The Association of Labour Sponsored Investment Funds (ALSIF) rejects as misleading the broad criticisms of the industry contained in a press release issued by IPM Funds this week.

IPM Funds is a new LSIF in its first year of raising capital and is not a member of ALSIF. According to the association, the press release issued by IPM Funds includes several criticisms of the very industry it seeks to participate in, including the claim that established LSIFs find it difficult to “do justice to the thorough due diligence process required to make good venture capital investments.”

“The LSIF industry makes a significant contribution to Canada, and it is regrettable that a new entrant has decided to make such broad and critical generalizations, ultimately for their own gain,” says Dale Patterson, executive director, ALSIF.

He says that IPM Funds’ approach presents an incomplete picture of the LSIF and venture capital industry, and adds that “the ultimate gains for LSIF shareholders will be much more attractive when the current round of investee companies matures.”

Specifically, ALSIF refutes IPM Funds’ claims that established LSIFs are too “pre-occupied with asset gathering” to conduct effective “due diligence” or “hands-on, added value” management.

“These points contradict best practices adopted by all of ALSIF’s members,” says John Richardson, Chair, Communications Committee, ALSIF. “As an association working diligently to educate all of our constituents, advocate public policy matters and partner with policymakers, and ensure best management and corporate governance practices in our industry, we are concerned that short-term marketing tactics can be destructive to everybody involved with the labour sponsored industry, including smaller Canadian companies and individual Canadian investors looking for solid information to make their investing decisions.”

The association says LSIFs make a significant contribution to the Canadian economy and job market, accounting for over 20% of all dollars invested in venture capital since 1996 and 28.5% of all venture capital deployed in the first three quarters of 2003.

ALSIF was founded in 1997 as the voice of the labour sponsored investment fund (LSIF) industry, representing LSIFs with $3 billion in total assets.