The VenturePulse survey said a total of €820 million was invested in SMEs last year, up from €740 million in 2018, but below the €994 million recorded in 2017.
The fourth quarter provided a welcome boost to figures, with €253 million in investment recorded, compared to €115 million for the same period in 2018. Growth was seen across all deal sizes during the year, IVCA director general Sarah-Jane Larkin said.
However, a number of big deals helped to boost figures, including a €90 million fundraising deal by financial services technology provider Options, which is led by Northern Irish entrepreneur Danny Moore, and more than €11 million raised by Cubic Telecom. Smart energy company GridBeyond raised €10.5 million.
Technology companies raised 87 per cent of total funding last year, with software companies raising 39 per cent of funds in 2019 followed by life sciences at 20 per cent. The fintech and cybersecurity sectors also performed well.
“While 2019 was below the peak of €994 million in 2017, a small number of large deals can have a significant impact – overall it is encouraging to see growth over last year,” said Neil McGowan, chairman of the IVCA. “We hope that the impressive fourth-quarter results suggest that continued momentum.”
Early stage companies
Mr McGowan said the growth had extended into seed or early stage companies, with funding up 55 per cent to €76 million in 2019, with Enterprise Ireland’s new €175 million Seed & Venture Capital Scheme starting to have an impact on the market.
Ms Larkin pointed to the rise of 175 per cent in the value of deals between €5 million and €10 million, a category that saw funding grow to more than €100 million in 2019 across 16 companies. That compares to €37 million in 2018, when five companies in that category availed of funding.
“This is important as these amounts are typically raised by scaling companies who are at a critical stage in terms of expansion in employment and revenues,” Ms Larkin said. “At a time when a programme for government is being considered, it is important that policymakers recognise the need to help create the right environment for local entrepreneurs to build a knowledge-based indigenous Irish economy.”
After investing billions in project, Kenney marks start of Keystone XL construction in Alberta – CBC.ca
Alberta Premier Jason Kenney marked the start of construction of the Keystone XL pipeline in the province on Friday, in the small town of Oyen.
“We are here at long last, kicking off construction of the Alberta spread of the Keystone XL project,” said Kenney. “We’re finally getting it done.”
The 1,947-kilometre project will be able to carry 830,000 barrels of crude oil per day from Hardisty, Alta., to Steele City, Neb., where it will connect with TC Energy’s existing facilities and eventually reach refineries on the Gulf Coast.
About 270 kilometres of the line will be within Alberta.
Work is already underway in three U.S. states.
Controversy in U.S.
The pipeline has been beset by controversy for at least a decade, facing protests and legal challenges. It was twice rejected under the presidency of Barack Obama. It received approval under Donald Trump, but a looming election south of the border could change that.
Democratic candidate Joe Biden has said he would cancel that permit if elected.
The Alberta government has bet on the project moving forward and has invested $1.5 billion, while also putting forward a $6-billion loan guarantee.
Kenney said at the time of the investment that there was too much risk, scaring away private investors from the $8 billion project.
“I’ve always been skeptical about government intervention in the market, but our failure to get pipelines built has been a failure of government policy and politics, not of markets,” Kenney told reporters after making the announcement at the end of March.
Selling the pipeline
On Friday, Kenney said his government would not rest until the full project is built and will work hard to pitch the benefits of the project to officials in the U.S.
“We will be reaching out, as we already have… to members of [Biden’s] party, many of whom support the project,” Kenney said, citing both lawmakers and unions.
He said the investment by his government helped get the project moving and is a “conscious risk” to create “facts on the ground” that could force the hand of any U.S. administration in overturning a project that is already partially constructed.
TC Energy says it anticipates the pipeline will be operational in 2023.
Holding cash is a sign of fear, and fear is the worst investment of all – Financial Post
In the United States, money market balances have gone from under US$3.5 trillion to US$4.6 trillion so far in 2020, according to Refinitiv Lipper data. Commercial bank balances have gone from US$13.3 trillion to US$15.5 trillion over the same time period according to the Federal Reserve Bank of St. Louis. Essentially, over US$3 trillion has moved into cash and money market funds since January.
To put that number into perspective, it would represent just about the entire market value of Apple and Microsoft combined, the two most valuable companies in the world.
In Canada, we have statistics from the Investment Funds Institute of Canada, which tracks mutual funds and ETFs. The end of May number for money market ETFs and Mutual Funds was $43.6 billion compared to just $30.3 billion one year earlier. Following the U.S. statistics, I would imagine that bank balances have seen a spike of much more than $13 billion in Canada.
There is certainly some good reasons to hold cash and money market funds. They are safe and liquid. If you have short-term needs for the funds or as a safety cushion or for ongoing operations of a business, this is a very valid option. However, as a choice for long-term investment it has not proven to be wise.
When I see a spike in these balances, this spike represents an investment decision. This is people and businesses choosing to be in cash rather than other forms of investments. Today, these trillions of dollars are likely earning somewhere between zero per cent and one per cent. I know that it is possible to earn higher rates at very small companies or by locking your money away for a period of time, although locking your money in removes the liquidity benefit.
Of interest, the largest money market funds in Canada have an annualized 10-year return of less than one per cent.
If most Canadians expect long-term investment returns of five-per-cent-plus, and money market funds have not provided one per cent over the long term, the only reason to have long-term money in a money market fund or bank account is either fear or a true belief that you are able to add value through timing of getting in and out.
Timing the market effectively by moving to cash is possible, but for most it isn’t effective, if for no other reason than markets go up over time. However, there is another reason why timing the market is usually not effective. If we look at actual monthly data from 2009, looking at money market balances in Canada and the performance of the TSX 60, we see that investors missed out on much of the rally.
In March, April and May 2009, the TSX 60 was up a total of 26.8 per cent. Money market balances peaked at the end of March and declined a total of 1.7 per cent over the same three-month period. This means that from an all-time peak in money market holdings, only a tiny percentage of investors had reinvested in time to take advantage of the big rebound. From June 2009 to January 2010, the eight months following the big gains, the TSX 60 was up 3.2 per cent. What happened to money market? Balances dropped 35 per cent, or $23.5 billion moved from the safety of money market back into some form of longer-term investment. No issue with it moving back out, but they did so after missing out on a major part of the recovery.
I had mentioned earlier that the only reasons to move long-term investment money into an asset class that is guaranteed to underperform your long-term goals is either fear or a true belief that you are able to add value through timing of getting in and out. The reality is that most investors bail and put funds into cash after at least a meaningful portion of losses have taken place. As seen in the 2009 recovery, they then return this cash to investments after most of the big gains have already happened. Essentially, most investors do not add value to their portfolios by switching to cash and then reinvesting. This leaves one reason to shift to cash. That is fear.
I don’t think I need to review the reasons why fear is not conducive to strong long-term investment returns. If you look at the table below, it shows returns for 25 years to Dec. 31, 2019. The returns are similar for any longer-term period. Of these asset classes, the only thing we know about the future is that U.S. T-Bills will produce a lower return than 2.5 per cent over the near future. The bottom line is that cash, money market, and GICs are not good for your long-term investment returns.
What are the better alternatives to investing in cash today? Almost everything. This isn’t a comment on the direction of the stock market in the short-term, but rather a comment on long-term investing and the inability to predict the future — especially in the short-term.
If we just look at dividend and other income yields, we will see a range, but all are higher than the returns on cash. As for growth beyond these yields, we can just put our faith in long-term history. For reference, I have also shown the private credit yields available through TriDelta’s Alternative fund at the high end of the range.
As a final thought, history tells us that big shifts in cash are short term. When trillions of dollars roll back into the market (which they will), do you want to be at the front end of that rush where you can benefit from the dollars that come behind you, or the back end.
If you are sitting on oversized positions in cash and money markets today, the best course of action is to get back to normal.
Ted Rechtshaffen, MBA, CFP, CIM, is president and wealth adviser at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning. You can reach him at firstname.lastname@example.org.
Insurer AXA says made investment portfolios greener in 2019 – TheChronicleHerald.ca
LONDON (Reuters) – French insurer AXA said it reduced the temperature score of its investments in 2019, bringing them closer to alignment with the targets of the Paris Agreement on climate change.
The so-called “warming potential” of its investments, a measure of their contribution to climate change, had fallen to 2.8 degrees Celsius from 3 degrees Celsius in 2018, AXA said in its 4th Climate Report released on Friday.
The Paris Agreement, struck in 2015, aims to keep average global temperature rise to below 2 degrees Celsius and ideally at 1.5 degrees Celsius above pre-industrial norms by 2050.
(Reporting by Simon Jessop; editing by Jason Neely)
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