Big news from Montreal this week, as Prime Minister Stephen Harper announced the government’s Venture Capital Action Plan. The result of several months of consultations with stakeholders, including Communitech and the Canadian Venture Capital and Private Equity Association, the plan offers details around the $400M in new funding for venture capital that was announced in the last federal budget.
The plan includes specific measures designed to deploy the new capital over the next 7-10 years, such as:
• $250 million to establish new, large private sector-led national funds of funds in partnership with institutional and corporate strategic investors, as well as interested provinces;
• Up to $100 million to recapitalize existing large private sector-led funds of funds, in partnership with willing provinces;
• An aggregate investment of up to $50 million in three to five existing high-performing venture capital funds in Canada; and
• Promotion of a vibrant venture capital environment in Canada rooted in a strong entrepreneurial culture and well-established networks that link investors to innovative companies.
“This is welcome news for Canadian tech companies,” said Iain Klugman, CEO of Communitech. “Canada’s Venture Capital industry needs a boost. These new funds will help support more high-potential firms and help drive our productivity.”
In his blog post about the new plan, Wellington Financial’s Mark McQueen calls the announcement “excellent progress” toward fixing the problems facing Canada’s venture capital industry, and highlights other measures that would contribute to a solution, including a recommendation to “replicate Communitech’s Tannery project in places such as Vancouver, Calgary, Toronto, St. Laurent and Halifax...”
The government is currently asking potential investors to express interest in co-investing in new or existing funds of funds by February 8, 2013, by contacting VentureCapital-CapitaldeRisque@fin.gc.ca. The government is not entertaining proposals for investment in individual companies.
