Canadian BioProducts Industry Strives to Increase Investor Interest. --Report to follow on the Inves
SARNIA, Ontario - A survey of Canadian industrial bioproducts companies has revealed that a more intensive communications strategy is necessary to bring to light successes and opportunities for investors in this emerging sector of the Canadian economy.
The survey, conducted by the Industrial BioProducts Value Chain Roundtable, sought opinions from Canadian small and medium sized enterprises, investors, and business incubators, as well as domestic and international bioproducts organizations, to better understand Canadian companies’ experiences in attracting investors and accessing capital. A total of 74 responses were received. The report documenting the findings was released today.
Murray McLaughlin, Industry Co-chair of the Roundtable, said that the survey provides very useful insight into the successes of more than 45% of respondents that could access capital they needed, and challenges of the 55% could not.
“Industrial bioproducts, including bio-fuels, bio-energy, biomaterials, and industrial biochemicals, are a relatively new sector of the Canadian economy,” said McLaughlin, “But consumer demand is growing for new made-in-Canada products that reduce our carbon footprint and provide a meaningful response to climate change. We need a business environment that helps Canadian companies rise to that challenge, at home, and in global export markets.”
The report reveals that lack of investor understanding of the sector, longer time for return on investment, and perceived risk of business failure are major barriers to attract risk capital. Angel investors were found to be the most common source of private equity, with a small fraction of businesses accessing venture capital or commercial bank financing. 92% of respondents indicated a need for new capital investment to commercialize their R&D, and to further expand manufacturing capacity.
Rory Francis of the PEI BioAlliance, and Co-Chair of the Investment Readiness Working Group, said the report also highlights the need for well-prepared business plans and execution strategies. “We found that incubators and accelerators with experience in the sector are an important resource in helping early stage businesses connect to sources of government seed capital as well as to private equity, particularly in the $500,000 to $5 million range.”
International best practice research conducted during this study revealed that the bioproducts sectors in other countries experience similar challenges to those identified by the Canadian companies. Lessons learned shared by these organizations included the importance of having focused leadership at the national government level through a single department (as opposed to distributed across various ministries); a supportive policy environment; communicating the success stories from the sector; and companies having a strong management team.
Paul Antoniadis, CEO of good natured Products Inc., a leading Canadian innovator driving transformation in the global bioproducts industry and a member of the Roundtable, said, “This report should provide an impetus to action by industry and governments to address the barriers to growth of the sector. Our business continues to overcome these challenges with investment from institutional funds, wealth advisors and individuals who see bioproducts as a high growth sector for their investments. It’s this continued support that has enabled good natured® to expand its customers base across Canada and the U.S., resulting in a 47% Y