As part of its ongoing effort to rejuvenate the venture capital (VC) sector, the federal government is devoting an additional $40 million to its new program that will support VC incubators and accelerators.
In Tuesay’s federal budget, Ottawa announced that it would provide an additional $40 million to the Canada Accelerator and Incubator Program (CAIP) over four years starting in 2015-2016. The government launched the CAIP last September in an effort to “establish a critical mass of outstanding accelerator and incubator organizations across Canada.”
Accelerators and incubators provide a range of services to fledgling startup companies, including financial support, mentoring, and office space, in order to help kickstart their growth.
In last year’s budget, the government allocated $60 million (over five years) to fund accelerators and incubators, following up on previous pledges to seed venture investment through the creation of new funds of funds vehicles alongside the private sector. The first of those new funds was announced earlier this year, and the government says that the organizations that will receive the incubator financing will be announced in the coming months.
In the meantime, the government is bumping up its commitment to the CAIP, taking the total size of incubator funding to $100 million. The program is designed to “increase the impact of CAIP in helping entrepreneurs realize the business potential of their ideas,” the government says.
Separately, the government is also planning to try and stoke venture investment with the help of new Canadians. In the budget, it says that it will replace its existing immigrant investor and entrepreneurship programs with a new pilot project that will require immigrants to make “a significant investment” in the Canadian economy in exchange for residency in Canada.
Details of the plan are scarce at this point, but the government indicates that it regards the existing immigrant investor program as a failure, as it both undervalues permanent residence and, it says, there is “little evidence that immigrant investors as a class are maintaining ties to Canada or making a positive economic contribution to the country.” As a result, it intends to replace that program with one that will do a better job of stoking economic growth through immigration.