Ingenious Motivator for Tech InvestmentsPosted: 27/05/2008 | Author: sten | Filed under: In English | Tags: entrepreneurship, innovation, investment, politics, startups | 2 Comments »
He shared a very interesting and bold incentive concept that the British Columbia (not even the whole Canada) government has introduced to motivate private investments in small technology startups. Per every dollar invested, the government will pay you 30% back at once. The conditions include holding your investment(s) for five years minimum and a yearly cap of 200,000 CAD total.
So in other words, when you invest 10,000 CAD in a software startup, you get a 10,000 CAD share of equity for the price of 7,000. Or, as an alternative scenario, a private investor can keep investing their capital gained from a previous exit at a rate of 200,000 CAD per year, taking an annual cashback of 60,000 CAD out for their own living expenses as opposed to paying themselves salary.
This scheme is applicable to both direct investments and private investors participating in VC funds, such as the ones Discovery builds.
The results? The district of 4 million people that has been heavy on mining and forestry industries now hosts 70,000 people in tech sector (that’s almost 10x more than Estonia, half the size; comparable to Czech Republic – but their total population is 10M), 8 locally focussed VC funds (larger ones with 500M CAD funds), 8000 mostly small and medium tech companies…
I just love the simplicity as well as braveness of this lever and can only imagine the type of political opposition introducing it could have caused.
I wish Estonian government would spend some time seeking out similar ideas from the world… and implementing the best ones fast.