Canada's public sector is continuing to counteract the plunge in venture capital funding in the country, as the Government of Canada has become the latest to back a new venture capital fund.
The federally owned Business Development Bank of Canada announced Monday it is committing C$75 million ($67.5 million) to the new Tandem Expansion Fund, which managers hope will close the summer at about C$300 million. The fund's general partner is Tandem Expansion, which was founded by Canadian Imperial Bank of Commerce chairman Charles Sirois and Brent Belzberg, founder and senior managing partner of the Canadian private equity fund TorQuest.
The Canadian VC market has been undergoing an extreme contraction recently, with first-quarter investment falling 25% from a year earlier to C$275 million, while funding plunged 75% to C$149 million.
To offset this plunge in funding, several governments have stepped forward with funds to back young companies. In March, the Ontario government set up the C$250 million Emerging Technologies Fund, and then Quebec teamed up with institutional investors to launch Teralys Capital, a fund-of-funds worth more than C$700 million.
The Business Development Bank's C$75 million contribution to the Tandem fund is the federal government's first response to pleas for help from the Canadian Venture Capital Association, which said in January the Canadian VC industry is in a state of crisis.
The fund will focus on later-stage funding and on companies with proven technology and managers with a record of commercialization. The fund will be run day to day by four Canadians who are returning from overseas jobs: David Bookbinder, André Gauthier, Christopher Legg and Alex Moorhead. - Peter Moreira
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