Earlier this week, Prime Minister Stephen Harper shared major plans to bolster Canada’s venture capital (VC) industry by injecting $400 million in new capital over the next seven to ten years. The Government’s Venture Capital Action Plan aims to help increase private sector investments in early-stage risk capital and strengthen the large-scale venture capital funds led by the private sector.
The message was also clear in continuing to champion the importance of innovation. “Significantly, and this is key, these funds target and accelerate investments in innovation, on a large scale,” stated the Prime Minister earlier this week.
Main objectives of the Action Plan include contributing to the development of a sustainable VC ecosystem, increasing the number of successful Canadian companies, and attracting foreign expertise to deepen the pool of experienced fund managers in Canada. These objectives will be achieved through partnering with the private sector. The Prime Minister explained that the goal is “to work with the private sector to maximize the impact of the funds announced today, and to ensure that investment decisions are substantially market driven and private sector led.”
Of the $400 million in new capital to be deployed, $250 million will be designated to establish new “funds of funds” (a portfolio consisting of investments in several VC funds), in hopes to partner with institutional and corporate strategic investors. Up to $100 million will be deployed mainly at the provincial level to recapitalize existing private sector-led funds. The remainder (up to $50 million) will be available in the near term to a few high-performing private sector-managed venture capital funds in hopes of making an immediate impact on the development of innovation.
At this stage, the Government is encouraging potential investors to express their interest in participating by February 8, 2013.
is an articling student in FMC's Ottawa office