16 Jan 2013 (BIV) Ottawa launches $400 million venture capital fund
By Nelson Bennett
The federal government is getting into the venture capital game with a $400 million fund to help high-growth companies access capital.
On Tuesday, Prime Minister Stephen Harper unveiled the new Venture Capital Action Plan, which will see $400 million invested over the next seven to 10 years.
“Our government understands that Canada’s long-term economic competitiveness in the emerging knowledge economy needs to be driven by globally competitive, high-growth businesses that innovate and create high-quality jobs,” said Harper.
“We will provide the resources needed to put Canada’s venture capital industry on the path to sustainability and ensure Canada’s high-potential firms have the resources they need to succeed.”
In next week’s Business in Vancouver profile, Bill Tam, CEO of the BC Technology Industry Association, says a lack of access to capital is the principal limiting factor in keeping Vancouver’s technology industry from growing a middle class (companies with between 50 and 500 employees).
“Here in B.C., roughly 3% of our companies are 50 people and above,” Tam tells BIV. “If we look at competitive jurisdictions, especially in the U.S., you’ll see that the middle class is usually around 8% to 10% of the population of the companies.”
Tam said the new fund is welcome news for B.C.’s technology sector.
“We see it as a positive signal of the federal government’s commitment to supporting entrepreneurs and innovation,” he said.
“It’s consistent with our four-point plan for growing the technology industry in B.C. and will help to catalyze a more sustainable capital ecosystem that will propel the growth of more world-class technology companies.” The new $400 million fund is intended to help leverage private sector investment and create new large-scale venture capital funds. The money will be broken down along the following lines:
- $250 million to create large private sector-led national funds in partnership with provinces and institutional and corporate investors;
- up to $100 million to recapitalize existing large private sector-led funds; and
- up to $50 million in three to five existing high-performing venture capital funds in Canada.
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