Further progress has been made with respect to the establishment of a new venture capital fund, initially discussed in the April 9, 2013 post entitled Boosting Canada’s Knowledge Economy: Will New Government Funding Be Enough?.
On May 3, 2013, the Honourable Jim Flaherty, Minister of Finance, announced a next step in implementing the Harper government’s Venture Capital Action Plan (the “VCAP”), as part of its 2012 and 2013 Economic Action Plan. In January 2013, Prime Minister Stephen Harper announced the VCAP, which includes resources for establishing and recapitalizing large, private sector-led funds of funds. A fund of funds portfolio is made up of investment in a number of venture capital funds.1 The important next step in implementing the VCAP involves the launching of a selection process for General Partners and Managers to manage the fund of funds and a process for selecting high-performing venture capital funds.
The Selection Process
i) General Partners and Managers
Those parties interested in acting as a General Partner and Manager are invited to submit their candidacy to manage a fund of funds established or recapitalized through the VCAP. Interested parties should submit an expression of interest by June 3, 2013. The selected candidate will invest and manage total committed capital between $300 and $400 million for each fund of funds and should have experience managing funds of funds, venture capital funds or a similar vehicle. Candidates should have or be prepared to establish a substantial presence in Canada.
ii) High-performing venture capital funds
High-performing venture capital funds looking for potential investment from the federal government through the VCAP are also invited to submit expressions of interest by May 27, 2013.
According to the May 3, 2013 announcement, “high-performing funds are expected to be broadly focused on key growth sectors where Canada can be competitive globally, have already or are expected to shortly hold a 'first closing', and have a substantial presence in Canada.”2
To assist in the selection processes for General Partners, Managers and high-performing venture capital funds, the federal government is planning to announce a private sector advisory panel in the coming weeks.
Moving to create the VCAP is an important step in stimulating Canada’s knowledge economy. In a Conference Board of Canada report released on April 4, 2013, Canada was ranked second-to-last among its peers in venture capital investment and business R&D spending. With the implementation of the VCAP, time will tell whether we will see an improvement from Canada’s “D” rating on investment capital spending.
The federal government’s announcement can be found here.
1. These investments are made by a General Partner and Manager on behalf of investors participating in the fund of funds.
2. Department of Finance, “Canada’s Venture Capital Action Plan: A Step Closer to Helping Innovators Grow and Create Jobs”, May 3, 2013.