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The Manitoba government is putting up $50 million to get back into the venture capital game, 17 years after a previous fund went into receivership.

“Manitoba’s business leaders … have told us that access to capital is critical for the development and expansion of Manitoba businesses now and well into the future,” Premier Heather Stefanson said Friday.

The new Venture Capital Fund is to be more independent from government and overseen by a board to be appointed in the coming months. It will not invest directly in companies, but instead in existing private investment funds that provide capital to companies.

To encourage investment, the province recently made permanent a venture capital tax credit, worth up to 45 per cent, which had been temporary.

The aim is to have more money available for businesses that want to start up or expand their operations.

“Every other province has been eating our lunch on this,” said Chuck Davidson, president of the Manitoba Chambers of Commerce.

“We applaud the government for taking the measure today. Because it’s really going to start to help the businesses that have been missing out and having to go to other jurisdictions to get that capital they need to grow.”

The new fund has been touted as completely different from the Crocus Investment Fund, the labour-sponsored fund, which collapsed after concerns were raised that its value had been overstated. It went into receivership in 2005 and Manitoba’s Auditor-General said the NDP government at the time missed warning signs that the fund was in trouble.

The government had an active presence on Crocus’s board and encouraged Manitobans to invest in Crocus even after the provincial cabinet was warned of liquidity problems. Some 34,000 Manitobans put money in.

The new fund will be more separate from government, and decisions on where money is invested will be left to professional fund managers, a government official said Friday. It will also not be marketed to the average investor.

“One of the problems (with Crocus) was that there was a misalignment of how risky venture capital is,” said Michael Swistun, secretary for the provincial cabinet’s economic development board.

“There was a perception of ‘oh, this is safe for your RRSP,’ and it was marketed to the retail investors. The reality is venture capital is incredibly difficult. It can be very rewarding, but it really isn’t for everyone.”

Manitoba has more than three per cent of Canada’s population but accounts for less than one per cent of its venture capital, Swistun added.

The announcement was made at a brewery that raised $2 million to start up several years ago, aided by the tax credit the government is now making permanent.

“Brewing is a very cost-intensive business, and having the ability to access more venture capital … will allow us to also expand, hopefully, into markets outside our province,” said Adam Olsen, owner of Torque Brewing.

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