The federal government Monday announced its investment in Teralys Capital Innovation Fund, a private sector-led fund of funds and a key element of the government’s of Venture Capital Action Plan (VCAP).
The new fund, which focuses on the life sciences sector, had its initial closing with $279 million in commitments, comprised of $186 million from institutional and corporate investors, and $46.5 million from each of the federal government and the government of Quebec. The fund will invest primarily in Canada-focused early-stage and mid-stage venture capital funds, and directly in companies across Canada.
The fund’s lead investors have named Teralys Capital to act as the general partner. It will make investment decisions with a focus on maximizing returns. “The fund intends to seek top tier financial returns by structuring investments in private venture capital funds specialized in innovation. On a long-term basis, these investments will support a profitable and globally competitive venture capital industry, and will allow skilled managers to emerge and to attract the funds required to accelerate the growth of our best local businesses,” said Jacques Bernier, managing partner at Teralys Capital.
The fund will seek additional investors and anticipates holding a second closing in 2015. Along with the governments, the initial partners in the fund are: Caisse de dépôt et placement du Québec, Desjardins, Fondaction CSN, Fonds de Solidarité FTQ, Knight Therapeutics Inc., National Bank, and OpenText Corp.
The governments of Canada and Quebec have agreed to make a combined capital commitment of $1 for every $2 committed by private sector investors to the new fund, up to a maximum of $62.5 million each.
The federal government’s investment is the second made in a fund of funds under the VCAP, a $400-million strategy to increase private sector investments in early-stage risk capital, and to help catalyze the VC sector in Canada. It plans to establish up to four private sector-led funds of funds alongside private investors and provincial governments.