Three Years Into VCAP and Program Still Propelling Canada’s Innovation Ecosystem

Three Years Into VCAP and Program Still Propelling Canada’s Innovation Ecosystem
January 23
09:04 2017

Today, the Canadian Venture Capital and Private Equity Association celebrates the third anniversary of the Government of Canada’s Venture Capital Action Plan (VCAP)– a program that was implemented in January 2014 as a means of leveraging government funds with private sector investment and expertise.

This program has had an overwhelmingly positive impact on Canada’s innovation ecosystem. In data that’s just been compiled, the total investment under VCAP has now reached $886 million and counting, which represents two-thirds of the $1.4 billion that will be invested, and well over double the original government investment.

VCAP was the result of the government’s belief of action required to boost the available venture funding in Canada. VCAP was also an acknowledgment of venture capital’s vital role for Canada’s economic future and the long-term prosperity of all Canadians.

The program was designed to establish and recapitalize large-scale, private sector-led funds of funds with the participation of institutional investors, corporate strategic investors, and interested provinces. The first fund of funds established under the VCAP rolled out in January 2014 with the launch of the Northleaf Venture Catalyst Fund.

Through September 2016, notable VCAP program accomplishments included $886 million committed to venture capital, including 21 new and emerging Canadian funds. Since 2014, VCAP-receiving firms have invested $481 million in at least 163 Canadian innovative companies. The funding has been used for a variety of purposes including generating high-skilled jobs, advancements in research and development and nurturing sales. Among the many VCAP success stories include SkiptheDishes of Winnipeg, Bit Stew Systems of Burnaby, Shopify of Ottawa, Zymeworks of Vancouver, Lightspeed of Montreal, Thalmic Labs of Kitchener-Waterloo, plus a growing list of others.

The three-year anniversary also highlights the ROI of VCAP; translating $340 million invested by the government into $1.4 billion. Since the program is considered an investment and not a direct cost, it could generate a direct financial return for taxpayers.

VCAP has helped to launch positive momentum of VC investment in Canada; dollars invested in Canadian VC in 2016 was its highest level since 2001. To prevent any downward trend, the industry has been rallying behind efforts to ensure that a second VCAP program is included in the upcoming 2017 federal budget.

Canada essentially needs to create and grow new companies, and without the inclusion of the VCAP program in the upcoming federal budget, we are concerned that innovation investment will take a step backward at precisely the wrong time, explains Mike Woollatt, CEO, CVCA.

“In times of fiscal constraint and focus on innovation, a program like VCAP which costs very little but has a direct impact on innovation is the right move. We hope the Government agrees.”

Read the full press release here.

 

Graphics below part of VCAP Program Overview – based on previous data from BDC Capital

VCAP: 20 Canadian Fund Commitments

VCAP: 20 Canadian Fund Commitments

VCAP: Over $450M Invested in 126 Canadian Companies

VCAP: Over $450M Invested in 126 Canadian Companies

VCAP: Economic Impact from BDC Capital

VCAP: Economic Impact from BDC Capital

VCAP: Economic Impact 2 from BDC Capital

VCAP: Economic Impact 2 from BDC Capital

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