The Fonds de Solidarite des Travailleurs du Quebec, the ftq pension fund, has formally authorized an additional $45-million investment in Fonds d’investissement de la culture et des communications. The funds will be advanced to ficc ‘on a conditional, performance basis’ in increments of $2.5 million, up to $25 million. Additional performance results will then be established before ficc receives the balance, $20 million, says ficc president and ceo Marcel Choquette.

To date, ficc has made four investments in the production sector: Productions Pascal Blais ($750,000), Tube Images ($1 million), Prisma Productions ($750,000 – the company subsequently declared bankruptcy) and animation software company Toon Boom Technology ($800,000). Two more investments (in as yet unnamed prodcos), bringing the total to $4 million in the audiovisual or production sector, will be announced before March 31, says Choquette, a former human resources and administration manager with Telefilm Canada. Choquette launched Telefilm’s new media program in late ’96.

Venture capitalist

ficc, a limited-partnership, venture-capital fund for cultural industries, was launched in the spring of ’97 with $15 million (now $17 million with interest) in start-up capital, including $10 million from ftq and $5 million from Quebec funding agency sodec. The extended contract with ftq, which Choquette says is duly signed, will ultimately bring ficc’s total capitalization to $60 million. Quebec-based companies qualify for ficc investments.

‘We are venture capitalists and invest in any company with a potential for growth,’ says

Choquette.

ficc invests in five major sectors: audiovisual, multimedia, book publishing, music, and performing arts. ‘Our main tool is stock options, although we are trying to adjust to the needs of companies and can use other quasi-equity tools such as debentures, which is a debt [a capital loan] with no guarantee,’ explains Choquette. ‘Sometimes the value of the company is not that high and the owners don’t want to dilute themselves too much.’

In venture capital terms, ficc’s ceo says on average, only two investments prove successful; four provide ‘so-so returns,’ while the remaining four are likely to be losses.

‘Because of the two that are successful, it gives you a return of around 10% on your total investment. So just figure out what your expected return should be on each investment in order to produce an overall return of 10%. It has to be a lot,’ he says, adding:

‘My investment committee will review any project if the expected return on investment is less than 15%.’

ficc also embodies the ftq’s ‘socioeconomic’ philosophy in terms of growth and long-term job creation. It only takes a minority position in its business partnerships, between 5% to 20% of the stock, based on a five- to seven-year outlook and on the value and needs of the particular company.

Choquette says ficc has made 20 investments in 14 companies since its launch. The investments, $8 million, combined with other investments from organizations such as Capital Communications cdpq, a Caisse de Depot subsidiary, have helped leverage $41 million in new capital for cultural sector businesses. The ftq pension fund is approximately $2 billion.