It's tough to be a small business in Manitoba

Let's suppose I had a small business in Manitoba. Let's call it Anybody Want A Gizmo? Let's suppose that I wanted to expand my gizmo business to include doohickeys but required additional funding to take that next step, and suppose as well that I was turned down for a spot on Dragon's Den. Who can I turn to?

Manitoba can be a tough place for an entrepreneur to do business. We hear a lot of talk about how innovation is important, and how growing small business is critical to Manitoba's economic future, but there aren't many stable sources of support and funding for budding businesses. "There are few places to turn for growth capital in Manitoba" Martin Cash, the Winnipeg Free Press business journalist, tells us.

Venture capital funds are a great source of financing for promising young businesses, and they are a great source of tax breaks for investors, but they are almost non-existent in Manitoba. There are a couple of small funds (GrowthWorks, Golden Opportunities -- which sounds more like a retirement retreat than a venture capital fund) but the Crocus calamity has forever tarnished venture capital in the minds of many Manitobans.

Crocus was by far the largest and highest profile fund if its type in Manitoba, such that it became synonymous with venture capital investing in this province. But even as the Crocus fund was incurring massive losses, it was being pumped by the Provincial Government as a great place for people to put their hard-earned cash. The end result of course was that the fund crashed and people lost money. If individual investors can't trust a government created and promoted venture capital fund, it's little wonder that there isn't much venture capital for small businesses around here.

With the lack of available venture capital, a business may need to turn to a hodge-podge of ever-changing government programs if they don't have the private connections to raise money. It seems that every two years the programs change ... probably so that every two years the government can send out another press release to announce another new program to help small business. Though the names of the programs may change, the entities that offer them generally do not.

One of the current programs, announced in 2011, is the Commercialization Support for Business Program, created by the Manitoba provincial government from a recommendation of the Manitoba Innovation Council which was appointed in 2009 by the Premier. There is also BCC (Biomedical Commercialization Canada) which is funded largely by the National Research Council and the Province of Manitoba. BCC affiliated programs with names like "Manitoba Knights" ostensibly help foster small businesses -- for a fee and a chunk of their equity.

Now another program is being pitched to supply start-up capital to entrepreneurs, as long as they "manage their progress through government-licensed incubators, such as ... Biomedical Commercialization Canada."

All of this is fine if it works and actually helps small businesses innovate and succeed commercially. I am sure sometimes it does, but as it turns out sometimes it doesn't. Sometimes things go terribly wrong. Let me tell you a story about one small local hi-tech business that not only didn't get the help it was expecting, but was driven into insolvency as a result of breaches of contract and extortion by the BCC and provincial government programs.

So grab yourself a cocoa and come back shortly for The Dragonfly Affair.

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I recently painted a dragonfly ... I will share with you ...