Government announces plans for $400M VC pledge

The federal government has announced a Venture Capital Action Plan using $400 million committed in the last federal Budget 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". The funding will be spread over the next seven to 10 years and used to establish large, private sector-led funds of funds ($250 million), recapitalize existing large private sector-led funds of funds ($100 million) and invest in three existing high-performing VC funds ($50 million). The investments stem from consultations held in 2012 with the private sector, which will continue as the government decides who will manage or receive the new funding. The new funds of funds require investment by the private sector (minimum $10 million) while funding directed towards existing funds of funds require provincial investment. The government's decision to invest in the VC industry follows a 2011 report from the Expert Panel on Federal Support to Research and Development (the Jenkins panel) to address persistent low returns for VC investors, lack of investor confidence, the reluctance of institutional investors to invest in early-stage firms, the relatively small size of VC funds and a shortage of experienced fund managers....