Governments across America support cleantech companies, and shares there are up since 2020. So why are cleantech stocks down in Canada?
Calgary-based Eavor Technologies is poised to become a global cleantech success story, with an asterisk—about which, more in a moment.
Now the asterisk: While Eavor didn’t have any difficulty accessing early-stage grants from both federal and provincial agencies, and was quite successful in putting together seed funding from Alberta-based angel investors, it had no such luck in securing Canadian capital to begin scaling and commercializing a technology that can be deployed literally anywhere on Earth.
New research from the University of Calgary’s Haskayne School of Business and the Université du Québec à Montréal’s School of Management reveals the short-sightedness of corporate Canada’s unwillingness to back cleantech in particular. A paper published earlier this year by the Global Risk Institute found that U.S. publicly listed cleantech firms enjoy better access to capital and higher valuations than their Canadian counterparts.
The Haskayne/UQAM study focused on an important multiple: the so-called enterprise value, which is the sum of a firm’s market capitalization and its total debt relative to EBITDA. That ratio represents a measure of the present value of future cash flows, says Nguyen, a professor of finance at UQAM. “It basically reflects all the future prospects of the company.”Those high cleantech multiples in the U.S. reveal investor confidence.
Peter McArthur, a retired investment banker who heads the Ontario Clean Technology Industry Association, says there have been recent examples of Canadian cleantech firms tapping into growth funding here, including Cyclic Materials, a Kingston, Ont.-based firm that sources recycled rare-earth elements, and e-Zinc, a long-duration battery storage system that relies on zinc, as the name suggests, instead of the rarer and more expensive lithium.
From the perspective of founders like Redfern, the experience of coming up empty-handed when approaching Canadian backers forced Eavor to adopt a global mindset. He says they learned the firm had to invest heavily in lobbying because it had to take an international approach to raising capital. They also realized they had to knock on as many doors as possible, even those that might not have seemed receptive to a pitch from an Alberta startup.
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