Canadian Prime Minister Stephen Harper said his government will create new national venture-capital funds and recapitalize existing pools as part of efforts to increase availability of cash to startups.
Harper, speaking today in Montreal, released details of his plans to inject C$400 million ($407 million) in venture capital funding, initially announced in the government’s March budget, including the creation of “funds of funds” that will be open to the private-sector and provinces. The federal money will be allocated over a period of as many as 10 years.
“The purpose is not for this to be solely a federal government-led effort,” Harper told reporters today. “The government’s role here really is to kick-start this, to provide a framework, but ultimately to build a very robust and complete private sector network.”
Canada’s government has sought to revamp funding for innovation, putting more focus on direct investments in companies and paring back tax credits. Investment by Canadian businesses in research and development was about 1 percent of gross domestic product in 2009, less than half the U.S. level, according to the 2012 budget.
The government will allocate C$250 million to create two major funds that will be jointly financed by non-government investors. The money will be used primarily to finance other venture capital funds. The government is asking private investors to signal their interest by Feb. 8.
As much as C$100 million will go to recapitalize existing “large” private-sector funds, and as much as C$50 million will go into three to five “high-performing” venture capital funds, Harper said.