Prime Minister Stephen Harper revealed Monday the outline of a plan for the $400-million his government earmarked in last year?s budget for the support of private sector investment in early-stage companies.
The exact structure of the Venture Capital Action Plan ? which will allocate three separate tranches of money to support new and existing private sector-led funds of funds and existing venture capital funds ? remained unclear.
Our government firmly believes strong action is required to bolster the available risk capital in Canada
Details such as which managers will be tapped to manage the investments, what conditions the funding comes with and an exact timeline for the deployment of the capital were scant, with more information said to be forthcoming.
The $400-million was first announced as part of the 2012 federal budget and a decision on how to spend the funds has been in the works since last June, when finance minister Jim Flaherty appointed private equity investor Sam Duboc to serve as a special advisor on consultations held across the country.
At a news conference in Montreal Monday, Mr. Harper said the government will allocate $250-million to support the creation of two new, private sector-led ?funds of funds,? which are portfolios of investments in several venture capital funds.
Both of these national funds of funds will be managed by a general partner with a ?substantial presence in Canada,? the government said in press materials Monday, adding that the funds of funds ?are expected to be finalized in the coming year.?
The federal government will also put up to $100-million to use in recapitalizing existing funds of funds led by the private sector and said it is looking for participation from provincial governments as well as private investors before it finalizes that funding.
Finally, the government plans to make a total investment of up to $50-million in three to five existing Canadian venture capital funds and expects to select those candidates ?in the coming months.? The government said the money would be deployed over the next seven to 10 years.
?Our government firmly believes strong action is required to bolster the available risk capital in Canada,? Mr. Harper said Monday. ?It is vital for Canada?s economic future and indeed for the long-term prosperity of all Canadians.?
In Ottawa, NDP finance critic Peggy Nash slammed the plan as woefully insufficient.
?The prime minister?s venture capital plan amounts to just peanuts and won?t get the job done,? Ms. Nash said. ?Canada?s venture capital market has been underperforming for over a decade and this funding will likely have little meaningful impact.?
With files from the Canadian Press
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