The federal Finance department is inviting venture capital advisors and funds to apply to participate in its plan to deploy $400 million in the venture industry over the next few years.
Earlier this year, the federal government announced that it plans to try and catalyze the moribund Canadian venture capital industry by investing in various vehicles that will be managed by private sector players, with the aim of attracting additional private co-investment. It said it plans to devote $250 million to establish new national funds of funds; $100 million to recapitalize existing funds of funds; and, $50 million in three to five existing venture funds.
Today, it unveiled the selection process for the private sector players — both the general partners and managers to run the proposed funds of funds, and the venture funds to take direct investment.
It’s inviting interested parties to apply to act as a general partner and manager to run the new funds of funds, and for the recapitalization of existing funds. For each fund of funds, the government expects the managers to handle total committed capital of between $300 million and $400 million. It also expects them to invest alongside the government, and to attract other private sector investors to the fund. Expressions of interest are due by June 3.
At the same time, it’s also seeking expressions of interest from high-performing venture capital funds seeking a share of the $50 million it plans to invest directly. To qualify, it says that funds are expected to be 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. Applications are due by May 27.
In the coming weeks, the government plans to announce a private sector advisory panel to assist in the selection processes for both the general partners and the venture funds.
“Venture capital plays a critical role in providing the investment and resources needed for innovative enterprises to realize their full potential,” said Samuel Duboc, the department of Finance’s Clifford Clark Visiting Economist and special advisor on venture capital. “The government has committed to an approach that is private sector-led and market-oriented. This will contribute to securing a long-term sustainable venture capital industry in Canada.”