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$400 Million Venture Capital Commitment
The 2012 Federal Budget committed $400 million over the next 4 years to increase private sector capital investments through support for the creation of large-scale venture capital funds led by the private sector.
To make these investments more successful, the goal is not only to increase the availability of funds, but also to find ways to encourage experienced entrepreneurial investors to pass on their experience to the recipients.
Now, the Government is asking you to assist them in understanding what will work best. See the Department of Finance website, "Minister of Finance launches consultations on increasing venture capital in Canada" at
We encourage you to provide Minister Flaherty with your thoughts. While $400 million looks like a lot, experience shows that a great deal depends on finding mechanisms that are lean, minimally bureaucratic, and responsive to the needs of business. These mechanisms must also succeed in attracting experienced entrepreneurial investors, including foreign, as participants.
CATA has just completed an important in-depth discussion paper on federal investment in Canadian Venture funds that looks in detail at what has worked well, what has not, and why. It can be viewed at:
The conclusion of this paper is that it will be particularly important to minimize management costs and avoid duplicative overheads associated with too much bureaucratic complexity.
It will be important to use a model that is attractive to foreign investors. For this to be the case, Canadian private sector leadership and minimal bureaucratic involvement will be important.
There is clearly sufficient experience with successes and mistakes for Minister Flaherty to create an effective program that meets these criteria and provides appropriate due diligence for the funds.
CATA is convinced that the $400 million is a good start, but only if transactional fees and overheads are minimized.
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