Is it spring time for venture capital in Canada?
By Francis Moran
When the Canadian federal government announced in its April budget that it would be kicking up $400 million to help increase private sector investments in early-stage risk capital and to support the creation of large-scale venture capital funds led by the private sector, I figured it wouldn’t take long before someone stepped up to tell the feds what to do with the three quarters of that pot of money that wasn’t earmarked for the Business Development Bank of Canada.
First past the post with its recommendation was the Canadian Advanced Technology Alliance, or CATA Alliance, which this past week issued a well-reasoned report that examined and rejected three possible models for doling out the new money before making the case for Canada adopting what has generally become known as the Israeli, or “Yozma-inspired,” approach. The model would see the BDC — which is essentially the government’s own venture capital arm anyway — manage a competitive RFP process to select Canadian or international VC firms, or groups of firms, that would act as general partners for new funds. Those GPs would then recruit additional limited partners who would match or better the government’s contribution to create new funds of at least $200 million each.
