Governments of Canada and Ontario Help to Create Jobs and Growth with New Venture Capital Fund of Funds
Governments create new fund of funds to increase private sector investments in early-stage risk capital
January 21, 2014 – Waterloo, Ontario– Department of Finance
On behalf of Finance Minister Jim Flaherty, Minister of State for the Federal Economic Development Agency for Southern Ontario Gary Goodyear today announced the establishment of Northleaf Venture Catalyst Fund, a private sector-led fund of funds and a key element of the Government of Canada’s Venture Capital Action Plan (VCAP). Minister Goodyear was joined at the event by Ontario Premier Kathleen Wynne and Ontario Minister of Research and Innovation Reza Moridi.
The Fund, the first fund of funds established under the VCAP, had its initial closing with $217.5 million in commitments, of which $145 million is from institutional and corporate investors, and $36.3 million is from each of the Governments of Canada and Ontario. The Fund has an overall target size of $300 million.
Northleaf Venture Catalyst Fund will invest primarily in Canada-focused early-stage and mid-stage venture capital funds, and directly in companies across Canada. Northleaf Capital Partners has been selected by lead investors to act as the general partner for the Fund, following a fair and competitive selection process led by the Venture Capital Expert Panel appointed by Minister Flaherty. Investment decisions will be made by Northleaf Capital Partners on market-based principles in order to maximize returns.
The Governments of Canada and Ontario have agreed to make a combined capital commitment of $1 for every $2 committed by private sector investors to the new Fund, up to a maximum of $50 million each. The Fund will seek additional investors to reach its target size and anticipates holding a second closing later in 2014.
The initial partners in the Fund are:
- BDC Capital Inc.
- BMO Financial Group
- Canada Pension Plan Investment Board
- Canadian Imperial Bank of Commerce
- National Bank of Canada
- Ontario Capital Growth Corporation
- OpenText Corporation
- TD Bank Group
- The Government of Canada’s investment in Northleaf Venture Catalyst Fund is the latest step in the VCAP, a $400 million strategy launched in January 2013 to help increase private sector investments in early-stage risk capital, and contribute to a vibrant private sector-led venture capital sector in Canada.
- The VCAP includes a commitment to establish up to four new or recapitalized private sector-led funds of funds with private sector investors and interested provinces.
- The Business Development Bank of Canada is facilitating the implementation of the VCAP on behalf of the Government of Canada by providing independent expertise, undertaking due diligence, supporting negotiations with funds and other investors, and assisting in the deployment of VCAP investments.
“Risk capital is vital for Canada’s economic future and indeed for the long-term prosperity of all Canadians. The Venture Capital Action Plan is helping to revitalize Canada’s venture capital sector and increase private sector investments. The new Fund being announced today will increase the supply of capital and other resources that high-growth firms require to reach their potential, and create jobs and growth.”
- Jim Flaherty, Minister of Finance
“The Northleaf Venture Catalyst Fund will increase the availability of risk capital required by many Canadian innovative firms, generating new market opportunities and greater success. It is no secret that Canada’s long-term economic growth in an increasingly competitive, knowledge-based economy will largely be driven by smart, confident entrepreneurs with the skills and drive necessary to innovate and create high-quality jobs.”
- Gary Goodyear, Minister of State (Federal Economic Development Agency for Southern Ontario)
“Ontario is proud to be working with the private sector on a new fund that will strengthen the venture capital industry in our province. This initiative builds on the successful Ontario Venture Capital Fund 'fund of funds' model, which was created by the Ontario Government to stimulate investment in the province. The new Northleaf Venture Catalyst Fund will help ensure that more high-growth companies and innovative ideas can access the funding they need to grow to market, compete globally and create good jobs in Ontario.”
- Reza Moridi, Ontario Minister of Research and Innovation
Office of the Minister of Finance
Department of Finance
Office of the Premier of Ontario