Class 7 - Choice of financing continued Flashcards
Explain the situation of FTQ in Canada
for the gov, the cost of the program are the tax credit que les gens qui achetent ont
Funding by “taxpayers”
Maximum annual investment: $5,000
Tax credit
initially the fund was for vc, they made investments in startups
their cost of capital was lower than other vc fund so they were always getting the enterprises so they screwed up the market, there was a crowding out effect of vc funds pcq cetait tjrs ftq qui avait les contrats
however, They have gone through a phase of VC-type investments
Their investment policies have evolved
Some seem to see themselves today as retirement funds…
these funds would not attract investors if they did not have tax credit studies says that no, pcq les retours sont interessants apres les tax credits
Explain the relevance of creating funds of funds
FOF created by cdpq et iq
way for these invesotrs to distance themselves from PE and that it would only be private
Encouraging the creation of VC funds in Quebec
Participate in venture capital formation
Should we admit…
That governments have a role to play in promoting access to capital for innovation and research and development?
yes they have because they create policies that help the formation
What are the factors that will attract or not a vc fund
a vc fund will go to where they can find an out
if you want to foster vc activity, youre better of if you already have a stock exchange/working on investor relation que sur les taxation
les taxes attirent pas le vc
what makes the countries attractive
- the most important factor is the depth of the capital market
- Investor protection and corporate governance
least important factor : taxation
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Explain the narrative between RD investing by countries
Some countries spend more than other on RD invesitng
the main motive to invest in RD is because the country grows with tech and innovation
in the US, more money is attributed in RD by gov, universities each year
Which sectors attract the most research and development spending and why?
where the money is spent?
information technology, software, biotehc, telecomm : thats where the money goes! thats whre theres value creation through RD so thats what interests vc funds
Metrick mentions the phenomenon of outsourcing research and development. What is the relationship between this phenomenon and VC investment?
what he says is what do large companies do not finance RD on its own? why can vc funds compete with large companies? large companies could finance RD themselves! they dont ened vc funds!
vc funds finance the start off, the endevours of the individuals. they allow individuals to lead RD projects and therefore create their own companies. vc funds are allowing indirect outsourcing of RD and the large copanies benefit from thatpcq elles vont acheter les compagnies
the founders of the startup would not have the same motivation if they were working for the large corporation
What could be the motivation to outsource research and development activities for a company?
the ppl creating it are more motivated when they do it by themselves
they need the outside financing
when you develop a new drug that has potential, you get a patent and you own it so you have a motivation to develop it first. big pharma has no choice to deal with the smaller companies that create it
What might be the motivation for a large pharmaceutical company to enter into a licensing deal with a small research and development company?
they want to commercialize the drug
all the small compagny does is create the molecule and make a patent on it and the big pharma go through the clinical trial and the FDA
the motivation is that they want access to the molecule! once the small compagny shows that the molecule has potential, the big pharma wants to have access to it
