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Provincial Government provides $20 million to drive entrepreneurial success through two venture capital funds

From the Executive Council; Department of Business, Tourism, Culture and Rural Development; and Department of Finance
November 4, 2014

Innovative entrepreneurs with high-growth potential will now have greater access to capital to help their businesses thrive, through a $20 million Provincial Government investment in two venture capital funds, Venture Newfoundland and Labrador and Build Ventures. The Honourable Paul Davis, Premier of Newfoundland and Labrador, was joined today by the Honourable Darin King, Minister of Business, Tourism, Culture and Rural Development, the Honourable Ross Wiseman, Minister of Finance and President of Treasury Board, and partner representatives at Common Ground in St. John’s, a hub for entrepreneurs to work, network and meet with other like-minded people.

“Our government is proud to expand the support we currently provide to businesses even further through our investment in venture capital in our province. We know what a positive difference access to venture capital will make to new or established entrepreneurs with innovative ideas and technologies. For emerging growth sectors, such as ocean technology and other knowledge-based industries, these new venture capital funds will help improve the global competitiveness of companies, strengthen high-end employment opportunities and drive economic diversification throughout Newfoundland and Labrador.”
– The Honourable Paul Davis, Premier of Newfoundland and Labrador

All businesses require various forms of financing and advisory support throughout their evolution and growth. Venture capital is a form of funding available to businesses that demonstrate high-growth potential.

“We have heard directly from the start-up business community and investors who have indicated that greater access to venture capital will support innovative, high-growth companies operating in Newfoundland and Labrador and lead to exciting new opportunities. The establishment of the Venture Newfoundland and Labrador fund and our investment in the Build Venture fund, as was announced in Budget 2014, will help diversify our economy and further strengthen the business climate. Venture capital is very much about investing in ideas, innovation and intelligence.”
– The Honourable Darin King, Minister of Business, Tourism, Culture and Rural Development

The Venture Newfoundland and Labrador Fund will provide funding to support new local start-ups and companies in the very early stages of their development. Along with a $10 million Provincial Government investment, this fund will also be supported by $2 million from BDC Capital and anticipated investment from individual private investors.

“Our participation in these two venture capital funds is part of an overall strategy that we initiated four years ago with the objective of bringing much needed seed and early stage capital to Canada’s venture capital ecosystem. We’re pleased to see the Government of Newfoundland and Labrador join its provincial counterparts in helping back the Atlantic provinces’ most promising entrepreneurs.”
– Jérôme Nycz, Executive Vice President, BDC Capital

GrowthWorks Atlantic Ltd., a leading venture capital management firm that has over two decades experience in managing regionally-focused funds, will manage the Venture Newfoundland and Labrador Fund.

“We believe the time is right for public and private investors to create this new pool of capital for budding entrepreneurs and we are very pleased to be involved in this exciting opportunity.”
– Tom Hayes, President & CEO, GrowthWorks Atlantic Ltd.

The Provincial Government will also implement a Venture Capital Tax Credit as an incentive for private investors to partner in capitalizing the fund.

“Available to both individual and corporate investors, the Venture Capital Tax Credit will provide a 30 per cent non-refundable tax credit on investment, capped at a lifetime maximum $75,000 credit to be applied against provincial taxes. This tax credit will serve as a powerful incentive to encourage the necessary participation that will support successful ventures in Newfoundland and Labrador.”
– The Honourable Ross Wiseman, Minister of Finance and President of Treasury Board

The two venture capital funds will provide entrepreneurs with access to the capital, advice and extensive business networks they need to expand into the global economy.

“The St. John’s Board of Trade is confident about the business opportunities in Newfoundland and Labrador. The creation of this fund is an effective way to exploit these opportunities and address the critical gap in the supply of early stage capital.”
– Nancy Healey, CEO, St. John’s Board of Trade, sponsor of the Newfoundland and Labrador Angel Network

Build Ventures is a privately managed venture capital fund focused on the Atlantic Canadian Region. The fund began operating in early 2013. Build Ventures makes equity investments in early-stage technology based companies that have successfully gained early customers in what are expected to be large global markets. Newfoundland and Labrador will contribute $10 million toward the $65 million fund.

“We are thrilled that Newfoundland and Labrador has joined with the three other Atlantic provinces to create a truly regional fund. We are excited to work with entrepreneurs in Newfoundland and Labrador and provide the capital they need to build valuable businesses.”
– Patrick Keefe, Partner, Build Ventures

The venture capital model of investment has been a primary facilitator of the growth in knowledge-based sectors in recent decades, and it is anticipated this will remain the case.

“As a co-founder of an emerging company, I am very pleased with today’s announcement. Access to capital is fundamental in supporting innovative and early stage companies in the start-up community. It is positive to see the partners involved in the creation of these funds come together to address the gap in the supply of early stage capital for companies like mine.”
– Dr. Tyler Wish, Co-founder Sequence Bioinformatics Inc.

The Provincial Government will act as a limited partner in both the Venture Newfoundland and Labrador and Build Ventures funds, providing general direction to the fund managers, but not participating in day-to-day operations.

The Government of Newfoundland and Labrador offers a wide suite of programs, including small business tax credits, which are driving economic development. For more information on the venture capital funds, partners and other Provincial Government programs please see the Backgrounder below.

QUICK FACTS

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  • The Provincial Government will invest $20 million in two venture capital funds to help entrepreneurs access the funding they need to grow their business.
  • Venture Newfoundland and Labrador will provide funding to support new local start-ups and companies in the very early stages of their development.
  • The Provincial Government will implement a 30 per cent non-refundable Venture Capital Tax Credit as an incentive for private investors to partner in capitalizing the Venture Newfoundland and Labrador fund.
  • The Build Ventures Fund is a pre-existing privately managed Atlantic Canadian regional venture fund that supports early-stage companies which are able to generate enough cash flow to sustain operation.
  • Support in venture capital will complement existing programs offered by the Department of Business, Tourism, Culture and Rural Development.
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