About WUTIF
(Western Universities Technology Innovation Fund)
WUTIF Capital (VCC) Inc. is a novel "angel" fund that co-invests with angel investors in promising new technology ventures in British Columbia. WUTIF was formed in mid-2003 and made its first investments in late 2004.
WUTIF, in addition to offering above-average investment returns potential, offers substantial tax incentives available only to residents of BC.
WUTIF gives investors an opportunity to invest in, as well as contribute to, the BC economy and optionally contribute to their favorite charity for additional tax benefits.
WUTIF, unlike other professionally managed funds, has a very low operating cost. Management is compensated primarily on performance!
WUTIF's Differentiating Features:
- early stage only - i.e. tech startups when valuations are in the low (typically <$2M)
- an "angel" fund - that has mainly angel investors and that only co-invests with angels
- $25K-$200K typical investment range
- no management loads (mainly performance fees)
- maximum 5% on all expenses, fees, commissions (cumulative total during first 3 years, not annual)
- all directors of WUTIF are also investors
- warrants provide an attractive charitable donation aspect (e.g. donate shares but keep warrants)
(allows one to get back >70% in tax credits)- RRSP eligible (combined tax saving >70%)
- directors all have technology/management/investing expertise, good track records
- shareholders invited to angel meetings
- regular shareholder updates to investors on confidential website
- Get 100% of your capital back in 5+ years by re-investing for an additional 5 years
Capital Raised and Investments Made (Feb 2010):
- Capital Raised: >$5 million
- Number of Companies: >50
- Average investment per company: $100K
- Average size of seed rounds: $500K
WUTIF...you could invest $10,000 and get your money back in 5 years? And, still have a great investment?
Now, you can...
- invest in British Columbia's New Economy companies
...and
- receive an immediate 30% cash-back from B.C.
...and- contribute $10,000 to your RRSP
...for additional tax deductions up to 44%.What does WUTIF invest in?
WUTIF invests in promising early-stage technology ventures in British Columbia, such as those being developed at B.C.'s universities and institutions. This includes communications and information technology, health and life sciences technologies, physical sciences, energy and fuel cells. The Fund will strive towards a broad portfolio, such that no more than 25% of its investments are in any one particular technology sector.
The Fund will co-invest with others (e.g. angels, founders, partners) in startup companies that are seeking their first external financing round beyond the initial "love" money stage. Specifically, the target is companies requiring less than $500,000 with valuations well under $4 million (i.e. closer to $1 million).
Early stage funds tend to out-perform most investment classes - generally doing better than mutual funds that invest in public companies. Because the risk is greater with early investments, the rewards are also much greater. By investing in many companies, those that succeed will provide returns that more than offset the losses from those that under-perform.
How do the tax incentives work?
By using a combination of tax incentives, investors can reduce their at-risk exposure to only 26 cents for each dollar invested.
There are two tax incentives:
1) the Venture Capital Corporation (VCC) tax credit provided under British Columbia's Small Business Venture Capital Act and...
2) Federal tax credits available under the RRSP program or through charitable deductions allowed under the Income Tax Act.How is WUTIF managed?
The Fund is managed by WUTIF Management Corp ("WMC"). WMC will partner with existing technology organizations in the Province to identify companies, perform due diligence on them, and monitor their progress. A list of B.C. organizations can be found at www.hitechbc.com. Management fees are low and management is compensated mainly by sharing in any upside gains from investments made by the Fund.
Who will benefit?
WUTIF will benefit B.C.'s academic institutions in two ways: First, by providing new technology ventures with greatly needed access to startup capital and second, by providing a future source of endowment income to these institutions or other charities.
The Fund Manager will also donate 20% of its performance fees to B.C.’s universities.
By helping to commercialize B.C.'s mega-million dollar investment in research and development, WUTIF will be well positioned to grow as it supplies the capital markets with a source of new deals while simultaneously supporting the Province's long-term economic plans.
An investment in WUTIF will provide investors with a 3-way win: a personal financial gain while at the same time making generous charitable donations and contributing to the growth of the B.C. economy.
B.C.'s advanced technology industry has grown dramatically over the past decade. It is one of the major - and growing - contributors to B.C.'s economy as the Province decreases its dependence on the resource sector and increases its investment in the "new economy" comprising knowledge-based companies. B.C. already has hundreds of success stories. There are more than a dozen companies generating more than $100 million in annual sales versus none just a decade ago. For more information on the technology sector in B.C., please visit T-Net at www.bctechnology.com.
This sector, now accounting for close to $10 billion in annual revenues is becoming a major contributor to the Province's $100 billion economy.
WUTIF provides a vehicle in which investors can participate broadly in the future growth of the advanced technology sector in British Columbia.
How and when can investors sell their shares?
There is no mandatory hold period on shares that are purchased. Although investors are free to sell their shares (subject to Securities regulations) the Fund does not trade on a public stock exchange. Instead, WUTIF, like many similar VCC funds will offer investors redemption privileges after 5 years at the "net asset value" per share. Note: the 5 year period is counted from the date that investors' funds are invested in eligible businesses. Therefore, investors should allow approximately 6 years for redemption eligibility. Investors will be notified by email when redemptions are possible.
2010 Subscriptions:
Shares are, subject to tax credit availability, being offered to eligible investors at $10.75 per share.
Until Feb 28, 2010 tax credits may be available for the 2009 taxation year. After that tax credits may be claimed for the 2010 taxation year.
[*based on tax incentives for top marginal taxpayers in B.C.]
Updated: 10 Feb 2010.