by Chris Arsenault

March 2009 will definitely be the month the Canadian Venture Capital Industry heard its “wake up” call. Fund of fund initiatives, new funds, follow on funds, co-investment fund, business funds. We got swamped with VC related initiatives and announcments and even withnessed some true initial traction. It was refreshing to read about the Québec Government Venture Capital initiative, done in close partnership with la Caisse de dépôt, the Fond de solidarité FTQ and Investissement Québec, with commitments toward the creation of: a $500M business growth fund, $125M for the creation of three seed stage funds as well as the creation of a $825M Fund of Fund. Now, the latest news comes from Ontario, where the Ontario Venture Capital fund announced, earlier today, that it had completed its first commitment to a private fund manager: Georgian Partners. Below an extract of the press release: 

  

Venture Capital Fund Invests In Jobs Of The Future

McGuinty Government Welcomes First Ontario-Based Commitment.

The Ontario Venture Capital Fund is committing up to $15

million inGeorgian Partners “Growth Fund I” to help support

innovative, high-growth businesses, including high-potential

companies in Ontario.

Georgian Partners (http://www.georgianpartners.com/index.html)

is an Ontario-based venture capital firm investing in companies

in the information technology, information aggregation, and

enterprise software sectors.

 

 

Note that the Ontario Government first announced the creation of its Fund of Fund, in close collaboration with its partners (OMERS, RBC Capital Partners, Manulife Financial, BDC & TD Bank Financial Group) back in June 2008 (Link), a $205M Fund, and, at the time of its announcement, it was one of the biggest to-be active Canadian Fund of Fund  (the Ontario Government commitment was in the order of $90 million). We hadn’t heard much since then nor seen any activity until earlier this month when the Ontario government followed up with the announcement of a new $250M VC fund that would co-investing with other eligible fund managers in emerging technologies (Link). This announcement was quickly followed by other rumors about the first two investment commitments towards private funds by the Ontario Venture Fund (the Fund of Fund) which were rumored to be Kodiak Venture Partners and Mayfield (both US funds). I guess it was just rumors, because today they announced their first commitment, and its towards Ontario based venture capital Georgian Partners.

The level of energy and the willingness coming from large Canadian institutions and government to commit important amounts of capital to Venture Capital is well received by the community. The CVCA and many of its members, have been putting allot effort towards gathering support from large institutions as well as from our governments in order to help address the current lack of funding available to bridge the gap between research and development and the commercialization of promising technologies. If you haven’t yet, take a look at the recently released study on the economic impacts of venture capital: Why Venture Capital is Essential to the Canadian Economy (Link).

Even if all of this sounds really good, I still fear that in the current economic climate, as a VC fund manager, attracting funds from the non-government entities, such as: Pension funds, Insurance Companies, Banks, large corporations, endowment funds… will prove to be at the least extremely difficult.

But we will get there.. only by showing our Canadian existing and potential limited partners, that yes, Venture Capital Funds in Canada can provide strong returns (IRR)!

Onwards, upwards!

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