A private venture fund that has been trying to secure a tax credit from the P.E.I. government for seven years has given up.
The Halifax-based company, Growthworks, is already able to offer tax credits to residents of the other three Atlantic provinces. The company takes that money and invests it in early-stage companies to help them grow.
Growthworks was keen to start up a similar relationship with P.E.I., one that would allow it to offer a 20 per cent tax credit to Islanders, and invest in Island companies.
"For what we would be able to raise, we could adequately invest in good opportunities," said CEO Tom Hayes.
"Agriculture, value-added food products, biotechnology, those are areas that you focused on in Prince Edward Island and have had some great success."
Hayes said Growthworks committed to return at least 75 cents of every dollar in investment in local businesses, probably about $1.5 million a year.
But Finance Minister Wes Sheridan is concerned about the history of P.E.I.'s involvement with venture capital companies. A similar arrangement in the 1990s resulted in very little, if any, venture capital for P.E.I. businesses, he said.
"The problem that we have, as the Prince Edward Island government, is that the money is not spent on Prince Edward Island," said Sheridan.
"We would be giving tax credits to individuals here in P.E.I. without the return of creating jobs and creating wealth, so that I have a small problem with."
Sheridan said commitments to investment levels can be problematic, with companies sometimes scrambling to make an investment in something that might not be worthwhile.
Hayes said he is confident there are deals in worthy businesses to be made, but he can't invest money in P.E.I. that has been the beneficiary of tax credits from other provinces.
The P.E.I. government has committed to other early stage business investment vehicles.
The government is already offering Islanders a 35 per cent tax credit if they invest in the province's own community economic development fund, money Sheridan said is guaranteed to stay on the island.
The government has also invested $2.5 million another regional venture fund managed by the Halifax-based Innovacorp. Sheridan said that situation is different, because the P.E.I. government has a member on the board of Innovacorp to ensure Island companies are treated fairly.
Growthworks also had P.E.I. board representatives, two Islanders from the private sector. Those two board members resigned when the company decided to discontinue negotiations with the P.E.I. government.