Attracting venture capital a challenge: Peter Lindfield reports in the Telegraph: the BC model for Atlantic Canada
January 4, 2011

Jan. 4, 2011 - The recent Future NB summit underscored the need to find a solution for the shortfall of venture capital (VC) in the province.

There exists a clear recognition that more investment needs to be made in New Brunswick firms but discussions about how to achieve this have reached no resolution. There have been calls to modify the mandates of potential investors such as the New Brunswick Investment Management Corporation (NBIMC). Prudently managing its pension assets on behalf of its investors is NBIMC's clear priority. Frequently more risky VC investments tend to be inconsistent with that mandate. However, investment in New Brunswick firms cannot be treated as a public service.

The challenges facing VC investment increasingly are more structural. In a recent study based on a 2010 Global Venture Capital survey of more than 500 VCs worldwide, the global consulting firm Deloitte, in conjunction with Canada's Venture Capital & Private Equity Association (CVCA) and several international industry associations highlighted a recent and marked contraction of VC investment in Canada. This is in sharp contrast to significant growth in available VC funding in emerging markets such as China, Brazil and India. The study stated that the Canadian VC experience is that a lack of critical mass in Canada is responsible for a less than optimal climate for investment and innovation. The study concluded that, if unaddressed, this shortfall of VC funding in Canada would precipitate a shift in wealth creation from Canada to other "more favoured jurisdictions."

According to John Ruffolo, Deloitte's national leader for its technology, media and telecommunications industry group and a Canadian Advanced Technology Alliance (CATA) leadership council director, "Canadian venture capital firms are up against serious competition from emerging markets, as are their counterparts in the U.S. and Europe. But with the small size of the Canadian industry, the impact of this decline is even more devastating."

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