Ottawa, June, 05, 2012…CATAAlliance CEO, John Reid & its National Spokesperson, Sir Terry Matthews, also President & CEO of Wesley Clover released today a Venture Capital (VC) Blueprint for Canada to succeed as an Innovation Nation. The VC Blueprint reviews different mechanisms and models for urgent adoption in Canada to accelerate the success of start-ups to enterprise flagships. It recommends how the federal government can best deploy $400 million dollars from the recent Budget.
Messrs Reid & Mathews said, “The financial ecosystem necessary to support the development of future global tech industry leaders requires a wide range of financing from ‘seed’ through ‘early stage’ through ‘later stage’ to achieve financial self sufficiency and business success, with job growth."
The Venture Capital Blueprint
“As a key part of an overall Venture Capital Blueprint for Canada, CATA believes that the federal government has to carefully consider its options as to how to best deploy the $400M promised in the “Economic Action Plan 2012” so as to maximize the potential to re-start large scale private sector VC Funds in Canada.”The Venture Capital Blueprint discusses the pros and cons of various options for allocating $400 million of VC Funding from the Federal Budget, leading to best practice option "D" as the preferred choice to avoid duplication of costs and benefit from attracting foreign capital and expertise. Options outlined in the Blueprint included:
A) Select an internationally respected private sector VC firm to establish and manage a ‘Fund-of-Funds’ structure which will then use its own processes and best judgment to choose the best Canadian VC managers with which it should invest the Crown monies, who will be expected to complete their fund raising from both private sources and existing ‘Quasi-public’ and ‘Public’ Funds .
B) Invest the monies through the Business Development Bank of Canada (BDC) using its existing ‘Fund-of-Funds’ operations, with BDC placing it with a number of top selected VC funds across Canada looking for investment monies, through a competitive process. Successful fund managers (GPs) would be expected to raise at least the equivalent amount to the Crown’s contribution from private investors, plus additional amounts from ‘Quasi-public’ and ‘Public’ funds.
C) Having in mind that there are reportedly about 20 existing situations where Canadian fund managers are seeking additional investment capital to complete planned new VC funds, the government could assign the $400M to Industry Canada or Finance to be ‘doled out’ directly to Canadian funds which apply, against a qualification check list, thereby assisting those presently incomplete VC funds seeking investment.
D) Implement a ‘Yozma Inspired’ approach with additional Canadian elements to carry out an international competitive process to select the top three or four proposals from partnerships of Canadian and Foreign investors that would attract significant additional international capital and talent into Canada, employing BDC as the government’s investment channel in a ‘Fund-of-Funds’ structure.
Reid & Mathews, pointed out that “unless we take this opportunity to rethink Canada’s approach (i.e, adopt the international best practice "D" option) to attracting venture investment and build an ongoing VC capability and scale able to build and sustain Canadian technology companies through their various growth stages, we will have not achieved much more than a short-term-fix to the VC sector, perpetuating the classic ‘vicious circle’ within which both our VC industry and tech sector industries are now trapped."
They concluded, “This is why it is so important that the opportunity created by Budget 2012 to attract foreign investment and expertise not be missed. To do otherwise we leave new tech start-ups now and at their later growth stages in the infamous Valley of Death.”
++ Action Required:
MP and Community Mobilization
Please send electronically and/or print out and fax this communiqué and follow up with a phone call to your local MP (federal and provincial members), Mayors, media and network of peer contacts, inclusive of posting on all your social media.
In support of the communiqué, we will also send you a copy of the CATA Venture Capital Blueprint. Please email firstname.lastname@example.org with CATA VC Blueprint in the subject line.
We will be sending shortly details of a TeleForum Conference Call with Messrs. Matthews, Reid, and Dr. Russ Roberts, Sr. VP Tax, Finance & Advocacy, CATAAlliance, among other noted experts to discuss the VC Blueprint, provide updates, engage supporters and offer a Q&A for participants.
Ps A Note from the Desk of CATA CEO, John Reid, to all our email subscribers: Join the CATA Social Network on Linkedin:
CATA provides moderated social networking forums for executives to connect inform and inspire others to individual and organizational success. In order to benefit and be first in line for critical updates, please join the CATAAlliance main social networking group (4800 current members) on Linkedin and add to the VC Conversation at: http://www.linkedin.com/groupRegistration?gid=37239