BC Investing 2020

BIV MAGAZINE

BC INVESTING THE

MARCH 2020

B.C.’S MONEY MACHINE REAL ESTATE REMAINS MAJOR GDP BOOSTER

BIV_Investing2020_32.indd 1

ISSUE

TECH POWERS UP GLOBAL FIRMS DRAWN

BY B.C. TALENT

WILSON-RAYBOULD REFLECTIONS ON A TUMULTUOUS YEAR

2020-02-26 12:04 PM

An historic opportunity to invest in the

HEART OF CRANBROOK

RURAL I NN O VAT I O N

C O LLE G E O F T HE RO CK IE S

INTE RNATIO NAL AIRPO RT

AIR

RAIL A C C ESS

REGION A L HUB

AI, GEOSPATIA L , MAC H IN E L EA RN IN G

RAIL

); -u; - 0ย vbm;vvล =ub;m7ัดย 1ollย mb|ย ฤท o@;ubm] ัดoย 1ourou-|; |-ย ;vฤท 1olr;เฆ เฆ ย ; 0ย vbm;vv 1ov|vฤท - v|-0ัด; 0ย vbm;vv ;mย buoml;m| -m7 -11;vv |o -m ;7ย 1-|;7 ย ouh=ou1;ฤบ o| omัดย 7o ย ; _-ย ; vol; o= |_; ัดoย ;v| u;-ัด ;v|-|; 1ov|v bm ubเฆ v_ oัดย l0b- 0ย | -ัดvo ย ; -u; 1;m|u-ัดัดย ัดo1-|;7 -v |_; u;]bom-ัด _ย 0 =ou ัดo]bvเฆ 1vฤท v;uย b1;v -m7 u;|-bัดล 1oll;u1b-ัดฤบ )b|_ -m bm|;um-เฆ om-ัด -burou|ฤท ฦ &" rou|v o= ;m|uย ฤท !-bัดย -u7 -m7 ย ouัด7 1ัด-vv 1omm;1เฆ ย b|ย ฤท ย ; -u; ย mbtย ;ัดย rovbเฆ om;7 |o _;ัดr ย oย u 0ย vbm;vv ]uoย ฤบ

MARKET ACCESS

COMPETITIVE u-m0uooh bv ;ย 1;rเฆ om-ัดัดย rovbเฆ om;7 =ou =ย |ย u; 0ย vbm;vv ]uoย |_ -m7 ;ย r-mvbomฤบ ย uu;m|ัดย ;ย r;ub;m1bm] - ฦ ฦ ฦ ัท bm1u;-v; bm 0ย bัด7bm] r;ulb| ย -ัดย ;v oย ;u |_; ัด-v| ฦ ย ;-uvฤท -m7 _ol; |o |_; ฦ m7 =-v|;v| ]uoย bm] -burou| bm -m-7-ฤท ย oย u m;ย | 0ย vbm;vv b7;- ย bัดัด 0; ub]_| -| _ol; bm oย u 1ollย mb|ย ฤบ ); rub7; oย uv;ัดย ;v om o@;ubm] =-v| -m7 ;L1b;m| r;ulbเฆฎm] -m7 7;ย ;ัดorl;m| -rruoย -ัดvฤบ ย u rorย ัด-เฆ om bv ย oย m]ฤท 7ย m-lb1ฤท -m7 ย ;ัดัด ;7ย 1-|;7ฤบ ); -u; |_; _ย 0ฤท -m7 ;1omolb1 ;m]bm;ฤท =ou |_; oo|;m-ย vฤบ

Darren Brewer

BIV_Investing2020_32.indd 2

C LE A N T E C H

GROUND

CONNECTIVITY Residing in the homeland of Ktunaxa -เฆ omฤท ย ; -u; 0ย bัด7bm] - =ย |ย u; =ou oย u 1ollย mb|ย |o];|_;uฤบ

U RBAN D EVEL OP M E N T

|

(250) 489-0275

ฦ _u Yb]_| ++ ล +(! ฦ _u 7ubย ; |o -ัด]-uย ฦบัตฦ lbm |o ฦ &" rou|v o= ;m|uย

|

ww w. c r a nbr ook . c a

2020-02-26 12:04 PM

opportunity is calling

Kitimat GHP A:L thousands of career opportunities sparked by the construction of Canada’s first LNG export facility. We also have thousands of reasons to make our community your new home.

Kitimat is a community of about ,000 people located on the north coast of B.C. The community sits at the head of Douglas Channel next to Kitimat River. Indoor and outdoor recreation facilities and surrounding wilderness provide plenty of opportunity for an active, outdoor, coastal lifestyle.

District of Kitimat - www.kitimat.ca @KitimatDistrict

BIV_Investing2020_32.indd 3

District of Kitimat

District of Kitimat

@DistrictOfKitimat

2020-02-26 12:04 PM

BIV MAGAZINE

4 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

CONTENTS

BIV MAGAZINE

BC INVESTING THE

MARCH 2020

B.C.’S MONEY MACHINE REAL ESTATE REMAINS MAJOR GDP BOOSTER

ISSUE

TECH POWERS UP GLOBAL FIRMS DRAWN

BY B.C. TALENT

WILSON-RAYBOULD REFLECTIONS ON A TUMULTUOUS YEAR

PRESIDENT: Alvin Brouwer PUBLISHER AND EDITOR-IN-CHIEF, BUSINESS IN VANCOUVER; VICE-PRESIDENT, GLACIER MEDIA: Kirk LaPointe EDITOR: Hayley Woodin DESIGN: Petra Kaksonen PRODUCTION: Rob Benac CONTRIBUTORS: Nelson Bennett, Greg D’Avignon, Glen Korstrom, Frank O’Brien, Tyler Orton, Crystal Smith, Albert Van Santvoort, Hayley Woodin PROOFREADER: Meg Yamamoto RESEARCHERS: Anna Liczmanska, Arthur Xie DIRECTOR, SALES AND MARKETING: Pia Huynh SALES MANAGER: Laura Torrance ADVERTISING SALES: Margaret Garrison, Betty Jin, Blair Johnston, Steve Micolino, Corinne Tkachuk, Chris Wilson ADMINISTRATOR: Katherine Butler

20 COLUMN

COLUMN

D’Avignon—15

Smith—23

12 FEATURES 6 FIRST NATIONS AND LNG Nations first to benefit from pipeline investments 10 TIMBER TROUBLES B.C. forestry opportunities aren’t clear-cut

BIV Magazine: The BC Investing Issue is published by BIV Magazines, a division of BIV Media Group, 303 Fifth Avenue West, Vancouver, B.C. V5Y 1J6, 604-688-2398, fax 604-688-1963, biv.com.

Copyright 2020 Business in Vancouver Magazines. All rights reserved. No part of this book may be reproduced in any form or incorporated into any information retrieval system without permission of BIV Magazines. The publishers are not responsible in whole or in part for any errors or omissions in this publication.

ISSN 1205-5662 Publications Mail Agreement No.: 40069240.

Registration No.: 8876.

Return undeliverable Canadian addresses to Circulation Department: 303 Fifth Avenue West, Vancouver, B.C. V5Y 1J6 Email: subscribe@biv.com Cover: MJgraphics/Shutterstock

20 B.C.’S MONEY-MAKING MACHINE Real estate remains largest single GDP contributor 24 TECH POWER International investments boost services growth 26 INTER-TRIBAL TRADE A new model for nation-to-nation trading 28 CANNABIS CAPITAL CRUNCH How investor appetite has shifted

PRODUCED BY

BIV MAGAZINE 12 BIV PROFILE: Jody Wilson-Raybould 18 INFOGRAPHIC: Investment in B.C. 22 AROUND TOWN: March 30 5 QUESTIONS: Barry Rivelis 31 ASK THE 40

BIV_Investing2020_32.indd 4

2020-02-27 11:54 AM

BIV MAGAZINE

| 5

MESSAGE FROM THE EDITOR

INVESTMENT IN B.C.: RISKS, EXPECTATIONS AND GROWTH B.C.’s overall economic growth did not live up to expectations last year. The Business Council of British Columbia (BCBC) revised its annual growth forecast down three times in 2019 (read more from BCBC president and CEO Greg D’Avignon on page 15). When the provincial government updated its 2019 economic forecast last month, it also reset last year’s projected pace of growth, down to 1.8% from the 2.4% that was forecast in Budget 2019.

But some areas of the economy proved expectations wrong. The level of business investment growth in B.C. was nearly double the level expected by the province at the start of 2019. The growth in residential investment was more than triple earlier estimates, and a double-digit drop

BIV_Investing2020_32.indd 5

in housing starts was avoided altogether.

When looking at the year ahead, there is no question that B.C.’s economy is softening. The province believes risks to its fiscal plan and the provincial economy are weighted to the downside, with global trade uncertainty, geopolitical tensions and low commodity prices weighing down economies and expectations around the world.

Still, B.C. may prove to be a bright spot in Canada. Despite certain sectoral challenges (read about ongoing challenges in forestry on page 10 and cannabis on page 28), the province’s nascent liquefied natural gas industry is expected to have a positive impact on B.C.’s economy this year (page 6). B.C.’s technology sector is growing and hungry for talent (page 24),

and even though Greater Vancouver’s real estate sector has eased off, it remains a massive economic contributor (page 20).

In this issue of BIV Magazine, we explore the landscape of investment in B.C. in a time of uncertainty and slowing global growth. We look at leadership (see our BIV Profile of Jody Wilson-Raybould on page 12) and strategy (page 30). We also asked BIV Forty under 40 alumni for one of the best investment decisions they’ve ever made. Their answers may surpass your expectations.

Hayley Woodin Editor, BIV Magazine hwoodin@biv.com

2020-02-26 12:04 PM

BIV MAGAZINE

6 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

FIRST NATIONS BENEFIT FIRST FROM LNG Indigenous nations will be the first to benefit when natural gas pipelines go into the ground this year in northern B.C. – but they won’t be the last FRANK O’BRIEN

P

erhaps as early as this autumn, approximately 8,200 members of 14 First Nations in northern B.C. will receive the first payment in what will be a 40-year, multimillion-dollar benefits package tied to the liquefied natural gas (LNG) pipeline that begins just north of Chetwynd and ends 676 kilometres later at the LNG Canada export terminal in Kitimat.

Under benefit agreements worked out over the past six years to ensure the largest industrial project in B.C.’s history would proceed, First Nations along the route were offered what appear to be life-changing deals that include cash, jobs and business opportunities.

Each of the nations, some of which have fewer than 200 members, will share $10 million annually from the British Columbia government as long as the pipeline is pumping – an estimated 40 years.

In addition, Indigenous bands will receive initial cash payments that total $31 million, or an average of approximately $2 million per community.

Half of these incentives are paid 90 days after the first 25 kilometres of pipe – known as the first spread – is in the ground. The pipeline contractor, Coastal GasLink, estimates that this official commencement of construction could be as soon as this summer. The final half of the incentives is paid 90 days after the pipeline begins fuelling the $13 billion LNG Canada terminal at Kitimat.

LNG Canada has signed separate impact benefits agreements with First Nations in Kitimat and along the shipping route, but the agreements “are considered commercially sensitive documents, not unlike a business contract, so we aren’t at liberty to discuss specifics,” says an emailed

BIV_Investing2020_32.indd 6

statement from Susannah Pierce, director of corporate affairs at LNG Canada.

One of the largest B.C. government payments goes to the Wet’suwet’en First Nation, which represents the most populous Indigenous organization under the agreement, with 1,921 members.

As BIV Magazine went to press, anti-pipeline protests in support of Wet’suwet’en hereditary chiefs were shutting down rail service and roads across the country. The elected band council of the Wet’suwet’en people supports the construction of the Coastal GasLink pipeline, while hereditary chiefs do not.

As it stands, the Wet’suwet’en, located near Smithers, is in line for $4.8 million, plus a further payment of $988,000, according to government documents, as well as an annual payment of what could be $714,000 per community, if the $10 million in annual payments is evenly divided among the 14 nations.

Tiny bands – even those less than 10% of the size of the Wet’suwet’en – will also benefit from the project. The 186-member Skin Tyee Nation will receive incentives of $2.3 million, plus an additional $466,000 and a share of the $10 million in annual payments.

Members of the Ts’il Kaz Koh First Nation (the Burns

2020-02-26 12:04 PM

| 7

A rendering of the LNG Canada terminal being built in Kitimat • SUBMITTED

Lake Band) will receive initial payments totalling $954,500. When the annual payments are factored in, the community of 144 people could receive nearly $1.6 million the first year the LNG pipeline begins producing.

In announcing the first benefit agreements in March 2014, the B.C. government estimated that the LNG project would generate $22 billion in direct government revenue over 40 years, beginning when the first LNG tankers leave B.C.’s north coast for Asian shores, which is expected by 2025.

To put LNG Canada in perspective, the current total natural gas production in B.C. and Alberta combined is 15.5 billion cubic feet per day. LNG Canada will have a capacity to accept 1.7 to 3.4 billion cubic feet per day.

Each tanker leaving Kitimat would hold 170,000 cubic metres of LNG, worth about US$24 million at January 2020 prices (which were at a 10-year low).

There will be up to 300 tanker shipments per year.

For many in the north, there is less concern about how the money is split up. Local municipalities stand to benefit through local taxation and are just glad the project is finally underway.

BIV_Investing2020_32.indd 7

Since the LNG Canada consortium made its final investment decision in October 2018, $870 million in contracts has been awarded, much of it to local firms. As of this January, 1,000 workers were employed on the pipeline right-of-way.

To November 2019, the most current figures available, the project has generated in excess of $107 million in local spending and more than $77 million in indirect economic spinoffs, according to a Coastal GasLink report published January 20.

“Not only does construction create thousands of high-quality jobs, it creates demand for things like equipment, food services, accommodation and more. Our contractors are mandated to source local wherever they can, including equipment and supplies,” says Dan Bierd, Coastal GasLink’s vice-president of pipeline implementation.

Bierd adds that prime contractors are required to provide local and First Nations participation plans prior to being selected, along with regular updates on that co-operation. To date, more than one-third of all fieldwork completed on the project has been conducted by Indigenous people, he says.

It is estimated the entire LNG project will

EACH TANKER LEAVING KITIMAT WOULD HOLD 170,000 CUBIC METRES OF LNG, WORTH ABOUT US$24 MILLION AT JANUARY 2020 PRICES (WHICH WERE AT A 10-YEAR LOW). THERE WILL BE UP TO 300 TANKER SHIPMENTS PER YEAR

2020-02-26 12:04 PM

BIV MAGAZINE

8 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

FIRST NATIONS BENEFIT FIRST FROM LNG

Fred Wilson, owner of Northwest Truck Rentals in Smithers, had this huge sign built to welcome LNG Canada to his northern B.C. community • SUBMITTED

generate 10,000 full-time jobs during construction, and throw an economic lifeline to northern companies that are facing a slowdown in the forestry sector and persistent delays in getting B.C.’s first major LNG project up to speed.

One of those company owners is Fred Wilson of Northwest Truck Rentals in Smithers, who is supplying rental vehicles to Coastal GasLink and its contractors.

“The spinoffs [from LNG] are huge,” Wilson says. “It has a massive trickle-down effect.” Wilson himself plans to add commercial space to his 3.5-acre lot on Highway 16 to meet local demand.

In December, Wilson put his mechanic to work building

a 60-foot-long lighted sign to show his support for the LNG project. “My mechanic spent 39 hours making that sign. We wanted to bring some awareness to the project in our backyard,” he says.

Like other business people in the north, Wilson is aware that LNG Canada, a consortium led by Royal Dutch Shell that includes Korea-based KOGAS, Japan’s Mitsubishi Corp. and Petronas of Malaysia, could be just the start of the LNG industry in British Columbia.

Chevron Corp. and Woodside Energy have applied to build Kitimat LNG, a second export terminal that could be in production within a decade. É

SECTOR SNAPSHOT: RETAIL Hard-hit retail sales expected to rebound Albert Van Santvoort

B.C. retail sales were hit hard in 2019. According to the province’s latest economic outlook, sales registered a mere 0.5% growth over 2018. Fortunately, sales are expected to pick up in 2020. The province expects retail sales growth to reach 3% this year, 3.3% in 2021 and 3.5% the following year.

Retail sales’ poor performance last year may not come as a surprise. Bricks-and-mortar retailers both big and small have been disrupted by e-commerce. In locations such as Vancouver, some businesses have struggled with issues around affordability. These trends have created a barbell effect in the Canadian retail landscape, where retailers tend to offer luxury brands or discounted products, with few outlets servicing the middle market in between.

According to Retail Trends in Canada 2019-2020 by BDO, this market polarization is expected to intensify, making that mid-priced retail market a challenge for independent and mid-market retailers who may be forced to pick a side to survive.

OLEG MAYOROV/SHUTTERSTOCK

BIV_Investing2020_32.indd 8

2020-02-26 12:04 PM

Forestry Innovation & Opportunity in the Northern Rockies!

The Northern Rockies Regional Municipality (NRRM),

with Fort Nelson as its service centre is located in British Columbia’s northeast corner of BC and with the worldfamous Alaska Highway as its main street. At approximately 86,000 km2, it covers almost 10% of the province – it’s larger than Austria ‌ and is home to 5,000 “can-doâ€? northerners to whom hard work, self-sufÂżciency and innovation are second nature.

Like Us ... Our Forest is Different Where coniferous species dominate in the rest of the province, the NRRM’s forest is made up of mixed-wood, primarily aspen and spruce, sprinkled with pine, cottonwood and birch. Our diverse ecosystems, wildlife habitat and vegetation also set us apart and have spawned a variety of cultural and recreational values worthy of celebration. These factors combine to provide a range of economic RSSRUWXQLW\ GLIÂżcult to match. The aspen resource alone, for example, has been deemed “...a high-quality resource, considerably higher than the aspen in other areas of Canada,â€? by the widely-recognized industry authority FPInnovations.

A Regional Municipality Rooted in Resource Development

The economy of the Regional Municipality has historically been driven by the resource sectors of forestry and natural gas. The global ¿ nancial crisis of 2007-2008 and the subsequent decline in global pricing and demand for Canadian natural gas (2014) have resulted in a signi¿ cant curtailment in natural resource-based activity and resulted in the closure of Canfor’s OSB and plywood mills. The resources on which previous industry thrived remain in abundance however, poised for renewal.

___________________ 1. FP Innovations. “Aspen Utilization in the Northern Rockies...� (2017)

https://nr.civicweb.net/document/147550

BIV_Investing2020_32.indd 9

Taking Initiative Is What We Do!

Never content to await others to address our needs, the NRRM initiated the Forestry Rejuvenation Project in 2013, and has forged a partnership with the province and a local First Nation, to secure greater inÀuence over its own economic destiny. This initiative has borne fruit in the form of the largest Community Forest license yet granted in the province (~217,000 m3). Based on the positive ¿ ndings of Phase 1 of an Aspen Study, the NRRM initiated a second, more comprehensive investigation considering a range of uses for our Aspen from panel products through lumber and Laminated Veneer Lumber (L9/ DQG FRQ¿rming initial ¿ ndings.

In 2019 the Fort Nelson TSA saw an increase of almost 60% to 2,582,350 m3.

As word about Northern Rockies Aspen travels, investors have shown keen interest in both traditional uses and other more innovative ones. The release of the second edition of a Forestry Investor Package Overview Report on Northern Rockies Aspen/ Hardwood Resources, in November 2019, has further heightened interest.

The Timber Supply: Healthy, Sustainable & Increasing

The Annual Allowable Cut (AAC) for the Fort Nelson Timber Supply Area (TSA) recently underwent a review and, while harvest levels elsewhere in BC have seen signiÂż cant reductions in AAC levels, that of the Fort Nelson TSA saw an increase of almost 60% to 2,582,350 m3, exclusive of the AAC allocated to the Community Forest. At the same time, along with Fort Nelson First Nation, the NRRM is engaged with the province in a process to Âżnd a positive balance between conservation concerns and socio-economic interest related to the protection and restoration of Boreal Caribou in the region.

We are Ready to Grow

The NRRM has planned ahead for growth; a Regional Economic Strategy (RES) has been developed and is being implemented to plot a sustainable path forward. With the assistance of the province in the form of a 20-year, $200 million shared-cost agreement, and using an awardwinning asset management program, we have maintained and upgraded key components of our infrastructure including Âż rst rate recreation facilities.

The government of BC’s investment in the Northern Rockies attests to their assessment of our future potential.

The NRRM is strategically positioned as the service centre for resourcebased activity in the region. Key transportation assets include the Alaska Highway (97 – north/south), Highway 77 (East – NWT/Alberta), CN Rail railhead access, and the recently upgraded Northern Rockies Regional Airport, hosting regular scheduled and charter air service. Our transportation capacity, complemented by a full suite of amenities and affordable housing, render the Regional Municipality capable of meeting the needs of residents, business and industry now and into the future.

What’s Missing?

We like to think that we offer the complete package‌ resources, amenities, infrastructure, energy and determined, capable people. We are the Northern Rockies, and we have a vision for a prosperous sustainable future! We want to talk to you about where you ¿ t into the picture.

Call or em email our Regional Development Devel OfÂżcers: Jack Stevenson or Mike Gilbert invest@northernrockies.ca 250.774.2541 www.northernrockies.ca >Business>Economic Development

2020-02-26 12:04 PM

BIV MAGAZINE

10 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

RATIONALIZING B.C.’S TIMBER TROUBLES Opportunities are in the north and in the niche as the sector rationalizes mill capacity

NELSON BENNETT

A

sk any forestry industry executive what the best investment opportunity in B.C. is these days, and he or she might flippantly answer, “Alabama.”

B.C.’s forestry majors continue to spend capital on mills and equipment – they’re just not making those investments in B.C. Mostly, they have been curtailing production in B.C. and investing in American lumber mills.

While B.C.’s forestry sector remains a major economic anchor in B.C. and the province’s largest export sector, it is an industry that is in the throes of rationalization, as majors scale back milling capacity that now exceeds timber supply and lumber demand.

Smaller, private companies continue to invest in new plants and equipment, and there are niche markets that could be developed – engineered wood product plants and pellet production, for example. And there is more than enough timber in the Fort Nelson area to support new specialty mills.

But the bread and butter of B.C.’s forestry sector – dimensional lumber and pulp – is in a long-term contraction.

For two decades, the sector burned through a bonanza of dead and dying pine, the result of the mountain pine beetle epidemic.

But pine beetle timber is pretty much gone, and investment opportunities in B.C.’s forestry sector have fallen off. Six sawmills were permanently shut down in B.C. in 2019 and they are not coming back, industry analysts say.

“Given potentially low returns and heightened risks, in the absence of change we expect lumber companies will deploy capital to regions outside of B.C.,” a report by Forest Economic Advisors concluded in August 2019.

Impediments to investment in B.C.’s forestry sector basically come down to high operating costs and a shrinking supply of merchantable timber.

B.C. simply doesn’t have enough affordable timber to sustain all the sawmills and pulp and paper mills that were built over the years. So any new investments will likely be in niche markets, not the traditional dimensional lumber or pulp and paper sectors. And those investments will likely come from smaller private companies, not the majors.

For example, Hampton Lumber in Oregon recently acquired a sawmill and tenure in Fort St. James from Conifex Timber Inc. and plans to build a new sawmill there. The San Group Inc. is investing more than $70 million in a new sawmill in Port Alberni, and Kalesnikoff Lumber Co. Ltd. is building a new $35 million cross-laminated timber (CLT) plant in Castlegar.

The provincial government has been playing up the opportunities for CLT plants in B.C. since it adds an additional link in the value chain.

“The overall focus is we need to go from being a primary producer of dimensional products to a producer of dimensional and value-added products,” says B.C. Minister of Forests, Lands and Natural Resource Operations Doug Donaldson.

But Russ Taylor, analyst for Forest Economic Advisors, says the market for CLT – tall wood buildings and bridges, for example – is still fairly small. He’s not expecting to see CLT mills popping up in place of every dimensional lumber mill that shuts down.

“It’s a very niche-y business,” he says.

He adds that there is still a fair amount of wood waste available from existing sawmills in B.C., which could feed new wood pellet plants. The pellets are exported as a renewable fuel – an alternative to coal – and burned for thermal power generation in places such as Japan and Europe.

“There is a lot of waste wood, and that’s going to maybe create another opportunity for a couple of pellet mills, but they’re not a lot of jobs,” Taylor says.

One government policy that doesn’t get a lot of attention, but drives some fairly significant investments in energy efficiency by lumber and pulp mill operators, is a government carbon policy that provides carbon credits.

It has resulted in a number of mills investing in fuel switching: reducing or replacing natural gas – typically burned in drying kilns – with wood waste (bioenergy), which can be used in cogeneration to produce power.

Opportunities are in the north and in the niche as the sector rationalizes mill capacity

BIV_Investing2020_32.indd 10

2020-02-26 12:04 PM

| 11

Forestry analyst Russ Taylor says investment opportunities in B.C.’s forest sector may be limited to “niche” areas like pellet plants • ROB KRUYT

Not only do these fuel-switching investments result in some notable greenhouse gas reductions, but also the companies can earn revenue from selling surplus power to BC Hydro. In 2018 alone, the government awarded $1 million in credits to Canfor Corp. and Kruger Products for ongoing investments in bioenergy.

As for the fundamental resource at the heart of the sector – trees – both the Interior and coastal forest sectors are facing a long-term reduction in the allowable annual cut. The one region that has an ample supply is the Northern Rockies timber supply area (TSA) around Fort Nelson.

Mike Gilbert, regional development officer for the Northern Rockies Regional Municipality, has been trying to lure investors to the region with the prospect of ample timber, rail access, a willing and able workforce and low housing costs.

“There is an absolutely prime resource here waiting to be used,” Gilbert says. “We’ve just established the largest community forest in B.C., in conjunction with our partners, Fort Nelson First Nation. We think that anybody that’s going to operate a significant operation here will need to use that as part of the portfolio.”

Fort Nelson used to have a dimensional lumber sawmill and plywood and oriented strand board (OSB)

BIV_Investing2020_32.indd 11

plants. Since they were shut down in 2008, the Northern Rockies TSA has built up an undercut – a surplus of trees created by unused allowable annual cuts. As a result, the provincial government recently bumped up its allowable annual cut to 2.6 million from 1.6 million cubic metres.

The region has a mixed forest composition of 60% deciduous (mainly aspen and cottonwood) and 40% conifer (primarily spruce) that was untouched by the mountain pine beetle epidemic. The high-quality aspen in the area could support OSB, veneer, plywood and hardwood lumber production.

“You’ve got an abundant resource that has been examined by objective, expert third parties and qualified as possibly the best aspen in North America in terms of quality,” Gilbert says.

While the B.C. government has implemented policies aimed at freeing up more logs and wood waste, what is really needed are policies to reduce operating costs such as stumpage rates, says Susan Yurkovich, CEO of the Council of Forest Industries.

“That is a key driver,” she says. “If we can get that right, there are opportunities. The forest sector will look slightly different, but there are opportunities if we can get that right.” É

YOU’VE GOT AN ABUNDANT RESOURCE THAT HAS BEEN EXAMINED BY OBJECTIVE, EXPERT THIRD PARTIES AND QUALIFIED AS POSSIBLY THE BEST ASPEN IN NORTH AMERICA j Mike Gilbert regional development officer, Northern Rockies Regional Municipality

2020-02-26 12:04 PM

BIV PROFILE

12 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

BIV PROFILE

MEMBER OF PARLIAMENT

JODY WILSONRAYBOULD Reflections on a tumultuous year

PHOTO: SUBMITTED

BIV_Investing2020_32.indd 12

2020-02-26 12:04 PM

| 13

HAYLEY WOODIN

Jody Wilson-Raybould walks onstage to a warm, roaring standing ovation from dozens of female Indigenous leaders gathered at a British Columbia Assembly of First Nations (BCAFN) women in leadership event in Richmond earlier this year.

“We come from an oral culture. And if you do not speak the truth, then your culture dies,” shared the independent member of Parliament for Vancouver-Granville.

“I come from a long line of matriarchs, and that’s what gave me strength to do what I needed to do,” she said.

“The strength that we have as Indigenous Peoples, and particularly as Indigenous women, is that we show the way. We guide the path. We guide chiefs. That’s my role in the Big House. And that’s what’s carried me through this last tumultuous year.”

Tumultuous. That is the word Wilson-Raybould says most appropriately describes her past year.

“It was tumultuous because I navigated something that wasn’t of my own making and something that was very public. I went from the front benches as a senior minister of the Crown on a very public journey to the far reaches of the corner of the House of Commons, sitting as an independent,” she tells BIV Magazine.

“I started 2018 as the Minister of Justice and we all know where I finished it off.”

A little over a year ago, Wilson-Raybould delivered what was described by many as “damning” testimony to Canada’s Standing Committee on Justice and Human Rights. It made headlines around the world and consumed airtime and print space at home for days.

“For a period of approximately four months between September and December of 2018, I experienced a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion in my role as the attorney general of Canada in an inappropriate effort to secure a deferred prosecution agreement with SNC-Lavalin.”

Her opening line was followed by a four-and-a-halfhour account that detailed, from her perspective, Prime Minister Justin Trudeau’s interference with Canada’s prosecution authority.

The event was preceded by Wilson-Raybould’s shuffle out of her role as minister of justice and attorney general weeks before.

“It started immediately, the day that I was shuffled to Veterans Affairs,” Wilson-Raybould tells BIV Magazine.

“I knew immediately and I was prepared for the reality of what might come.”

But the media circus, the speculation, the smear campaigns and her expulsion from the Liberal caucus were

nonetheless challenging.

“It was very public. It was very challenging for my husband, for my family, particularly my mother, who felt a sense of helplessness watching it all,” she says.

“I resigned from cabinet and the prime minister alone made the decision to eject me from the Liberal caucus and to eject me from being the already confirmed Liberal candidate in Vancouver-Granville. And at that point, I had a choice. I could have walked away,” she laughs, “or continued and ran.

“I feel OK with the record. There are parts of it that are ridiculous, completely untrue. Spiteful.”

She quotes Martin Luther King.

“It’s always the right time to do the right thing, and I know I was confident I was doing the right thing and that I was speaking my truth and acting as I think every public servant should – with integrity.”

THE RACE

Wilson-Raybould sits onstage at the BCAFN women in leadership dialogue session with a microphone she barely uses. She makes a few quick introductory remarks.

The setting may have suggested she was there to talk; in reality, she was there to listen. One at a time, audience members took turns at their own microphones to thank her, to share their stories, to talk about leadership and to share a moment with the former BCAFN regional chief who became – and perhaps still is – the most talked-about woman in Canadian politics.

Offstage, Wilson-Raybould signs copies of her book, From Where I Stand: Rebuilding Indigenous Nations for a Stronger Canada, published in September 2019. She takes selfies and photos and listens some more.

“I really am a bit uncomfortable talking about myself,” she admits in a one-on-one interview near the end of the conference.

She also shares that she received thousands of letters from constituents and Canadians over the course of her tumultuous year.

“It dramatically impacted me in terms of the positive responses,” Wilson-Raybould says. She learned she’s “kind of tough,” she says with a laugh. She learned a lot about politics and political personalities and blind loyalty, a term she repeats throughout the interview.

“I went through a whole series of reflections and it was never clear that I was going to run again. I mean I found myself in a place where I could never have anticipated being,” she says. “Ultimately the decision to run again, if I can boil it down, was I didn’t feel that any one person could determine my longevity in federal politics.”

ULTIMATELY THE DECISION TO RUN AGAIN, IF I CAN BOIL IT DOWN, WAS I DIDN’T FEEL THAT ANY ONE PERSON COULD DETERMINE MY LONGEVITY IN FEDERAL POLITICS j Jody Wilson-Raybould MP, Vancouver-Granville

BIV_Investing2020_32.indd 13

2020-02-26 3:06 PM

BIV PROFILE

14 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

As an independent candidate, Wilson-Raybould’s second term as a member of Parliament will be different.

She says there are pros and cons – but mostly pros – to being non-partisan in what she calls “hyper-partisan” politics.

The cons include less power to effect change. Wilson-Raybould drew No. 78 in the private member’s bill lottery, which she says generally means she will be about two years into her term before she has an opportunity to bring new legislation forward. By comparison, she passed 14 pieces of legislation as minister of justice.

But the issues are still the issues, and Wilson-Raybould’s passion for them remains. As an independent, she has an opportunity to work across party lines to bring bills forward, and it’s one she plans to seize.

“The electorate here, I think, sent a pretty strong message to Ottawa that ... the way we do politics right now is not the way that it should always be done. That we should actually have more representative democracy,” she explains. “The opportunity to work across party lines as an independent not constrained by the central control that exists within political parties – I mean I only know one political party and there was a huge amount of control in the centre – gives you the ability to talk to people and understand what they want and get support for legislation that you want to advance. Which is what I’m going to do.”

THE ISSUES

Social justice, democratic reform and Indigenous issues remain priorities for Wilson-Raybould, who says her focus is on doing a good job as an independent, and not on her political future.

She’s interested in working with members of the Senate on bringing forward public members’ bills. Criminal justice reform around mandatory minimum sentences is an area of interest for Wilson-Raybould, who earned her law degree from the University of British Columbia.

When asked about what she would like her legacy in politics to look like, reconciliation is front of mind.

“I would love to play a role in creating that space for the transformative change of Indigenous nations within this country. That is the biggest passion of why I got involved in mainstream politics in the first place, and I was hopeful it would happen in the previous government. But if I can play some role in opening that door, that would be a pretty

amazing part of somebody’s legacy.”

She is clear that in addition to truth telling and healing, reconciliation requires laws and processes to change, and that that necessarily requires the political will to change them. That pace of change has been incredibly slow, she says. But she’s hopeful it will change, just as she’s hopeful the political landscape in Canada will change as well.

“I was raised from a very young age to be a leader and to contribute my skills to issues that are important and to help advance quality of life for our people. I come from a communitarian culture, which means that everybody has a role to play,” she says, including independent members of Parliament in the far reaches of the corner of the House of Commons.

“If I have a leadership style, it is one of trying to build consensus where possible. It is incredibly hard and it takes a lot of time, but it’s always in the background of who I am.”

Wilson-Raybould says she’s been toying with when to write her memoir. She’s settled on writing two books. One will chronicle her time as Canada’s minister of justice.

The second will simply be a memoir.

Whether Wilson-Raybould will or should or could become prime minister one day follows the Vancouver-Granville representative to events and interviews like a shadow. A video of her father, Indigenous leader Bill Wilson, telling then prime minister Pierre Trudeau that both of Wilson’s young daughters aspire to be lawyers, and both want to be prime minister, surfaced in the wake of the SNC-Lavalin scandal.

“I love that video,“ says Wilson-Raybould.

“He was at the table in that video at the constitutional discussions after Section 35 just came in and full of optimism about Aboriginal title and rights being recognized and what that meant for rebuilding Indigenous nations.

And he was and is incredibly proud of both my sister and I. And his comments reflected his optimism about his daughters and that they could achieve anything that they wanted to achieve,” she says, adding that she has never had and does not have ambitions to one day lead the country as prime minister.

“My voice is still amplified and people still listen when I say things. I don’t know how long that’s going to last but I want to continue to say what I feel and what my constituents want.” É

SECTOR SNAPSHOT: TOURISM Tourism growing faster than forecasted Albert Van Santvoort

B.C.’s tourism industry has enjoyed significant growth for some time. In 2019, overnight stays increased 2.6% to 6.2 million. That growth followed a 6.4% increase in overnight visits between 2017 and 2018. Over the past five years, the province has seen U.S. multi-day trips increase by 36% while visitors from all other countries increased 49% from 2013 to 2018.

Despite slowing year-over-year visits, Destination BC expects revenue to grow by 5% each of the next two years.

B.C.’s economy is the second most dependent on tourism in Canada after Prince Edward Island. It contributes nearly 3% to the province’s GDP. Some 5% of B.C. workers are employed by the sector, and the industry estimates 106,000 new jobs will open in the sector between 2018 and 2028.

PPA/SHUTTERSTOCK

BIV_Investing2020_32.indd 14

2020-02-26 3:08 PM

BIV MAGAZINE

| 15

B.C. COMPETITIVE TRAJECTORY THREATENS INVESTMENT LANDSCAPE Past economic performance won’t dictate B.C.’s economic future

GREG D’AVIGNON

B.C. has enjoyed an extended stretch of solid economic growth over the past decade. Some readers may be surprised to learn that from 2009 through 2018, B.C. actually posted the strongest average annual economic growth rate of any province. When GDP growth is averaged over the past three years, B.C. also topped provincial rankings.

This performance, however, is backward looking. And there is evidence that the competitive landscape for many of the industries that drive our economy has deteriorated, even though the top-line growth numbers have held up.

While we wait for Statistics Canada to produce its data on 2019, estimates indicate the province’s economy downshifted and grew by a meagre 1.8% last year. This marks the slowest growth since the 2009 recession and global financial crisis. Several current economic indicators are pointing down, suggesting the economy will continue to moderate in the near term and struggle to grow by more than 2%.

Much of the recent slowdown is due to external factors beyond the province’s control. The sluggish global economy and ongoing trade conflicts are weighing on B.C.’s export sector, which in turn has negative spinoff implications for many local service providers. This less favourable backdrop means weaker sales activity and pressure on margins. Rising costs – for energy, labour, property taxes and more – are especially challenging for export-oriented companies that cannot pass such costs on to their customers.

In this environment, many businesses “sharpen their pencils” and deploy capital with even greater rigour and caution. This is concerning, especially at a time when B.C.’s overall competitiveness is eroding. The overall tax burden on B.C. business has risen significantly in the past several years due to the introduction of the employer health tax, a higher corporate income tax rate and B.C.’s steadily escalating carbon tax. Steep property tax increases are also problematic for many businesses. The application of the provincial sales tax on most business

inputs is also a cost that companies in most other Canadian jurisdictions do not face. Meanwhile, the corporate tax rate in the U.S. was slashed to 21% from 35%. Alberta, too, is cutting its corporate income tax rate to 8% from 12% in the next few years. In a short period of time, the overall business tax advantage B.C. once enjoyed has evaporated. In fact, relatively high and rising business taxes are now a source of competitive disadvantage for the province.

B.C. businesses also face higher costs stemming from a myriad of recent regulatory and policy changes. While some of these changes may be justified, amendments to the Employment Standards Act and the higher minimum wage are examples of government decisions that are adding costs. For businesses operating on the land base, increasingly cumbersome government-dictated regulatory and permitting processes create uncertainty for new investment and undermine the economic viability of existing operations. Additionally, B.C. maintains the highest carbon tax in North America. This is a particularly worrisome disadvantage because, unlike most other jurisdictions around the world, B.C. has no measures in place to offset any of the added costs borne by B.C.’s export-oriented industries, which include natural resource companies, manufacturers and providers of transportation services. B.C. is also a complex place to do business because of the need to address the legitimate interests and concerns of Indigenous communities.

In parts of the province, transportation and other infrastructure bottlenecks make it more expensive to move people and ship goods to market. In urban areas, the hiring challenges that many employers face are exacerbated by the fact that job seekers are unwilling to make long and increasingly uncertain commutes.

Add it all up, and there are reasons to be concerned about B.C.’s competitive trajectory and the extent to which we remain an attractive place to invest and grow a business.

It is time for B.C. policy-makers to turn their attention to these issues and to refrain from taking further actions that make it harder for the private sector to operate and succeed. É Greg D’Avignon is president and CEO of the Business Council of British Columbia.

FOR BUSINESSES OPERATING ON THE LAND BASE, INCREASINGLY CUMBERSOME GOVERNMENTDICTATED REGULATORY AND PERMITTING PROCESSES CREATE UNCERTAINTY FOR NEW INVESTMENT AND UNDERMINE THE ECONOMIC VIABILITY OF EXISTING OPERATIONS

BIV_Investing2020_32.indd 15

2020-02-26 12:04 PM

ADVISING NEW BUSINESSES HOW TO EXCEL. MEET THE CPA AND TECH-ENTREPRENEUR WHO’S LEADING START-UPS TO SUCCESS. Ali Pourdad is no stranger to throwing himself into new ventures. In fact, he’s made a career of it.

The tech-entrepreneur was born and raised in Vancouver, but lately he’s been spending three-quarters of his time in Toronto with his newest business. Pourdad Capital Partners focuses primarily on venture capital and private equity investments, helping new companies in the critical early stages of getting their businesses off the ground.

Pourdad founded the Vancouver-based family office in late 2017, and lately, it has meant a geographical adjustment.

“Some of our portfolio companies are here in Toronto,” says Pourdad. “I’m helping them solve early-stage problems more efficiently to help them move faster as a business.”

Pourdad’s track record suggests that his clients are in good hands.

Although he’s best known for his role with financial technology (fintech) firm Progressa, he has been proving his ability to recognize a good investment for years. When he was exploring career options, Pourdad remembers wanting to expand his opportunities.

“I was looking at the job market,” he remembers. “I thought the CPA skill-set would open up the most doors.”

His choice wasn’t surprising. Pourdad’s father and uncle are both Chartered Professional Accountants -- “it just goes back generations,” he laughs -- but he found the CPA program complemented his existing experience.

Prior to getting his CPA designation, Pourdad dipped his toes into

entrepreneurship, co-founding and leading an IT company. He received his CPA designation and then began articling for PricewaterhouseCoopers LLP. That’s where he says he honed the critical thinking skills that brought him to where he is today.

“Having a CPA strengthened a lot of the skills that I’d already picked up running businesses for myself,” says Pourdad. “Being able to work with others and being able to coach - you learn those things as a CPA very early on in your career.”

FROM FOUR PERSON OFFICE TO FASTEST-GROWING COMPANY IN B.C.

With experience leading his own business and a CPA designation under his belt, Pourdad co-founded Progressa in 2013.

The firm’s goal was to provide alternative loans that would help clients consolidate their debt instead of having to rely on payday lenders. Pourdad and co-founder Michael Jover rolled up their sleeves and poured their hearts and souls into the business, running operations from a four-person space in Fairview Slopes. Pourdad was the company’s first CEO between 2013 and 2019. Under his leadership, Progressa grew to $20 million in annual revenue and was recognized as one of the fastest-growing companies by revenue in B.C. and Canada.

“Running my own business and growing a leadership team, I was responsible for hiring senior leadership and guiding them over the course of the last seven years,” says Pourdad. “In the trenches of growing a business for myself again, I realized that being a CPA was my calling because the skill sets that I had picked up allowed me to be successful as the CEO of Progressa.”

ADVISING IN AN EVER-EVOLVING MARKET

In September 2019, Pourdad announced he was stepping down from his role as CEO of Progressa, but he still supports the leadership team as a shareholder and board member.

Today, Pourdad brings his subject matter expertise in fintech to his work for Pourdad Capital Partners.

The company has active investments in early-stage technology, including fintech and real estate, in companies throughout Canada and the western United States. His expertise is a boon in the current climate.

“The Canadian market right now is really tough for younger entrepreneurs to navigate,” he says.

The projected downturn has made investors cautious. Demographic and logistical issues revolving around big tech’s arrival in Canada have made it difficult for companies to raise capital.

“We see ourselves as a guiding hand, a company that can see these issues when entrepreneurs are bogged down in the details and don’t see what’s happening around them,” says Pourdad.

“Organizing yourself and your thoughts and dealing with problems efficiently instead of spinning your wheels, those little things just get entrenched in you as a CPA.” His hands-on approach means that the majority of his time these days is spent personally advising the company’s investments.

“That’s really what I’m focused on, is trying to source good entrepreneurs, good companies that need the help,” says Pourdad. “And then, we’ll do everything we can to guide them. We’re cautiously optimistic that we can help.”

SPONSORED CONTENT

Left side V1 BIV_Investing2020_32.indd 16

2020-02-26 3:05 PM

EVERYONE NEEDS THEIR BUSINESS TO GROW, THAT’S WHY EVERYONE NEEDS A CPA. From the smallest startup to the largest multinational corporation a CPA can find ways to help businesses succeed. Find out what a CPA could do for your business at BCCPA.CA

BIV_Investing2020_32.indd 17

2020-02-26 12:04 PM

BIV MAGAZINE

18 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

ECONOMICS OF INVESTMENT IN B.C. There are many metrics with which we can measure investment trends in B.C. Total real investments by government and business into the province tell us how our domestic economy is supporting itself. Foreign direct investment figures offer a glimpse at international investment appetite. Both are explored in this month’s infographic, which includes data from the B.C. government’s recently released budget and economic forecast and outlook.

2019 INVESTMENT GROWTH IN B.C.

12.8

13.4

%

%

Increase in total real investment in B.C. in 2019

THREE YEARS OF PROJECTED TOTAL REAL INVESTMENT GROWTH, SUPPORTED

BY INVESTMENTS FROM BUSINESS AND GOVERNMENT

Estimated growth in real business investment in 2019

2020 %

2021 %

5.4

2.1

2022 %

2.3

ASIA-PACIFIC INVESTMENT INTO B.C. OVER TIME 2018

2017

2016

2015

43 DEALS

23 DEALS

21 DEALS

16 DEALS

$26.9 BILLION

BIV_Investing2020_32.indd 18

$2 BILLION

$2.4 BILLION

$519.5 MILLION

2020-02-26 12:04 PM

| 19

$47.5 BILLION IN CAPITAL INVESTMENTS HAVE BEEN MADE IN B.C. BY INVESTORS FROM THE ASIA-PACIFIC ENERGY

MINING AND CHEMICALS

FINANCE

$32.9 billion

$8.5 billion

$1.9 billion

CONSUMER GOODS AND SERVICES

INDUSTRIAL GOODS AND SERVICES

TECHNOLOGY

$1.2 billion

$594 million

$582 million

B.C. real estate investment and services saw more than $1.7 billion in foreign direct investment from the Asia-Pacific between 2015 and 2018 compared with virtually no investments before 2015

ASIA-PACIFIC INVESTMENT INTO B.C. CITIES FROM 2003 TO 2019 KITIMAT

VANCOUVER

8 DEALS

150 DEALS

$26.2 MILLION

DAWSON CREEK

$13.9 BILLION

$3.2 BILLION

FORT NELSON

SURREY

RICHMOND

3 DEALS

4 DEALS

15 DEALS

$1.2 BILLION

$617.9 MILLION

1 DEAL

$138.2 MILLION

MAKEEVADECOR/SHUTTERSTOCK

Sources: Budget 2020: A Balanced Plan to Keep BC Moving Forward, February 2020; APF Canada Investment Monitor, Asia Pacific Foundation of Canada

BIV_Investing2020_32.indd 19

2020-02-26 3:09 PM

BIV MAGAZINE

20 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

The Squamish Nation, which earned $32 million from real estate leases during 2019, plans to develop up to 11 residential towers at the south end of Vancouver’s Burrard Street Bridge • REVERY ARCHITECTURE

B.C.’S BIGGEST MONEY MACHINE Real estate is the largest single contributor to B.C.’s GDP, and a tool for transformative change in the provincial economy FRANK O’BRIEN

T

wenty-two years ago a Canadian-Finnish couple bequeathed their five-acre farm in Coquitlam to the Finnish Canadian Rest Home Association (FCRHA).

This January, after a unique agreement between the non-profit association and one of British Columbia’s largest real estate developers, the FCRHA was handed the keys to a 14-unit seniors housing complex where rents are affordable to households with incomes of $33,600 or less.

Intracorp built the seniors centre in exchange for half of the farmland, on which it is building family-sized

BIV_Investing2020_32.indd 20

four-bedroom homes in the first phase of a 73-unit townhouse development.

The 3,600-member Squamish Nation, which in the latest fiscal year posted $95 million in revenue that included $32 million in real estate income, recently approved developing an 11-acre site it owns near downtown Vancouver in a joint venture with private developer Westbank Corp. Squamish

2020-02-26 12:04 PM

| 21

figures the residential-weighted mixed-use project could generate from $10 billion to $20 billion for its nation over the next few decades, making it one of the wealthiest Indigenous communities in Canada.

Metro Vancouver’s tight rental vacancy rate would also be much worse than its current 1.1% if it were not for private condo investors, who now account for 69,967 rentals – including 11,000 condos that were added to the region’s rental stock in 2019 – compared with a total of 1,464 purpose-built rental apartments completed last year, according to Canada Mortgage and Housing Corp.

But the transformative power of real estate investing goes beyond improving the lives of marginalized citizens. It is the dominant force driving B.C.’s economic growth.

Real estate accounted for 18% of B.C.’s gross domestic product (GDP) last year, according to Statistics Canada.

When construction is included, real estate is an economic behemoth that now represents 26% of the entire provincial economy. This compares with a 4% GDP contribution from B.C.’s once-dominant resource sector.

Greater Vancouver home sales alone tallied $25.4 billion in 2019, and that was considered a slow year.

In the commercial sphere, office and industrial construction in Metro Vancouver built 11 million square feet in 2019, second only to the Greater Toronto Area. An additional four million square feet of retail space is being built in Metro Vancouver.

“There are many reasons for optimism heading into 2020,” Jason Kiselbach, senior vice-president and managing director for CBRE, told an outlook panel at the 2019 Vancouver Real Estate Strategy & Leasing Conference held last fall.

At 2.4%, Vancouver’s downtown office vacancy rate is the second lowest in North America. Metro Vancouver office vacancies are 3.8%, the lowest in Canada, which has an urban average vacancy of 11%, Kiselbach noted.

Avison Young reports that downtown Vancouver lease rates for prime office space are now in the range of $55 to $95 per square foot gross, compared with $50 to $90 in downtown Toronto and a maximum of $45 per square foot in central Montreal.

In the first half of 2019, $2.1 billion worth of office space was sold in Metro Vancouver – a near-record high. The billion-dollar sale of the Bentall Centre office complex in downtown Vancouver was soon followed by an announcement from its U.S. buyers that it will expand with a 500,000-square-foot commercial tower. Reliance Properties, which is building a new office tower on Burrard Street with the Jim Pattison Group, plans to construct another new 29-storey office tower downtown.

Industrial vacancies, meanwhile, have plunged to 2.5% across Metro Vancouver, a near-record low despite the biggest annual addition of new supply in 10 years.

“The challenge for Vancouver is the lack of product, not purchasers,” states a December 2019 report on Metro Vancouver real estate from Altus Group.

Metro Vancouver’s real estate markets are forecast to match the pace seen in 2019, Altus concludes, “with some

BIV_Investing2020_32.indd 21

Jason Kiselbach, senior vice-president and managing director for CBRE, at the Post, which is replacing the old Canada Post headquarters in Vancouver. The office space in the QuadReal project has already been pre-leased to U.S. tech and retail giant Amazon • CHUNG CHOW

upside potential for new home sales.”

Real estate’s blast radius extends far beyond Vancouver.

In Chilliwack, the opening of the $200 million Molson Coors Brewing Co. brewery, which was relocated from Vancouver, helped make the eastern Fraser Valley community the Lower Mainland’s second most active industrial market, according to Avison Young, with the region’s lowest vacancy rate at 0.4%.

On the retail front, PCI Developments has purchased the Cottonwood Mall and is in the midst of a $30 million expansion. Work also begins this year on the $63 million remake of the Chilliwack Mall that includes three residential towers.

In Kelowna, 12 new multi-family towers are under construction, including the tallest tower between Vancouver and Calgary. Kelowna added 312,600 square feet of new office space in December 2019, six times more than in 2018.

The latest new buildings – totalling more than 300,000 square feet – are 100% pre-leased.

With 3.9 million square feet of office space in the city, less than 200,000 square feet is vacant, according to Colliers International. Kelowna’s industrial vacancy rate is at an alltime low of 0.7%. This has attracted nearly 180,000 square feet of new construction and driven prime industrial land prices to $1.3 million an acre.

In Prince George, a near-record pace of construction is credited for the city’s forecast GDP growth rate of 1.7% this year, according to the Conference Board of Canada.

Indicative of what is happening in much of B.C., the board contends that real estate will be Prince George’s fastest-growing industry in 2020, expected to grow by a rate of 2.7%. É

2020-02-26 12:04 PM

BIV MAGAZINE

22 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

AROUND TOWN IN MARCH A month of drive, dance and dresses HAYLEY WOODIN

DANCE THE NIGHTS AWAY

The Vancouver International Dance Festival returns to the city with its mission to support under-represented contemporary dance. The festival offers a number of free and paid performances throughout Vancouver until the end of the month. Guests can also trade in dress shoes for dance shoes by attending one of the festival’s free workshops. This year marks the festival’s 20th iteration. vidf.ca

GURYANOV ANDREY/SHUTTERSTOCK

CELEBRATE A CENTURY OF CAR SHOWS

This year marks the centennial anniversary of the Vancouver International Auto Show, which celebrates 100 years of B.C. automotive history March 25-29. The event, operated by the New Car Dealers Association of BC, will feature a special history-of-auto procession, with Jimmy Pattison behind the wheel as the parade grand marshall and event honorary chair. The show has attracted more than 115,000 attendees each of the past three years. vancouverinternationalautoshow.com É

SERGEI BACHLAKOV/SHUTTERSTOCK

GET RUNWAY READY

Va ncouver Fash ion Week is back w ith its Fa l l / Wi nter 2020 show lineup. Founded in 2001, the event features both established and emerging designers in a series of runway shows and related events. Vancouver Fashion Week has expanded to highlight children’s fashion and provides an international platform for up-and-comi ng designers th rough its Globa l Fash ion Col lective. vanfashionweek.com SERGEI BACHLAKOV/SHUTTERSTOCK

SECTOR SNAPSHOT: FILM AND TV B.C.’s film industry the fastest growing in the country Albert Van Santvoort

B.C.’s moniker as Hollywood North is a star that burns brighter with each passing year. The province has become the No. 1 film and television production centre in Canada and the third-largest physical production centre in North America. Three years ago, B.C. generated more revenue from film and TV than did Ontario. Between 2013 and 2017, the industry more than doubled in size. Revenue increased by 175% to $3.3 billion in 2017, up from $1.2 billion in 2013.

That pace of revenue growth significantly outpaced growth in Quebec and Ontario over the same period (29% and 18.8%, respectively). In 2019, B.C.’s film and TV sector contributed $3.2 billion to the economy.

The provincial government predicts the industry will grow to be one of B.C.’s largest employment sectors. Employment is projected to grow 3.3% annually until 2023 – more than three times the 1% annual growth rate expected for overall employment over the same period. The industry’s revenue and employment growth are supported by more demand for filming in Canada. The increase is largely due to foreign investment, which increased 18.7% over the past year. In 2019, Canada secured a record $5.6 billion of foreign investment into the country’s film sector.

GNEPPHOTO/SHUTTERSTOCK

BIV_Investing2020_32.indd 22

2020-02-26 12:05 PM

BIV MAGAZINE

| 23

FIRST NATIONS ECONOMIC RECONCILIATION TO CONTINUE IN 2020 Bill 41 changes what is possible between First Nations and the provincial government

CRYSTAL SMITH

To say the least, Canada’s First Nations have been playing on an unequal playing field for a long time. But I can confidently say the tides are turning – and, I believe, will continue to turn throughout the next decade.

Fi rst Nations have spent years fighting to reclaim our basic rights to our lands, to practise our culture and to self-govern. We have advocated for the right to be part of the discussions that lead to decisions and projects that impact the everyday lives of our people, now and in the future. As the late Heber Maitland, a former Haisla Nation elected chief councillor, once said, “All we want is a share and a say.”

In this last decade the Haisla Nation finally did get a share and a say.

As part of the $40 billion LNG Canada project, we negotiated agreements that allowed us to protect our environment in a way that is based on our input, priorities and needs. The agreements also gave us the ability to invest in programs we believe can help empower this generation of Haisla and those who follow us.

We have also developed positive relationships with many other proponents in our territory, and have become equal partners, with a share and a say, in their projects.

Many other First Nations – the Nisga’a and the Tahltan, to name two – are taking similar steps, sitting at the table with industry, not only participating in discussions and projects but leading them too.

While this means economic growth for our First Nations, the most important impact has been the improvement in the physical, mental and social well-being of our people.

Feelings of hope and pride are back.

For the Haisla Nation the last decade represents a shift in what is possible in relationships between industry and First Nations. We are no longer on opposite sides of the table. Instead we work together, share decision-making and create mutually beneficial outcomes.

For the Haisla Nation, the next decade will see B.C.’s Bill 41 – based on the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and passed unanimously in the legislature in late November of last year – change what is possible in our relationship with the government.

Bill 41 lays the groundwork for a more positive, mutually advantageous and – most importantly – legally supported, consent-based relationship.

No one knows the exact implications of Bill 41. As these things go, it could be messy and confusing. It will take time to sort out and clarify. But the fact that UNDRIP has been enshrined in a provincial act puts a focus on economic reconciliation like never before.

Bill 41 enshrines the right of B.C.’s Indigenous people to participate in all decision-making that affects our interests. It affirms a new approach to Indigenous rights and issues that entails moving forward, together, in a way that we all have that “share and a say.”

The Haisla Nation will continue to advocate for our rights and the rights of all First Nations. We will continue to support responsible development in our territory and in the world overall. And we will continue to build positive partnerships with respectful proponents and the government.

We look forward to seeing what this new relationship model will look like. And we look forward to sitting at the table and being part of those discussions with our fellow Nations and partners.É Crystal Smith is chief councillor of the Haisla Nation.

THE MOST IMPORTANT IMPACT HAS BEEN THE IMPROVEMENT IN THE PHYSICAL, MENTAL AND SOCIAL WELL-BEING OF OUR PEOPLE

BIV_Investing2020_32.indd 23

2020-02-26 12:05 PM

BIV MAGAZINE

24 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

B.C. TECH POWERS PROVINCIAL GROWTH International tech firms, drawn to B.C.’s access to talent, are boosting growth in the province’s service sector TYLER ORTON

W

hile most British Columbians rang in 2020 with sips of champagne or personal resolutions, one global financial giant had its eyes firmly set on the $510 million investment it was about to make in

Vancouver.

Mastercard Inc.’s January launch of a new cybersecurity centre in the city’s downtown core is set to create about 300 new positions in the province’s rapidly expanding technology sector.

At the Exchange office tower on Howe Street, Mastercard’s new cybersecurity team finds itself in the company of another global giant making similar moves to tap B.C.’s service-oriented innovation industry: Amazon.com Inc. “We’re going to continue to be attractive to major multinationals making foreign direct investments, and that’s a good thing – but only if we make the investments to ensure that we have a balanced tech ecosystem,” Jill Tipping, CEO of the BC Tech Association, said on the day Mastercard revealed its major expansion plans.

Big investments from massive multinationals are among the reasons B.C.’s economy is forecast to outperform all other provinces in 2020, spurred on significantly by tech’s growing influence on the service industry.

“It is the services-based industries that are poised to drive the province’s employment gains, particularly within the information technology (IT) sector,” states the Conference Board of Canada in its fall 2019 outlook.

The think tank projects the province’s economy will expand 3% in 2020 – above the 2.6% it is estimated to have grown in 2019, but below the 3.3% average annual growth rate enjoyed between 2014 and 2017.

“The province has already attracted investment from major tech players such as Apple [Inc.] and Amazon and will continue to see a rise in demand for IT-related occupations within professional services such as computer services and consulting,” the Conference Board writes.

“As well, the continued rise of financial technology and its related applications will lead to solid employment gains within the province’s strong financial sector over the next two years.”

Jeff Booth, an entrepreneur and one of the city’s longest-serving leaders in the innovation sector, says demand for talent is

BIV_Investing2020_32.indd 24

Mastercard Inc. announced in January at the World Economic Forum in Davos, Switzerland, that it’s investing $510 million to open a new cybersecurity centre. From left: Ajay Bhalla, president, cyber and intelligence solutions, Mastercard; Ajay Banga, president and CEO, Mastercard; Navdeep Bains, minister of innovation, science and industry; and Ian McKay, CEO, Invest in Canada • SUBMITTED

driving much of the interest in Vancouver as a tech hub.

Metro Vancouver is home to major universities as well as a number of smaller institutions pumping out thousands of tech workers.

CBRE Group Inc.’s 2019 Scoring Canadian Tech Talent report determined the region was home to 74,700 tech workers – a

2020-02-26 12:05 PM

| 25

BuildDirect Technologies Inc. cofounder Jeff Booth says international firms are drawn to Vancouver’s access to talent. But he cautions the tech sector could be at risk of becoming a support ecosystem for global tech giants rather than a hub for entrepreneurship • CHUNG CHOW

42.6% surge in workers over the last five years alone.

In addition to Mastercard’s $510 million investment in a new cybersecurity centre, Amazon Web Services (AWS) kicked off 2020 by launching a Cloud Innovation Centre at the University of British Columbia to provide students with access to AWS tools in cloud technology.

But Booth, who was the founding CEO of e-commerce company BuildDirect Technologies Inc., cautions that there are knock-on effects that the province should be aware of.

“That race for talent pushes up the cost of business starting here,” says Booth, author of the newly released book The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future.

He says this puts Vancouver at risk of drifting into the role of a support ecosystem for global tech giants instead of becoming a hub for entrepreneurship.

In a speech to the Greater Vancouver Board of Trade in early January, outgoing Bank of Canada governor Stephen Poloz touted higher-than-expected growth in business investment.

“This is crucial to the outlook for the economy because investment is both important for growth and vital for building the economy’s productive capacity,” he told the audience.

“And the whole concept of investment is evolving with the digitalization of the economy, making it much harder for Statistics Canada to measure.”

Poloz noted that despite trade conflicts between the U.S. and China that have targeted the goods sector, the services sector has remained fairly resilient throughout this uncertainty.

“Clearly, the Canadian economy is not immune to global

BIV_Investing2020_32.indd 25

developments,” he said.

“We are looking to see the extent to which weakness from manufacturing may be spreading to services, employment, consumer spending or housing. In this regard, the most recent data have been mixed, so we continue to monitor the situation closely.”

Meanwhile, it’s not only global tech giants that are planting a flag in Vancouver’s services sector.

Days before the Mastercard announcement, U.S. financial technology firm Tipalti Inc. revealed plans to open a 50-person office in Vancouver the following month.

“It [Vancouver] actually came out on top in terms of all the metrics we cared about,” CEO Chen Amit said, citing factors such as availability of talent and location within a three-hour flight of the company’s Silicon Valley headquarters.

Months earlier, American tech firm Grammarly Inc. and consumer electronics firm Tile Inc. also set up shop in the city.

Beyond Vancouver, the province’s capital has also proven enticing to smaller international players.

Last year saw the arrival in Victoria of British artificial intelligence firm Element Human Ltd., Seattle’s NetMotion Software and Brazilian software company Daitan Group.

Dan Gunn, executive director of the Victoria Innovation, Advanced Technology and Entrepreneurship Council – better known as VIATEC – says Canada’s progressive immigration policies have been one of the driving forces behind the growth of the sector.

“Globally, the entire world is short of high-skilled talent, and so places that have a quality of life and quality of opportunity advantage are going to attract more of those people,” he says.É

2020-02-26 12:05 PM

BIV MAGAZINE

26 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

A MODEL FOR TRIBAL TRADE How Indigenous trade zones can unlock economic opportunities for B.C. First Nations HAYLEY WOODIN

A

bout 35 minutes east of Oklahoma City, construction on a brand new 50,000-square-foot pipe production facility is underway at Iron Horse Industrial Park.

Ground on the project was broken last October at an event attended by local officials, business representatives and tribal leaders. The real groundbreaking work invested to make the project possible started years before.

“It’ll be quicker next time because we had to break new ground.

We had to visit with people who didn’t understand tribal sovereignty. We’ve created networks that didn’t exist before,” explains Dr. James Collard, director of planning and economic development with Citizen Potawatomi Nation.

The 400-acre industrial park sits on Native American trust land owned by Citizen Potawatomi Nation. That in and of itself gives businesses that partner with the nation access to certain tax incentives. It’s also ideally located next to a rail network revitalized by the nation. But the kicker of Iron Horse is that the area has also been granted a foreign trade zone designation, which comes with additional trade incentives for companies that invest and set up shop in the park.

“We’re pitching Iron Horse as a location for manufacturing, as well as distribution,” says Collard.

The park’s first tenant is Pro-Pipe USA LLC, which will operate a 50,000-square-foot manufacturing facility on 25 acres of the industrial park’s land. The Oklahoma-based company plans to leverage the park’s foreign trade zone status to facilitate ongoing commerce between the company and its Canadian business interests.

Iron Horse is the first Indigenous foreign trade zone in the United States, and Collard says the process was long and arduous. But the result is a designation that can amplify existing investment incentives – such as location, market access or low to no taxation – to make an Indigenous jurisdiction just as competitive, if not more competitive, than other jurisdictions.

BIV_Investing2020_32.indd 26

Dr. James Collard, director of planning and economic development with Citizen Potawatomi Nation • CITIZEN POTAWATOMI NATION

2020-02-26 12:05 PM

| 27

The concept has caught the interest of Indigenous leaders and communities in Canada, but the model developed by Citizen Potawatomi Nation cannot simply be copied and pasted.

“Indigenous people economically are coming late to the party,” says Wayne Garnons-Williams in reference to First Nations in Canada. He is a senior lawyer and principal director of Garwill Law Corp. and chair of the International Inter-tribal Trade and Investment Organization (IITIO).

Significant constitutional and legal differences in how Canada and the United States have recognized and acknowledged Indigenous Peoples have ultimately created two systems that recognize Indigenous sovereignty differently, he explains. South of the border, nations are recognized as nations, whereas Indigenous Peoples north of the border have a history of being recognized as wards of the state. It is the former that facilitates the creation of a foreign trade zone, for example, which is designed to remove barriers to trade between nations.

“What we’re advocating for is not a foreign trade zone status in Canada, but an Indigenous trade zone status in Canada, which is entirely different,” he says, which would allow portions of federal reserve land to become Indigenous trade zones. IITIO would like to see four test zones set up in different regions in Canada, including one in British Columbia.

A study last year by the Government of Canada estimates that nearly a quarter of Indigenous small and medium-sized enterprises (SMEs) export. More than one in five Indigenous SMEs export to the United States, and more than one in seven sell to markets overseas, the study found.

“An awful lot of Indigenous business is still small and medium enterprise,” says Garnons-Williams. “They can’t sell to China, they can’t sell to the European market directly. So what they need is something that’s along their scale so they can scale up over time. They need to find markets that are accessible to them.”

According to Collard, Iron Horse can provide that kind of market. He says it is ideal for First Nations in Canada looking to sell their products to the Indigenous nations south of the Canada-U.S. border or more generally to the broader U.S. market.

“These trading relationships have been going on for a long time before the entire notion of a nation-state came into existence. So really what we’re doing is we’re trying to re-establish those relationships,” he says.

IITIO will host its seventh trade mission and conference in Oklahoma this June – a forum that helps establish trade, business and knowledge-sharing partnerships between nations around the world. Those partnerships are key to helping Indigenous businesses and communities

Construction is underway on a 50,000-square-foot production facility at Iron Horse Industrial Park • CITIZEN POTAWATOMI NATION

unlock their global economic potential.

The size of Canada’s Indigenous economy was estimated to be around $32 billion in 2016, according to research from TD Economics and the Canadian Council for Aboriginal Business. The Indigenomics Institute would like to see that number more than triple by 2025 to $100 billion.

That leaves a $68 billion gap to be bridged over the next five years.

Inter-tribal trade could be one solution.

“These powerhouse tribes … they already trade globally, but now they’re looking to trade tribally, which is really cool,” says Garnons-Williams. É

SECTOR SNAPSHOT: AGRICULTURE B.C. bucks agricultural trends Albert Van Santvoort

Farm income adjusted for inflation fell a staggering 45% across Canada in 2018. But B.C.’s agriculture sector may have bucked the trend. By contrast, 2018 was a breakout year for B.C. farmers, who hauled in record-setting revenue of $15 billion, according to Ministry of Agriculture data.

Agricultural exports in B.C. rose 10% year-over-year in 2018, hitting a record $4.5 billion. The real success for the province’s agriculture industry is the $6.3 billion of local agricultural products purchased by British Columbian customers and businesses that same year. The top purchase was alcohol ($1.1 billion), followed by meat and poultry ($800 million) and grains ($700 million). Additionally, agricultural companies sold an estimated $4 billion worth of goods to other Canadian provinces and territories.

Employment within B.C.’s agriculture sector also reached a 10-year high – bucking yet another trend afflicting other agricultural regions across the continent. While Canada faces a shortage of 123,000 agricultural workers this decade, labour challenges have opened up agricultural automation and appliedscience opportunities for Vancouver’s technology industry. Innovation in agriculture could add $11 billion to Canada’s GDP by 2030 with the right technologies and talent, according to RBC. JAMES WHEELER/SHUTTERSTOCK

BIV_Investing2020_32.indd 27

2020-02-26 12:05 PM

BIV MAGAZINE

28 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

CANNABIS COMPANIES FACE CAPITAL CRUNCH Detailed corporate books and negotiating strategies key to snagging investment and financing

Investor appetite for cannabis-related investments has shifted. Business basics are critical as hype around the industry has given way to hesitation • CASCADE CREATIVES/SHUTTERSTOCK

GLEN KORSTROM

T

he slight bump in share prices for Canadian cannabis companies in early 2020 was a welcome respite from the plunge in corporate valuations that happened throughout 2019.

While few believe that the sector is out of the woods, entrepreneurs who structure their companies in ways demanded by investors can still secure venture capital.

Gone are the giddy days of 2018, when investors were infected with a cannabis fever that drove up share prices ahead of legalized recreational marijuana sales in Canada.

Instead of securing loans, getting equity financing and navigating initial public offerings, corporate CEOs today tend to be facing more dismal prospects, which have forced layoffs at a number of cannabis companies, including B.C.’s Emerald Health Therapeutics, which announced last October

BIV_Investing2020_32.indd 28

that it had laid off 65 employees, or about one-third of its workforce, since August 1, 2019.

Personnel changes have also included the exits of key executives who were once the public faces of large cannabis companies, including former Aurora Cannabis Inc. chief corporate officer Cam Battley and former Canopy Growth Corp. CEO Bruce Linton.

For every Hexo Corp., which recently closed a production facility, there is an Aurora Cannabis, which postponed construction on two production facilities. Some companies are merging with others to stay afloat, or, in a worst-case

2020-02-26 3:07 PM

| 29

scenario, are facing bankruptcy or liquidation.

There was even a reported case in January of California-based retail chain MedMen Enterprises Inc. trying to pay suppliers in full with shares, or a one-time payment of half the outstanding bill.

“The financing side seems to be slowing down significantly, and what we’re preparing for is a restructuring of the industry in the sense of being ready for mergers and acquisitions and consolidation – expecting some of the bigger players who have equity on their books to make moves and try to acquire some of the juniors,” Borden Ladner Gervais LLP partner Stephen Robertson tells BIV Magazine. “That and getting ready for bankruptcies, and allowing companies to restructure.”

Ventures such as Ontario-based Wayland Group Corp. and Ascent Industries Corp. in Maple Ridge have filed for creditor protection as they try to restructure and stay solvent. CannTrust Holdings Inc. could follow suit. At the time of publication it was under a cease-trade order imposed after losing its Health Canada licence for growing cannabis in unlicensed rooms.

“We’re going to continue to see, in the next couple quarters at least, some material writedowns and writeoffs, and more challenges ahead,” warned Altitude Capital partner Roderick Stephan while on a panel at the Lift & Co. Cannabis Business Conference in Vancouver this January.

The mood in the room was far more subdued than at the same conference in 2019, when panellists and attendees exuded a sense of excitement – that the cannabis sector was on the verge of explosive sales and early entrants would enjoy untold fortunes.

Panellists in 2020, by contrast, provided cautionary tales along with tips for how to structure businesses and negotiate for capital.

Keeping accurate corporate books – including a detailed account of everyone who has stock options, how many and at what price – is vital, says Narbe Alexandrian, CEO of Canopy Rivers, which has investments in more than a dozen cannabis companies.

Remarkably, he adds, some ventures do not have that information ready.

Large investors, who today have time to weed through every aspect of a company’s business, are far less likely to be swayed by an idea or a story, or any personal fear of missing out if they wait, says Alexandrian. The tables have turned.

“What we are seeing now is companies that are really cash hungry,” he says. “They need money. They’re putting their hand up and asking for any structure whatsoever.”

Alexandrian sees the current climate as one in which investors can get royalties in addition to high interest rates for providing capital because so many companies are focused on getting to profitability. They need cash to become profitable and in many cases they are willing to dilute their equity stake to get there.

Providing too much equity to investors, however, can be a dangerous thing.

“The No. 1 advice I’d give is to not screw up your cap table,” Alexandrian says, referring to the chart that shows the percentages of ownership, equity dilution and value of equity in each round of investment in a company.

“If you screw up your cap table and if the founders and operators of the business don’t have enough ownership in the company, you will shoot yourself in the foot for future financing.”

If a sizable stake in the company is provided to unknown people or entities with representatives who are hard to reach, that will kill the prospect of any new investment, Alexandrian says.

Other advice from Alexandrian and Matthew Nordgren, founder and CEO of California’s Arcadian Fund, is that entrepreneurs should seek key investors who are willing to tough it

BIV_Investing2020_32.indd 29

Borden Ladner Gervais LLP partner Stephen Robertson believes the cannabis sector is rife with consolidation and companies restructuring • ROB KRUYT

out for the long term.

If they meet investors who appear to be out for a quick buck, it is best to walk way, Nordgren says.

“You better have investors who are willing to go down that dark alley with you, because, right now, I can promise you, we’re not doing much else other than being down that dark alley with all of our companies, and we’re going to find our ways out,” he says. “You’re going to want us with you. You want real investors who are here for the long term because we’re building resources and portfolios that are going to benefit your business for years to come.”

Alexandrian suggests that an affinity with a long-term investor is much like a marriage – and it lasts about as long, too.

“The average marriage in North America is about 10 years,” he says. “The average length of time – investment to exit – in the tech space is 9.6 years in Canada, and in the U.S., with a huge flow of capital, is 9.2 years.”

A final tip from Alexandrian is to let investors come up with valuations and make offers, which entrepreneurs can always decline.

“We had a company come to us recently and tell us what they were developing, and they gave us a valuation of $25 million,” he says. “We thought it was grossly high but we politely said, ‘This isn’t the right investment for us. Let’s keep in touch.’ They emailed us back and said, ‘We’ve revised our valuation. Now it’s $10 million.’”

That revision killed trust, Alexandrian says.

“It’s not Black Friday, when I get a great Black Friday deal,” he says. “The huge gap goes to show that, if you’re not confident of the $25 million value, how can I be confident about your $10 million valuation? Leave the valuation work to investors because that is what we do. If you don’t like [our assessment], you can pass.” É

2020-02-26 12:05 PM

BIV MAGAZINE

30 |

BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER

5 QUESTIONS ON STRATEGY

CHUNG CHOW

WITH BARRY RIVELIS, CIO, PACIFIC BLUE CROSS Barry Rivelis is a translator, a broker of information, a strategic CIO. He is the chief strategy and information officer at Pacific Blue Cross, where he also serves as senior vice-president. He was the inaugural winner of BIV’s CIO of the Year award, and here he shares his insights on strategy.

1. WHAT DOES IT MEAN TO BE A STRATEGIC CIO? CIOs have traditionally been seen to focus exclusively on technology. However, I view the role as that of a translator who translates between the business and the technical organization. More importantly, a CIO translates how technology can deliver overall organizational improvement and performance. Technology cannot be viewed just through the lens of technology. It has to be linked directly to your overall organizational direction.

quo and force me to look at things differently. I have been fortunate to work for, alongside and lead amazing individuals who have pushed me to think about not only what we need to do differently, but also what we need to stop. Strategy is about understanding the environment you’re in and making choices. I have also been gifted with an ability take multiple concepts and ideas and distil them into consumable concepts.

It is something I have used throughout my career.

3. HOW DO YOU APPROACH A CHALLENGE? 2. HOW HAVE YOU HONED YOUR STRATEGIC THINKING? I am an experiential learner and throughout my career I have strived to put myself in situations that challenge the status

BIV_Investing2020_32.indd 30

The size and scope of a challenge can at times be daunting. I try to break it down into consumable and actionable pieces.

Those pieces are divided into elements that lead you to your optimum solution. What I have found, however, is that you don’t arrive at the ultimate outcome by following a straight line,

2020-02-26 3:07 PM

| 31

STRATEGY IS ABOUT UNDERSTANDING THE ENVIRONMENT YOU’RE IN AND MAKING CHOICES j Barry Rivelis CIO, Pacific Blue Cross

ASK THE 40

In the spirit of this month’s magazine theme, we asked BIV Forty under 40 winners about one of the best investment decisions they’ve ever made.

Borrowing money as a single-parent student and going on to achieve two university degrees

Giving back Peter Armstrong, founder and CEO, Armstrong Group

Youssef Zohny, institutional consulting director,

and as a result, you need to be adaptable. Every challenge is also an opportunity, so it is important to try to shift your mindset into a positive versus negative setting. What has been fascinating to me is how much I have learned when I’ve failed. That learning has contributed to greater career and life success.

Morgan Stanley

In 1996 joining the Vancouver chapter of EO (formerly YEO)

Taking the personal risk to acquire Webnames.ca when it could have been sold to a large U.S. company Cybele Negris,

Praveen Varshney,

co-founder and CEO,

partner,

Webnames.ca Inc.

Varshney Capital Corp.

4. WHAT SETS A TRULY SUCCESSFUL STRATEGY APART? A good strategy is easily understood, is aligned to the environment you are operating in and identifies what you are going to do and, as importantly, what you are not going to do. Resources need to be aligned to the strategy, and measured and tracked appropriately. The final part of a good strategy is leadership. When you embark on a new strategy, things feel awkward and different. But if you believe your analysis and direction, great leadership will provide the discipline to make the choices you and your team have agreed to.

5. IF LEADERS WANT TO IMPROVE THEIR CAREER OR COMPANY STRATEGY, OR THEIR STRATEGIC THINKING, WHERE SHOULD THEY START? You need to first determine where you want to go, either in your career or your organization, and then work backwards through the tactics to get you to that place. At the same time, be brave enough to say no if you don’t believe a particular tactic will get you to where you want to go.

When you say no, be comfortable that the door you are going to close won’t actually open up a pathway to your destination. Second, be curious and ask a lot of questions.

Questions allow you to gain insight. Third, if you really want to learn from someone or a group of people, ask. You would be amazed how often people don’t ask. Fourth, work hard – nothing replaces hard work. And finally, say thank you. I still send thank-you notes, which extends a level of gratitude that people truly appreciate and will take the time to reciprocate in the future. É

BIV_Investing2020_32.indd 31

Investing in my tech skills Linda Fawcus,

Building an R&D laboratory to create novel environmental technologies

founder and CEO,

Norm Chow,

Gluu Technology Society

president, Kemetco Research Inc.

Investing precious startup capital to bring in experienced people Rob Craig, CEO, 3 Tier Logic

Our recommendation to buy the Boyd Group in 2008 at $2.30. The stock trades above $205 today, for a gain of over 8,900% Ryan Irvine,

Becoming our own landlord and purchasing our office

president and CEO, Keystone Financial

David Coates, managing partner, Ion Brand Design

Expanding LMS into new markets (and my subscription to BIV)

My own business

Ron McNeil,

Paul Welsh,

co-founder and CEO,

managing partner,

LMS Reinforcing Steel Group

National Vancouver

Buying a house in Vancouver in 2003

Taking several years off after selling my first business to focus on family

Jason Smith,

Eric Jordan,

Klue

co-founder and CEO,

CEO, Codename Entertainment

Meditation, morning and night Tina Burke, director, Burke Recruiting

2020-02-26 12:05 PM

Getting a claim paid within 24 hours is like training for the Sun Run. Go with someone who won’t slow you down.

Aaron Brady, Director, Product and Innovation

Make your employees Pacific Blue Cross Members.

At Pacific Blue Cross, we’re locals. We know B.C. and the B.C. health care system – including how to leverage technology to make claiming quick and easy. In fact, only Pacific Blue Cross has innovative software that powers our online Member portal and mobile app so that claims can be reimbursed in as little as 24 hours.

Call 1 877 PAC BLUE | Talk to your advisor | Visit PacificBlueCross.ca

BIV_Investing2020_32.indd 32

2020-02-26 12:05 PM