The new $205 million Ontario Venture Capital Fund is open for business.

The fund is intended to strengthen the ability of the province’s venture capital sector to support innovative, high-growth companies in Ontario by making it easier for them to find the investment, expertise and support they need.

The fund has been established to address the lack of investment funding in Ontario for innovative, high-potential companies.

Early stage venture capital — funding to emerging Ontario companies looking to grow — declined from $1.5 billion in 2000 to $236 million in 2007.

The fund is a limited partnership between the Ontario government and leading institutional investors to invest primarily in Ontario-focused venture capital and growth funds. Ontario’s contribution to the fund is $90 million.

“Innovation and a strong climate for business are key pillars of our five-point economic plan. The Ontario Venture Capital Fund will play a critical role in supporting both,” says Minister of Finance Dwight Duncan.

In addition to the province, the leading institutional partners in the fund are:

  • OMERS Capital Partners;
  • RBC Capital Partners:
  • Manulife Financial;
  • Business Development Bank of Canada; and
  • TD Bank Financial Group.

“As patient venture capital investors, we’re confident the Ontario Venture Capital Fund can not only produce attractive returns but can also have a significant impact on creating a virtuous cycle that will drive incremental investment in world-class Ontario-based technology and innovation over the long term,” says Rob MacLellan, chief investment officer, TD Bank.

The partners have unanimously selected TD Capital Private Equity Investors to manage the Ontario fund. Investments decisions will be market-based and returns focused, with the aim of supporting the most promising opportunities in Ontario. The partners will also seek additional investors to grow the fund and anticipate holding a second closing later in 2008.

Between 80% and 100% of the capital will be invested in Ontario-based and Ontario-focused funds. Up to 20% of the capital will be available for direct co-investments, alongside fund managers, in Ontario-based companies.