Canada’s Hot New VC: The Federal Government

venture capital canadaWhile Canada’s venture capital sector is showing signs of improvement, it is a long way from being robust, let alone healthy. So it was encouraging to see the Conservatives commit $500-million to support venture capital initiatives.

The support consists of $400-million into VC investment, although the details have not been disclosed yet, and $100-million via the Business Development Bank of Canada.

Not surprisingly, it was welcome news for the VC industry.

Gregory Smith, president of the Canadian Venture Capital Association, said he was “pleased to see that the federal government has taken decisive action to address the acute shortage of venture capital by committing $500 million to the industry,” while Round13′s Scott Pelton told BNN it was “the beginning of a turnaround” for an industry that has struggled.

There is no doubt that $500-million of support for venture capital is a positive development. It will be interesting to see how the money is allocated and how it gets divvied up into the different sectors and investment stages.

At the same time, it’s also a sad state of affairs when the federal government has to get so involved at a time when it’s cutting corners to wrestle an enormous budget. Clearly, the need to support startups and innovation outweighed the financial and economic challenges.

The upside is the government is willing to walk the walk and talk the talk. It’s one thing to tout the benefits of innovation and the New Economy, it’s another to use taxpayer money to support it.

Maybe this will provide even more encouragement to institutional and corporate investors that have been sitting on the venture capital sidelines for whatever reason.

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  • B.R. Johnson

    All in all that is great our Gov. wants to become more involved in VC. However the preverbial red tape still applies to garnering anything from them. So unless you have someone who has the ear of the higher ups in that area any VC that you propse is tied up for months.
    This delay, especially in the IT world means a time frame of that nature would stall out progress for those needing immediate input or capital.
    So until the red tape can become more transparent or non existent and some method of fast tracking some of the VC they will become involved in leaves those like myself hanging in the beaurictratic hall ways of our government offices.