The venture capital (VC) sector got a boost in Wednesday’s federal budget as the government pledged up to $400 million over three years to help drive investment in growth-stage companies.

To do that, the Liberals announced that they will launch a new program, known as the Venture Capital Catalyst Initiative (VCCI), that will see the Business Development Bank of Canada provide these funds starting in 2017-18 for “late-stage” venture capital.

The VC sector had been lobbying the government to retain the Venture Capital Action Plan (VCAP) program, which the former Conservative government began in 2012 to spark increased VC funding. The VCAP program is set to expire this year.

The VCCI is similar to the VCAP in that it aims to inspire co-investment from the private sector. The government indicates that this could generate as much as $1.5 billion in total new funding, depending on the extent of private sector participation. Prospective co-investors will have to submit proposals to the government to unlock the funds.

Details of the process for private participation will be announced in the coming months, following industry consultation, the budget indicates. Initially, the budget suggests that proposals will be assessed on several criteria, including the proposed investment strategy, the planned approach for sharing investment risk between the government and the private sector, and the amount of committed private sector capital.

Earlier this month, several of the Big Six banks and other financial services institutions also announced plans to establish a $500-million fund to provide long-term capital to growing companies.

Taken together, these initiatives aim to address one of the industry’s key concerns, which is the lack of capital for later-stage companies that are attempting to scale a business rather than early-stage, or startup, capital that has been relatively abundant in recent years. A recent report from an industry working group estimates the current shortfall in capital for growth-stage companies at about $4 billion.

On top of the pledge to bolster late-stage VC funding, the budget also promises $125 million to specifically support research into artificial intelligence (AI). The so-called Pan-Canadian Artificial Intelligence Strategy aims to fund post-graduate research in AI and to attract academics to the specialty. Financial services firms, particularly the big banks, are pursuing AI as they see the vast potential in the technology to reduce compliance costs and enhance customer service.

Read: Budget 2017