The Covington Strategic Capital Fund opens for public purchase today, just in time for RSP season. The new labour sponsored investment fund is the only LSIF based on a collaborative model with alliance partners Microsoft Canada and Hewlett-Packard Canada.

The fund, through its strategic alliance with Microsoft and HP, will invest in and actively help accelerate the growth of select Canadian companies focused on providing application software products or services to a wide range of industries.

The will invest in promising mid-stage, privately-owned Canadian software and services companies whose growth potential can be significantly advanced through a collaborative strategic alliance and partnership approach. These companies will have assets under $50 million and must clearly demonstrate their fit in leveraging the value of the fund’s strategic alliance partners. Prospective companies have existing revenue streams from developed and commercialized technologies and are on a path to profitability.

Venture capital firm Covington Capital Corp. will review the prospective companies with the assistance of Microsoft Canada and HP. Only after such review and independent recommendation by the strategic alliance partners are investments made.

The alliance partners will then have the opportunity to provide active support for growth through development support and their sales and delivery channels. For instance, Microsoft may review the technical abilities of the companies and assist them in their software development support.

Covington says aligning with Microsoft and HP provides these investee companies with the opportunity to access new customers and revenue streams and brings the potential of a higher success ratio.

It adds that fund shareholders benefit by investing in an LSIF built on a portfolio of high growth companies with best-of-category solutions.

“This is a brand new model for an LSIF and is the only one available today that is structured this way. We have formalized exclusive agreements with our strategic alliance partners Microsoft and HP where they will provide us with assistance in analyzing investment potential and actively support the growth of the companies in which the Fund has invested,” said Grant Brown, managing partner of Covington Capital, in a news release.

The initial offering price for the fund is $10 per share with a minimum subscription of $500. In addition to RSP tax savings and a 30% tax credit is available to Ontario investors. Investments must be held for eight years.