Ottawa, Ontario create new venture capital fund of funds

The fund’s initial closing of $217.5 million in commitments includes $145 million from institutional and corporate investors, and $36.3 million from each of the federal government and the Ontario provincial government. The fund has an overall target size of $300 million.

The initial investors in the fund include: all of the big six banks, BDC Capital Inc., Canada Pension Plan Investment Board, Ontario Capital Growth Corp., and OpenText Corp. Ontario and the federal government have also 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 $50 million each. The fund will seek additional investors to reach its target size of $300 million, and anticipates holding a second closing later this year.

The fund, which is managed by Northleaf Capital Partners, will invest primarily in Canada-focused early-stage and mid-stage venture capital funds, and directly in companies, with the goal of maximizing returns. Northleaf was selected as the general partner by the lead investors in the fund following a selection process led by an expert panel that was appointed by Flaherty.

Back in January 2013, the federal government embarked on its Venture Capital Action Plan to help revitalize venture investment in Canada with a $400 million commitment to establishing new venture funds and funds of funds that will be privately managed. At the same time, it has pledged to scrap federal tax credits for labour-sponsored venture capital corporations by 2017.

“The new fund being announced today will increase the supply of capital and other resources that high-growth firms require to reach their potential, and create jobs and growth,” said Flaherty.