VCAP At Year 7: More Canadian Companies & More Canadian Jobs

February 9, 2021 | By: Jon Jackson

It has been seven years since the Government of Canada’s Venture Capital Action Plan (VCAP) was implemented. A unique program, VCAP leveraged CAD $350M of government funds to attract an additional CAD $904M in private sector investment into Canada’s venture capital (VC) industry (as well as CAD $112.5M in provincial funds). These combined public and private sector investments have since been managed by professional private venture capital firms under competitive market forces. The approach has proven to be quite successful.

Announced in 2013, VCAP was the result of the government’s belief that action was required to reattract investors after the Canadian VC industry was severely impacted by the fallout of the 2008 financial crisis. Recognizing VC’s vital role in Canada’s economic future and the long-term prosperity of all Canadians, VCAP was the Government of Canada’s response to reignite and catalyze the growth of a strong domestic VC industry.

As VCAP turns seven, its impacts on Canada’s innovation ecosystem have been significant. The original CAD $350M government contribution has attracted a total of CAD $1.35B of investment into the program. These funds have, in turn, been invested into 347 high potential Canadian firms that have raised CAD $2.3B from all sources.

At the end of 2019, the BDC conducted an economic impact survey with these 347 companies. The 178 companies that responded to the survey reported supporting an impressive 23,500 Canadian jobs, enjoyed an average annual growth rate of 36% and derived an average of 57% of their annual revenues from export markets. In addition to producing strong economic benefits, VCAP is also on pace to deliver solid positive returns back to the taxpayer relative to the initial investment of CAD $350M: it will return more money to the government than the government invested.

Among the many VCAP success stories is Ontario-based Shopify, Manitoba-based Skip The Dishes, BC-based Aurinia Pharmaceuticals, Coconut Software in Saskatchewan, and Lightspeed POS in Quebec. Also included in the long list of successful VCAP-backed companies is life sciences company IMV Inc. which is headquartered in Nova Scotia. IMV is currently working on a vaccine candidate designed to generate targeted and sustained protection against COVID-19.

The success of VCAP gave rise to a follow-on program, the Venture Capital Catalyst Initiative (VCCI). Announced in 2017, VCCI received CAD $450M and is expected to inject a total of over CAD $1.7B in the Canadian innovation ecosystem, continuing the success of VCAP in accelerating the growth of high potential Canadian companies and supporting the creation of thousands of middle-class jobs.

VCAP, and more recently VCCI, have helped to establish positive momentum for VC investment in Canada. In 2013, when VCAP was introduced, CAD $1.9B was invested in Canadian VC; whereas in 2019, Canada enjoyed its highest level of VC investment since 2001, at CAD $6.2B. In the face of the pandemic crisis, to maintain momentum as the VCCI program concludes, and to fuel our economic recovery, a third VC program is both timely and represents a smart government investment.

VCAP and VCCI are proving to be highly successful programs that attract private sector capital to build a strong technology-led innovation ecosystem and support the continued evolution of the Canadian venture capital industry. Investing in a third VC program will enable an innovation-led recovery and provide the foundation for Canada’s future economy. Canada should “triple down” on this proven and successful program.

VCAP Program Impact





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