Unique Solutions bankruptcy is the latest in a string of losses for Nova Scotia Business Inc.’s venture capital portfolio.
Techlink Entertainment and Origin Biomed previously declared bankruptcy. Unique Solutions got more than $5.6 million from NSBI. The company also used the name Me-Ality and created body scanning software that identified the right clothing fit for people who used the software.
In a statement emailed to Global News, NSBI president and CEO Laurel Broten said NSBI’s investment in Unique Solutions wasn’t secured and the foreclosures process will determine how much, if any, money the corporation will recoup.
“It’s certainly unfortunate that the earlier investments made in this company did not result in a positive outcome,” Broten said.
In addition to the bankruptcies, the crown corporation’s entire portfolio has been devalued from $58 million to $15.5 million. NSBI’s 2014-15 report recorded the dramatic drop in the value of its venture capital fund. The report set the value at 73 per cent of what was initially invested. Its 2015-16 annual report is expected out in the next few weeks.
Broten said she had expressed her “disappointment” at the numbers when the 2014-15 report was released. As of July 2014, NSBI stopped making these types of investments in Nova Scotia companies, in part because of the unacceptable risk to taxpayers, Broten said.
Since 2002, NSBI has invested in 12 companies in Nova Scotia. In addition to the three confirmed bankruptcies, the status of another company, Kytogenics Pharmaceuticals, is unclear. Innovacorp has written off its investments in that company and its status has been revoked on the registry of joint stocks for lack of payment, but NSBI couldn’t answer whether it’s also written off its investment of $2 million.
Close to $8 million was invested in Origin Biomed and $13 million was invested in Techlink Entertainment, meaning at least $26.5 million of the $58-million portfolio was invested in companies that went bankrupt.
‘They choose too many losers’
While NSBI is out of the venture capital business, crown corporation Innovacorp’s entire mandate is to invest in early stage business. Progressive Conservative Leader Jamie Baillie is calling on the government to get out of all venture capital investment.
“Get the government out of the job of picking winners and losers, because they pick too many losers,” Baillie said.
According to the Tories, the taxpayers’ money currently going towards NSBI and Innovacorp for venture capital could instead go to lowering the small business tax rate.
Baillie said lowering the rate will let the “real winners rise to the top” and create more jobs.
Both crown corporations fall under the responsibility of the business department. Minister Mark Furey was not available to comment Thursday.