The Association of Labour-Sponsored Investment Funds (ALSIF) says it regrets Ontario’s plan to discontinue offering tax credits for investors in the labour-sponsored investment fund program.

“The province’s decision is ill-advised,” said Dale Patterson, executive director of ALSIF, in a release. “LSIFs have provided roughly 30% to 40% of Ontario’s venture capital over the past several years, and much of the rest is built on the previous financings of existing LSIF- backed companies. Without access to LSIF investment, the next generation of entrepreneurial firms will find it very difficult to attract capital.”

The contribution of LSIFs to Ontario’s economy over the past decade has been significant. ALSIF says LSIFs have invested over $2.7 billion in more than 550 Ontario companies, creating 27,000 jobs.

“In our view Ontario’s high-tech entrepreneurs still need LSIFs to provide venture capital. Today’s announcement will make it harder for young companies to have access to a large and stable pool of expansion capital,” said Patterson.

The government and industry will immediately begin discussions on the impact of this decision, and appropriate transitional measures.

“We are committed to ensuring that the best interests of LSIF shareholders are protected,” said Patterson.

Other industry players also expressed their disappointment.

“At a policy level we are extremely disappointed in the province’s intention to phase out its support for a program which has created a $2.7 billion supply of venture capital to leading Ontario businesses,” said David Ferguson, managing general partner, VenGrowth Private Equity Partners Inc.

“We believe this decision is wrong for the Ontario economy and the 450,000 Ontario investors in these funds,” said David Levi, president and CEO of GrowthWorks. “There is already a shortage of venture capital in Canada and this decision will make the situation even worse for emerging Ontario companies.”