Question Period Note: CANADIAN VENTURE CAPITAL ECOSYSTEM (SEED INVESTMENT DATA, VENTURE CAPITAL CATALYST INITIATIVE)

How is the Government of Canada supporting the development of Canadian venture capital?

• The government is committed to creating a vibrant sustainable venture capital industry in Canada, supporting innovative, early-stage companies that create well-paying middle-class jobs.
• Budget 2024 proposes to provide an additional $200 million, starting in 2026,to the renewed Venture Capital Catalyst Initiative.
• This investment is expected to increase access to venture capital for equity-deserving entrepreneurs, and to invest in underserved communities and outside key metropolitan hubs.

• The Canadian venture capital ecosystem has grown significantly over the past decade, with a total of $6.9 billion invested into 660 deals in 2023. Maintaining momentum will be important given economic uncertainties in the market.

The Canadian venture capital (VC) ecosystem has grown significantly over the past decade, with annual investments increasing from $1.9 billion in 2013 to $6.9 billion invested in 660 deals in 2023. While this includes investments across all regions, 68% of deals in 2023 were concentrated in the technology centres of Ontario and Quebec.
Support for pre-seed and seed stage investments remained strong in 2023, with $969 million invested in 372 deals. These totals are consistent with the record highs set in 2022 ($791 million invested in 372 deals). These investment indicate that investors continue to be willing to support promising start-ups.
Originally introduced in Budget 2017 and expanded in the 2018 Fall Economic Update, the Government of Canada invested $371 million in four national funds-of-funds and eight venture capital fund managers under the previous VCCI.
The VCCI will invest up to $450 million through three streams: funds-of-funds, life sciences, and inclusive growth. In October 2022, HarbourVest Partners, Kensington Capital Partners, Northleaf Capital Partners, and Teralys Capital were announced as the recipients for the funds-of-funds investments.

In April 2023, AllosteRx Capital-CCRM, Amplitude Ventures, CTI Life Sciences, Genesys Capital, Pender Ventures, and Sectoral Asset Management were announced as the recipients for the life sciences investments.

The first intake of the inclusive growth stream closed on November 30, 2022. The selected fund managers are BKR Capital, District Ventures, Ripple Ventures, Sandpiper Ventures and The51.
The second intake of the inclusive growth stream closed on November 22, 2023. Evaluation of applications is underway.
The managers selected under the previous VCCI (2017) collectively raised more than $1.8 billion from public and private investors, increasing the availability of capital for promising start-ups. Taken together, previous federal VC programs, including the VCAP, have invested $761 million, resulting in a combined total of over $3 billion in capital raised to help Canadian companies start up and grow.
The promotion of gender balance and diversity in the VC ecosystem was an important factor in the design of the VCCI. Support for VC funds that champion diversity, equity and inclusion will not only help address existing imbalances but will also serve to strengthen Canada’s VC ecosystem as a whole.
The Business Development Bank of Canada (BDC) manages the VCCI on behalf of the Government. BDC is also Canada’s most active single VC investor, and is helping foster innovation in Canada by supporting the development of a vibrant VC ecosystem. It has a VC portfolio of over $3.2 billion, and is investing $500 million through its Thrive Venture Fund and Lab for Women, the largest in the world of its kind.
The Government of Canada also advances inclusion in the venture capital ecosystem through the Inclusive Women Venture Capital Initiative under the Women Entrepreneurship Strategy. This is a $15 million program to strengthen and build a more inclusive VC environment for Canadian women entrepreneurs by supporting projects that help strengthen the capacity of women entrepreneurs to access VC funding, contribute to the increasing representation of women in the VC industry, and help ensure that the VC industry is sensitive to gender and potential unconscious bias.

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