Discovery Capital Corporation has launched the British Columbia Discovery Fund, the province’s first venture capital corporation with approval to offer redeemable shares to investors. A wholly owned subsidiary of Discovery Capital will be manager of the fund.

BCDF has received a 3-year tax credit allocation from the B.C. Ministry of Science, Competition and Enterprise to raise $10 million per year in each of 2002, 2003, and 2004, for a total of $30 million. The fund will make venture capital investments in a portfolio of emerging B.C. technology companies, focusing on information technology, communications, health and life sciences, and energy and environmental technologies. The fund is initially raising up to $20 million.

The Fund will invest in eligible small businesses that qualify under the Small Business Venture Capital Act. Investors in the fund will be eligible for an Investment Tax Credit equal to 30% of the amount invested, to a maximum of a $60,000 tax credit per annum. Shares in the Fund are eligible for RRSPs, RRIFs, RESPs and DPSPs. Shares purchased on or before Dec. 31, 2002 will be eligible for tax credits for the 2002 taxation year.

BCDF is similar to the labour sponsored funds available to BC investors, with several added advantages:

– 30% investment tax credit on investments from a minimum of $2,500 to a maximum of $200,000;
– ability to request redemption after 5 years;
– lower management fees and no additional sponsor fees;
– the fund’s manager is fully aligned with investor interests as incentive performance compensation is only paid on realized gains for cash, and only after a minimum hurdle rate is met.

“By offering redeemable shares, the Fund has addressed the historical illiquidity problem for VCC shareholders, by making available to them the same liquidity path that is available to LSFs in Canada,” says Discovery Capital co-CEO John McEwen.

Altara Securities Inc. is the lead agent of a syndicate which includes IPC Securities Corporation and Canaccord Capital Corporation for the offering of the Fund’s shares. This offering is being marketed in British Columbia only.