Venture Capital Action Plan Performance Metrics – December 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 $715 million committed to 22 Canadian funds. Of this, $535 million has supported 197 Canadian companies to date, with much more expected as the capital is invested 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
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
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
Total Commitments (C$M) % of  Total
Gov't of Canada 339.5 25%
Provinces 112.5 8%
Pension Funds 187.5 14%
Financial Institutions and Insurance Companies 207.5 15%
Endowment 15.0 1%
Retail Funds 125.6 9%
Corporate Strategic 102.5 8%
Asset Management Firm 53.1 4%
High Net Worth Individuals 202.1 15%
General Partners 10.7 0.80%
Grand Total 1,356.00 100.00%
Table 2: Nationality of Investors Participating in VCAP
NumberFootnote 1 of Investors Total Commitments (C$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 December 31, 2016)
Total Commitments (C$M) % of Total
Direct Investments in Canadian Companies 116 92.8%
Direct Investments in non-Canadian Companies 9 7.2%
Total Direct Investments in Companies 125 100.0%
Commitments to Canadian FundsFootnote 2 664 81.2%
Commitments to non-Canadian Funds 154 18.8%
Total Fund Commitments 818 100.0%

Funds-of-Funds Commitments to Canadian VC Funds

Table 4: Distribution of Fund-of-Fund Commitments Across Canada
(as of December 31, 2016)
Location of Fund Manager HQ Number of Funds Total Commitments
# % of Total C$M % of Total
BC 4 21% 103.7 16%
AB 1 5% 5.0 1%
SK 0 0% 0.0 0%
MB 0 0% 0.0 0%
ONFootnote 3 10 53% 450.1 68%
QC 4 21% 106.1 16%
NL 0 0% 0.0 0%
NB 0 0% 0.0 0%
NS 0 0% 0.0 0%
Total 19 100% 664.9 100%
Table 5: Primary Stage Focus of Canadian Fund-of-Fund Commitments
(as of December 31, 2016)
Primary Stage Focus Number of Funds Total Commitments
# % of Total C$M % of Total
Seed 3 16% 46.4 7%
Early Venture 9 47% 340.7 51%
Late Venture 2 11% 55.3 8%
Growth Equity 5 26% 222.4 33%
Total 19 100% 664.9 100%
Table 6: Primary Sector Focus of Canadian Fund-of-Fund Commitments
(as of December 31, 2016)
Primary Sector Focus Number of Funds Total Commitments
# % of Grand Total C$M % of Grand Total
Energy & Cleantech 4 21% 85.4 13%
ICT 11 58% 480.7 72%
Life Sciences 4 21% 98.8 15%
Grand Total 19 100% 664.9 100%

Financial Returns

Table 7: Performance of the VCAP Funds-of-Funds Portfolio
(Program Inception to December 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 1,356,000 348,345 25.7% 9,225 332,374 341,599 0.98x

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 $15 million
Table 9: Primary Stage Focus of Canadian High-Performing Fund Commitments
(as of December 31, 2016)
Primary Stage Focus Number of Funds Total Commitments
# % of Total C$M % of Total
Seed 1 25% 10 20%
Early Venture 2 50% 30 60%
Late Venture 1 25% 10 20%
Growth Equity 0 0% 0 0%
Total 4 100% 50 100%
Table 10: Primary Sector Focus of Canadian High-Performing Fund Commitments
(as of December 31, 2016)
Primary Sector Focus Number of Funds Total Commitments
# % of Grand Total C$M % of Grand Total
Energy & Cleantech 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 22 funds have received funding under VCAP.

Financial Returns

Table 11: Performance of the Government of Canada VCAP High-Performing Funds Investment
(as of December 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 19,759 40.0% 391 20,421 20,812 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 December 31, 2016)
Primary Stage Focus Number of Funds Total Commitments
# % of Total C$M % of Total
Seed 4 18% 56.4 8%
Early venture 10 45% 370.7 52%
Late venture 3 14% 65.3 9%
Growth equity 5 23% 222.4 31%
Total 22Footnote 9 100% 714.9 100%
Table 13: Primary Sector Focus of Overall VCAP Commitments to Funds-of-Funds and High-Performing Venture Capital Funds
(as of December 31, 2016)
Primary Sector Focus Number of Funds Total Commitments
# % of Grand Total C$M % of Grand Total
Energy & Cleantech 4 18% 85.4 12%
ICT 12 55% 505.7 71%
Life Sciences 6 27% 123.8 17%
Grand total 22Footnote 9 100% 714.9 100%

Investments in Canadian Companies

Total invested in Canadian companies up to December 31, 2016 was $535 million. 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 December 31, 2016)
Location of Company HQ Number of Companies
# % of Total
BC 14 7%
AB 10 5%
SK 1 1%
MB 2 1%
ON 84 43%
QC 81 41%
NL 0 0%
NB 1 1%
NS 4 2%
Total 197 100%
Chart 2: Primary Stage Focus of Overall VCAP Investments in Canadian Companies
(as of December 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 December 31, 2016)
Stage at Initial Investment Number of Companies
# % of Total
Seed 93 47%
Early Venture 43 22%
Late Venture 17 9%
Growth Equity 33 17%
Other companies 11 6%
Total 197 100%
Chart 3: Primary Sector Focus of Overall VCAP Investments in Canadian Companies
(as of December 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 December 31, 2016)
Primary Sector Number of Companies
# % of Total
Energy & Cleantech 13 7%
ICT 147 75%
Life Sciences 31 16%
Other companies 6 3%
Total 197 100%
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