Venture Capital Catalyst Initiative

Investing in great ideas

Overview

Announced in Budget 2017, the Government of Canada, through the Business Development Bank of Canada (BDC), will be making available $400 million to increase the availability of late stage venture capital in Canada through the Venture Capital Catalyst Initiative (VCCI). With funds leveraged from the private sector, and depending on the proposals received, this investment could inject around $1.5 billion into Canada's innovation capital market. This funding will complement support provided by other programs under the Innovation and Skills Plan to help grow Canada's innovative high potential start-ups.

Background

Access to capital is vital in growing innovative companies to develop ideas, market new products and create good, middle class jobs in communities across the country. Venture capital (VC) is a specialized type of private equity financing that takes educated risks on great ideas and smart people, giving young, high growth-potential companies the opportunity to develop their ideas into marketable products. In addition to capital, VC investors bring operational experience, technical knowledge, networks and mentorship to the firms in which they invest. Because of the funding and expertise it provides, a strong and steady stream of VC is an essential element in the success of many of Canada's potential future technology leaders.

This past year, 2016, saw the seventh straight year of growth for VC in Canada, and the most VC invested in start-up companies since 2001. Canada is now ranked third for VC investment according to the OECD. The Canadian Venture Capital and Private Equity Association (CVCA) attributes much of this growth in venture to the impact of the Venture Capital Action Plan (VCAP) and the Government's support for VC. VCCI will continue this momentum.

In June 2017, the Department of Innovation, Science and Economic Development Canada (ISED), together with Finance Canada and BDC, held national consultations on the design and development of VCCI. This process captured the views of leaders from the VC ecosystem, such as fund-of-funds managers, investors in VC, VC fund managers, entrepreneurs and provincial government officials.

How it works

Through VCCI, the Government is seeking to build a portfolio of large funds-of-funds and alternative models that strengthen and broaden the Canadian VC ecosystem, and increase the availability of late-stage VC over time.

The Initiative will allocate capital to two streams:

  • Stream 1 will allocate $350 million to large private sector-led funds-of-funds that will seek to maximize returns through diversified investments, support skilled VC fund managers, and attract substantial private sector capital.
  • Stream 2 will allocate $50 million for proposals in areas that can provide a financial return to investors, but would not otherwise be addressed by Stream 1. Applicants under this stream should have strategies focused on supporting underrepresented groups such as women or diverse fund management teams and entrepreneurs, or emerging regions and sectors.

Additionally, VCCI includes a comprehensive focus on enhancing diversity and addressing gender balance among VC fund managers and portfolio companies.

Detailed information on the submission process can be found in the Call for Expressions of Interest package below.

The Government will also establish a private sector Selection Committee to evaluate incoming proposals and provide recommendations to the Deputy Minister of Innovation, Science and Economic Development Canada (ISED) on which applicants to select for VCCI. Interested candidates are encouraged to apply; further details are provided below.

Eligibility

Call for Expressions of Interest

Applicants will be evaluated on a number of factors based on the stream for which they apply. Both streams include evaluation criteria on investment strategy, management capabilities, fundraising strategy, and overall impact on the Canadian venture capital ecosystem. All applicants are required to meet minimum thresholds of Canadian presence and investment levels, and to adhere to detailed code of conduct and reporting requirements, including a focus on gender and diversity.

In line with the Government's objectives, VCCI includes a comprehensive focus on enhancing diversity and increasing the participation of women across the venture capital ecosystem. All applicants are expected to demonstrate how their strategies advance these objectives, and will be evaluated on this basis. Successful candidates will be required to report on the gender balance of the fund managers and entrepreneurs they support.

Detailed instructions on the application, submission and selection process can be found in the Call for Expressions of Interest.

Call for Expressions of Interest is now closed.

Selection Committee

Following an open process posted through the Departmental Appointment Opportunities webpage, the Government of Canada received applications from diverse and talented Canadians who expressed interest in participating in the Venture Capital Catalyst Initiative Selection Committee. From these applications, the Government has assembled five highly qualified industry experts to form this Committee.

The co-chairs and members of the selection committee will evaluate incoming proposals and provide recommendations to the Deputy Minister of ISED on which applicants to select for VCCI. Members of the committee will act on a part-time, volunteer basis.

The composition of the VCCI Selection Committee can be found at VCCI Selection Committee. Additional background information on the VCCI Selection Committee is available at VCCI Selection Committee – Backgrounder.

Contact

Email: capital@canada.ca
Telephone (toll-free in Canada): 1-800-328-6189
Telephone (Ottawa): 613-954-5031
Fax: 343-291-1913
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