Canadian government talks with Northleaf Capital, HarbourVest for venture capital investment- report

November 29
1:47 AM 2013

The Wall Street Journal said in its report that the Canadian government is in discussions with two investment firms to oversee part of the funds geared towards the promotion of a new venture capital investment. Citing sources, the report said the government of Canada had been talking with Northleaf Capital Partners and HarbourVest Partners for the plan. Northleaf Capital is a Toronto-based fund manager spun out from Toronto-Dominion Bank. HarbourVest Partners, meanwhile, is a Boston-based investment manager.

People familiar with the situation said that should a deal be agreed upon, Northleaf and HarbourVest will each manage CAD 300 million. They added that Canada will pour an estimated CAD 100 million in each fund while the remainder of the money will be generated from other sources as determined by the matching plan of the government.

According to the report, the Canadian government wants a commitment of two dollars from the private sector for every dollar it allocates to the fund. This arrangement would bring the total commitment to CAD 1.2 billion. Venture capital financing is one of the strategies used by the Canadian government to promote long-term growth of the economy, the report added. The move will hopefully encourage innovation and foster the establishment of new firms that will provide skilled jobs and high pay. Moreover, the government has already made a commitment to pour CAD 400 million or USD 377.5 million in its current venture capital funds as well as to make new ones.

The people said Northleaf and HarbourVest will be acting as fund-of-funds managers. They would be responsible for allocating the money to venture capital companies who will in turn invest the capital in young firms, the sources added.

The report said discussions with the two fund managers were the second stage of the government's efforts to infuse the venture capital industry with new money. The government said in the summer that it intended to invest CAD 50 million in four venture capital funds. 

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