What is the BC Discovery Fund?
BC Discovery Fund is registered as a venture capital corporation (“VCC”)
under the Small Business Venture Capital Act (the “SBVCA”).
Under the SBVCA, VCCs such as BCDF are established to make investments
in Eligible Small Businesses in accordance with the provisions of the
SBVCA, and to provide business and managerial advice to the Eligible Small
Businesses in which they make investments. The SBVCA also regulates the
kind of Eligible Small Businesses in which a VCC can invest.
When did the Fund start and how long has the manager been doing
The Fund was launched in November 2002 and started raising funds
by prospectus in March of 2003. The founding managers of Discovery
Capital have been managing VCC funds in BC for over 25 years. In March 2015, the Fund discontinued the sale of its shares and is focused on managing the remaining portfolio of venture investments to their exits and distributing the proceeds to the shareholders of the Fund. The Fund is no longer seeking to make new investments.
Is the Fund redeemable? How will I get liquidity for my shares?
In June 2017, the shareholders of the Fund voted by a 94% margin to approve special resolutions that converted the manner in which the Fund provides liquidity to investors to a dividend distribution model. The key elements of the dividend distribution model are summarized below:
The Fund is no longer redeemable, except in the case of: (i) the death of a shareholder; (ii) the death of the annuitant of an RRSP or RRIF account that is a shareholder; or (iii) the death of the original purchaser of an RRSP or RRIF under which the original purchaser of those shares or his spouse or common law partner is the annuitant.
Notwithstanding the foregoing, holders of Class A Shares who hold their shares coded as DCC400 shares on the FundSERV network can continue to fulfill a redemption at any time, which will be processed through the FundSERV network. The Fund retains sufficient funds to satisfy redemptions of all outstanding DCC400 shares.
It is the intention of the Fund to make distributions to shareholders as and when it realizes on its investments, subject to retaining sufficient funds to operate the Fund and make follow-on investments as required. The Fund will no longer make any new investments but may be required to make follow-on investments into existing portfolio companies in certain circumstances. The Fund cannot predict the amount or timing of future returns of capital and cash dividends to Shareholders. Distributions will depend on the timing and realizations of exits from existing portfolio investments, which is largely beyond the control of the Fund and, therefore, difficult to predict.