Venture Capital Action Plan Performance Metrics – March 31, 2016

Backgrounder

In 2013, the Government of Canada announced the Venture Capital Action Plan (VCAP), a market-oriented approach to putting Canada's venture capital industry on the path to sustainability and increasing the availability of financing for innovative Canadian firms.

Through VCAP, the Government has invested:

  • $340 million to establish four large, private sector-led funds-of-funds (Northleaf Venture Catalyst Fund, Teralys Capital Innovation Fund, Kensington Venture Fund and HarbourVest Canada Growth Fund)
  • $50 million directly in four existing high-performing Canadian venture capital funds
    (Lumira Capital II, Real Ventures III, CTI Life Sciences II and Relay Ventures III)

Under VCAP, the Government's investment of $390 million has attracted significant investments in the venture capital industry in Canada. In particular, the four VCAP funds-of-funds attracted investments from a diverse set of investors that included pension funds, high-net-worth individuals, corporations, banks, and the governments of Ontario and Quebec. Including the federal government investment, the four funds-of-funds raised $1.356 billion. Of that total, $904 million came from private sector investors. Canadian-based sources account for 95 percent of the capital, while 5 percent was from American and European investors.

In total, investments under VCAP have to date translated into $453 million committed to 126 Canadian companies, with much more expected as the capital is invested by fund managers in the years to come.

VCAP aims to make Canada's venture capital industry more globally competitive, while ensuring that Canada's high-potential firms have the resources they need to grow and create jobs.

Key VCAP Metrics

Section 1: VCAP Funds-of-Funds Program Overview

Metrics in this section relate to the activities associated with the four VCAP funds-of-funds.

VCAP Funds-of-Funds Fundraising

Table 1: Capital Raised by the VCAP Funds-of-Funds
(as of March 31, 2016)
Fund-of-Fund Committed Capital
Northleaf Venture Catalyst Fund $300 million
Teralys Capital Innovation Fund $375 million
Kensington Venture Fund $306 million
HarbourVest Canada Growth Fund $375 million

The four funds-of-funds raised $1.356 billion from public and private sector investors, including approximately $340 million from the Government of Canada.

Chart 1: Type of Investors Participating in VCAP
(as of March 31, 2016)
Pie chart of Type of Investors Participating in VCAP (the long description is located below the image)
Description of Chart 1
Type of Investors Participating in VCAP
(as of March 31, 2016)
Total Commitments (C$M) % of Total
Gov't of Canada 339.5 25%
Provinces 112.5 8%
Pension Funds 187.5 14%
Financial Institutions and Insurance Companies 207.5 15%
Endowment 15.0 1%
Retail Funds 125.6 9%
Corporate Strategic 102.5 8%
Asset Management Firm 53.1 4%
High Net Worth Individuals 202.1 15%
General Partners 10.7 0.80%
Grand Total 1,356.00 100.00%
Table 2: Nationality of Investors Participating in VCAP
(as of March 31, 2016)
Number of Investors Total Commitments (C$M) % of Total
Canada (private sector) 24 828.6 62%
Canada (public sector) 3 452.0 33%
Europe 2 18.0 1%
U.S. 1 57.4 4%
Grand Total 30 1,356.0 100%

Portfolio Allocation Across the Four Funds-of-Funds

Table 3: Breakdown of Direct and Indirect Investments by the Funds-of-Funds
(as of March 31, 2016Note *)
Total Commitments (C$M) % of Total
Direct investments in Canadian companies 83.2 92.7%
Direct investments in non-Canadian companies 6.5 7.3%
Total direct investments in companies 89.7 100.0%
Commitments to Canadian fundsNote 1 554.3 80.0%
Commitments to non-Canadian funds 138.9 20.0%
Total fund commitments 693.2 100.0%

Funds-of-Funds Commitments to Canadian VC Funds

Table 4: Distribution of Fund-of-Fund Commitments Across Canada
(as of March 31, 2016Footnote *)
Location of Fund Manager HQ Number of Funds Total Commitments
# % of Total C$M % of Total
BC 1 6% 25.0 5%
AB 2 12% 20.0 4%
SK 0 0% 0.0 0%
MB 0 0% 0.0 0%
ONFootnote 2 11 65% 418.9 75%
QC 3 18% 91.0 16%
NL 0 0% 0.0 0%
NB 0 0% 0.0 0%
NS 0 0% 0.0 0%
Total 17 100% 554.9 100%
Table 5: Primary Stage Focus of Canadian Fund-of-Fund Commitments
(as of March 31, 2016Footnote *)
Primary Stage Focus Number of Funds Total Commitments
# % of Total C$M % of Total
Seed 2 12% 33.0 5.9%
Early venture 9 53% 284.5 51.3%
Late venture 1 6% 43.9 7.9%
Growth stage 5 29% 193.5 34.9%
Total 17 100% 554.9 100.0%
Table 6: Primary Sector Focus of Canadian Fund-of-Fund Commitments
(as of March 31, 2016Footnote *)
Primary Sector Focus Number of Funds Total Commitments
# % of Grand Total C$M % of Grand Total
Energy and clean tech 4 24% 83.9 15.1%
ICT Footnote 3 11 65% 436.0 78.6%
Life sciences 2 12% 35.0 6.3%
Grand total 17 100% 554.9 100.0%

Financial Returns

Table 7: Performance of the VCAP Funds-of-Funds Portfolio
(Program Inception to March 31, 2016)
(C$, 000s) Amount Committed Capital
CalledFootnote 4
% Called Cash
DistributedFootnote 5
Fair
ValueFootnote 6
Total
ValueFootnote 7
Total
Value To Paid-InFootnote 8
Funds-of-funds 1,356,000 199,174 14.7% 7,121 185,675 192,795 0.97x

Section 2: VCAP High-Performing Venture Capital Funds Program Overview

Metrics in this section relate to the activities associated with the four high-performing venture capital funds, which together received a commitment of $50 million under VCAP.

Commitments to High-Performing Funds

Table 8: Government of Canada Investment in the VCAP High-Performing Funds
Fund Committed Capital
Lumira Capital II $10 million
Real Ventures III $10 million
CTI Life Sciences II $15 million
Relay Ventures III $15 million
Table 9: Primary Stage Focus of Canadian High-Performing Fund Commitments
(as of March 31, 2016)
Primary Stage Focus Number of Funds Total Commitments
# % of Total C$M % of Total
Seed 1 25% 10 20%
Early venture 2 50% 30 60%
Late venture 1 25% 10 20%
Growth stage 0 0% 0 0%
Total 4 100% 50 100%
Table 10: Primary Sector Focus of Canadian High-Performing Fund Commitments
(as of March 31, 2016)
Primary Sector Focus Number of Funds Total Commitments
# % of Grand Total C$M % of Grand Total
Energy and clean tech 0 0% 0 0%
ICT 2 50% 25 50%
Life sciences 2 50% 25 50%
Grand total 4 100% 50 100%

Note: One of the high-performing funds was also supported by a fund-of-funds; therefore, a total of 20 funds have received funding under VCAP.

Financial Returns

Table 11: Performance of the Government of Canada VCAP High-Performing Funds Investment
(as of March 31, 2016)
(C$, 000s) Amount
Committed
Capital
CalledFootnote 4
% Called Cash
DistributedFootnote 5
Fair
ValueFootnote 6
Total
ValueFootnote 7
Total
Value To Paid-InFootnote 8
High performing funds 50,000 14,991 30.0% 314 15,401 15,714 1.05x

Section 3: Overall VCAP Program Overview

Metrics in this section relate to the overall activities associated with the four VCAP funds-of-funds and the four high-performing venture capital funds that received VCAP investment.

Commitments to Canadian Venture Capital Funds

Table 12: Primary Stage Focus of Overall VCAP Commitments to Funds-of-Funds and High-Performing Venture Capital Funds
(as of March 31, 2016Footnote *)
Primary Stage Focus Number of Funds Total Commitments
# % of Total C$M % of Total
Seed 3 15% 43.0 7.1%
Early venture 10 50% 314.5 52%
Late venture 2 10% 53.9 8.9%
Growth stage 5 25% 193.5 32%
Total 20Footnote 9 100% 604.9 100.0%
Table 13: Primary Sector Focus of Overall VCAP Commitments to Funds-of-Funds and High-Performing Venture Capital Funds
(as of March 31, 2016Footnote *)
Primary Sector Focus Number of Funds Total Commitments
# % of Grand Total C$M % of Grand Total
Energy and clean tech 4 20% 83.9 13.9%
ICT 12 60% 461.0 76.2%
Life sciences 4 20% 60.0 9.9%
Grand total 20Footnote 9 100% 604.9 100.0%

Investments in Canadian Companies

This includes investments by high-performing funds, funds-of-funds and underlying funds.

Table 14: Distribution of Overall VCAP Investments in Companies Across Canada
(as of March 31, 2016)
Location of Company HQ Number of Companies Total Investments
# % of Total C$M % of Total
BC 10 8% 43.4 9%
AB 5 4% 65.3 14%
SK 0 0% 0.0 0%
MB 2 2% 1.0 0%
ON 62 49% 178.2 39%
QC 42 33% 159.3 35%
NL 0 0% 0.0 0%
NB 1 1% 2.5 1%
NS 4 3% 3.2 1%
Total 126 100% 453 100%
Chart 2: Primary Stage Focus of Overall VCAP Investments in Canadian Companies
(as of March 31, 2016)
Pie chart of Primary Stage Focus of Overall VCAP Investments in Canadian Companies (the long description is located below the image)
Description of Chart 2
Primary Stage Focus of Overall VCAP Investments in Canadian Companies
(as of March 31, 2016)
Stage at Initial Investment Number of Companies Total Investments
# % of Total C$M % of Total
Seed 78 62% 43.5 10%
Early Venture 12 10% 28.1 6%
Late Venture 10 8% 74.5 16%
Growth Equity 26 21% 306.8 68%
Total 126 100% 453 100%
Chart 3: Primary Sector Focus of Overall VCAP Investments in Canadian Companies
(as of March 31, 2016)
Pie chart of Primary Sector Focus of Overall VCAP Investments in Canadian Companies (the long description is located below the image)
Description of Chart 3
Primary Sector Focus of Overall VCAP Investments in Canadian Companies
(as of March 31, 2016)
Primary Sector Number of Companies Total Investments
# % of Total C$M % of Total
Energy & Cleantech 6 5% 105.0 23%
ICT 104 83% 201.1 44%
Life Sciences 16 13% 146.8 32%
Total 126 100% 453 100%
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