Venture Capital Catalyst Initiative
The government of Canada is helping Canadian small and medium-sized businesses start up, scale up and access new markets. A strong venture capital ecosystem is critical to achieving this goal and to creating middle class jobs.
Venture capital (VC) is a specialized type of private equity financing that takes educated risks on high growth-potential companies.
Venture capital is often an essential element in helping Canadian companies scale.
Canada's VC ecosystem has nearly doubled in size since 2010. In fact, in 2018, Canada saw a total of $3.7 billion of VC investment in Canadian start-ups.
Canada is now ranked third for VC investment according to the Organisation for Economic Co-operation and Development (OECD). The Canadian Venture Capital and Private Equity Association (CVCA) attributes much of this growth to the Government of Canada's support for VC, including through the Venture Capital Action Plan (VCAP).
To build on this success, the Government made available $450 million through the Venture Capital Catalyst Initiative (VCCI). VCCI Stream 1 invested in large funds-of-funds that will support Canadian VC fund managers, while VCCI Stream 2 invested in emerging and diverse managers, underserved regions and sectors, and alternative fund structures. VCCI Stream 3 invested in VC funds investing primarily in clean technology firms.
One of the objectives of VCCI is to improve gender balance among Canadian VC fund managers and companies. As part of their submissions, applicants under all streams were required to submit gender balance strategies demonstrating how they will enhance diversity and increase the participation of women across the VC ecosystem. All recipients will be required to report on statistics relating to the number of women fund managers and entrepreneurs supported.
VCCI will leverage private sector and other capital to inject a total of over $1.5 billion into the VC marketplace, growing Canadian companies and supporting thousands of middle class jobs.
Selected Recipients under Stream 1
VCCI Stream 1 aimed to establish a portfolio of new private sector-led large funds-of-funds that could inject significant capital into the Canadian VC ecosystem. This stream aimed to maximize returns through diversified investments, support skilled VC fund managers, and attract substantial private sector capital.
The five large funds-of-funds selected under Stream 1 were announced on June 26, 2018. Each of these managers have since made significant progress. Notably, Hamilton Lane opened its Toronto office in early 2019.
The remaining recipient funds-of-funds have raised more than $868 million and are now investing into VC funds and companies.
The five managers selected under Stream 1 were:
- Hamilton Lane
- HarbourVest Partners
- Kensington Capital Partners
- Northleaf Capital Partners
- Teralys Capital
Selected Recipients under Stream 2
VCCI Stream 2 aimed to provide a financial return to investors while prioritizing areas not otherwise addressed by Stream 1. The fund managers selected under this stream had strategies focused on supporting underrepresented groups such as women or diverse fund management teams and entrepreneurs, or emerging regions and sectors.
The seven VC fund managers selected under Stream 2 were announced on November 5, 2018.
To date, Build Ventures, Garage Capital and TandemLaunch have had closes of over 50% of their target fund size and are beginning to invest in companies as they continue fundraising. Negotiations continue with the other recipients, with additional closes expected soon.
The seven managers selected under Stream 2 were:
Stream 3: Investing in Clean Technology
The global transition towards the adoption of clean technologies that are designed to enhance productivity, increase resource efficiency, and reduce waste and pollution, presents an economic opportunity for Canadian companies. In fact, the clean technology sector is expected to be a $26 trillion industry by 2030 and Canada currently ranks fourth in a global clean technology leader index.
To continue on this momentum, the following three VC fund managers selected under Stream 3 were announced on June 5, 2019:
VCCI Fund Selection
All selection of VCCI recipients were subject to a competitive process informed by the recommendations of an impartial selection committee.
The purpose of this performance measurement framework (PMF) is to outline the metrics that will be used to evaluate the performance of VCCI in delivering on its objectives and outcomes. The Department of Innovation, Science and Economic Development Canada is committed to releasing annual reports based on the performance metrics.
- Minister Ng announces federal venture capital investments in clean technology
- Minister Ng announces federal venture capital investments focused on gender and diversity
- Minister Bains and Minister Chagger announce first investments under Venture Capital Catalyst Initiative
- Venture Capital Catalyst Initiative — Call for Expressions of Interest (Streams 1 and 2)
- Venture Capital Catalyst Initiative — Call for Expressions of Interest (Stream 3 — Clean Technology)
If your organization is interested in learning more about the VCCI program, please contact the VCCI Secretariat at firstname.lastname@example.org.
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