It’s a great day for four Canadian venture capital funds. Today, Jim Flaherty, Minister of Finance, announced a $50 million investment to help innovative businesses access capital. The investment is the “next step in implementing the Harper Government’s Venture Capital Action Plan (VCAP) to help create a vibrant private sector-led venture capital system in Canada.”
The VCAP includes a commitment by the Government to invest in a few key high-performing venture capital funds with a substantial presence in Canada. In May, Flaherty announced the establishment of a private sector Venture Capital Expert Panel to provide advice and recommendations on the VCAP, including the selection of the high-performing venture capital funds to receive direct investment from the Government.
Through a selection process, the Expert Panel has now selected four high-performing venture capital funds that have demonstrated strong investment performance. The Government will be investing in these funds on the basis of the recommendations made by the Expert Panel. These investments are:
- a $15-million investment in Summerhill Ventures II, focused on investment opportunities in the information and communication technologies sector;
- a $15-million investment in CTI Life Sciences Fund II, focused on investment opportunities in the life sciences sector;
- a $10-million investment in Real Ventures Fund III, focused on investment opportunities in the information and communication technologies sector; and,
- a $10-million investment in Lumira Capital II, focused on investment opportunities in the life sciences sector.
“Canada’s long-term economic success in an increasingly competitive, knowledge-based economy will depend, in large measure, on the ability of our dynamic innovative firms to grow into global leaders that invest and create high-quality jobs,” said Flaherty. “Today’s investment will help ensure that Canada’s promising start-up businesses have the resources they need to grow, innovate and create jobs for Canadians.”
The Business Development Bank of Canada will provide support and advice to the Government as it implements the VCAP, by providing independent expertise, undertaking due diligence, supporting negotiations with funds and other investors, and assisting in the deployment of VCAP investments.
The Government’s investment in the four high-performing venture capital funds is contingent on satisfactory negotiations with the selected fund managers. It is the latest step in the VCAP, a $400-million strategy launched in January to help increase private sector venture capital investments in order to create jobs, growth and long-term prosperity.
“We’re happy that our efforts over the last six years have been recognized and appreciated and we’re happy that the government and their advisors have chosen to place their faith in us, and now everything starts,” said Real Ventures’ John Stokes.
“My focus is much more on the fact that they recognized that we are a fund worth supporting. The federal government has chosen four funds that they regard as high performing and ones that they have chosen to invest into alongside other institutional investors,” he said. “It’s a vote of confidence.”