Start-up companies were thrown a bone in Tuesday’s budget, with a pledge of $270 million for venture capital financing.

The bulk is coming through a $250 million commitment Ottawa is making to firms in need of venture funding. The investments will be made through the Business Development Bank of Canada — $100 million is targeted for “pre-seed” and “seed” companies; $100 million is to support the creation of VC funds; and the remaining $50 million is be invested directly in early-stage companies and other startups.

The BDC has been asked to submit a detailed plan for implementation of specific seed and VC initiatives. The government is targeting these funds at areas such as biotech, life sciences, medical technologies, environmental technologies and information technologies, in which it believes that Canada has research strength.

Apart from boosting the fortunes of startups themselves, the government says it expects these investments to help bolster the VC investment industry. Specifically, it suggests that the $100 million earmarked for VC funds will “support the development of a broader base of private VC fund managers.” It says that past experience indicates that the government’s additional investments through BDC should lead to over $1 billion in new venture capital investment in Canadian companies.

The government says it expects that BDC will establish a number of external advisory committees composed of scientists, engineers and financiers, to help target these investments.

Another $20 million has been pledged to Farm Credit Canada’s venture capital arm, FCC Ventures. It was lunched in 2002 to provide venture capital financing for the agriculture and agri-food sector. Last year Ottawa contributed an initial investment of $20 million over two years.