Canada's minister of state Gary Goodyear speaks during Question Period in the House of Commons on Parliament Hill in Ottawa September 17, 2012.CHRIS WATTIE/Reuters
Ottawa has doled out another small tranche of the hundreds of millions of dollars it promised to the venture capital community almost two years ago.
On Tuesday, minister of state Gary Goodyear announced the federal government has put $36.3-million into a new venture capital fund of funds, matching a similar level of support from the Ontario government and supplementing $145-million from the private sector.
The new NorthLeaf Venture Catalyst Fund will invest in other venture capital funds that support early and mid-stage businesses across Canada.
Ottawa announced it would set aside $400-million for venture capital support in the March, 2012 federal budget. But it has taken years to get the money out the door, with the first funds allotted just last September. At that time, $50-million was put into four existing venture capital funds – two that focus on life sciences, and two involved with information and communications technologies.
The latest announcement means money will flow into a new fund that has been created by Toronto-based fund manager Northleaf Capital Partners. It has financial support from the Canada Pension Plan Investment Board, Canadian Imperial Bank of Commerce, National Bank of Canada, BMO Financial Group, BDC Capital Inc., Ontario Capital Growth Corp., OpenText Corp., Royal Bank of Canada, Bank of Nova Scotia, and Toronto-Dominion Bank.
While a total of $217.5-million has been invested in the fund so far, eventually it hopes to raise a total of $300-million. The maximum commitment from federal and provincial governments is $50-million each.
Last fall Finance Minister Jim Flaherty said the slow progress in getting Ottawa's money into the hands of the venture-capital community is due to the time it takes to arrange for government funds to be rolled into larger packages that include private-sector money.
But that "leverage" is crucial, he said, because it means a much larger resource for early stage Canadian companies.