to assess by normal or conventional financial institutions,” he says.

“At the moment, we’re better capitalized than ever. The credit of our clients has been improving over the past few years, to the extent we decided we can take on more risk. So we’re going to be more active next year in ongoing and startups.”

The extra $190 million earmarked for venture capital in the budget “will allow us to continue investing at a time when a lot of investors in venture capital have been pulling back from new investments either because they’re out of money or they have to work out their investments,” Vennat added.

“There are some very interesting projects out there that are more reasonably valued than two or three years ago. And the relative market offering of capital is relatively smaller. So it’s important for us to continue supporting our present investments and finding new companies.”