On January 14, 2013, Canadian Prime Minister, Stephen Harper, announced that the federal government will be moving forward with a new Venture-capital Action Plan to improve access to funding for small business owners across Canada.
The Prime Minister befittingly chose to make the announcement while on the set of the French-language version of CBC TV’s “The Dragon Den,” which focuses on entrepreneurs that pitch their ideas to angel investors in return for a stake in their firm. The Prime Minister later elaborated on the plan stating,
“Canadian venture-capital markets have been dealing with mixed results and growing challenges over the past decade, especially since the global credit crunch of 2008-2009. This unfortunate situation has meant that Canadian firms with good ideas and high growth potential have often been starved for needed funds.”
Finance Minister Jim Flaherty, who attended the announcement along with Maxime Bernier, Minister of State for Small Business, spoke out on the importance of relying on the creativity and ingenuity of young Canadians through Canadian government funding for small business. He stated, “The primary focus here is on young entrepreneurs and the fact that we’re losing young entrepreneurs and their businesses to larger American enterprises.”
Venture-Capital Action Plan Details: Canadian Funding for Small Business
The plan that is expected to begin rolling over the next 7 to 10 years will involve the federal government deploying funds for government business grants to a tune of $400 million in three separate streams. $250 million will be allocated to establish two new large-scale, private sector-led national funds of funds; $100 million to recapitalize existing large private sector-led funds of funds; and $50 million will be invested in three to five existing high-performing Canadian VC funds. This means the Government of Canada will not be directly investing in individual firms through this initiative. In order to maximize impact and help support a sustainable, private sector-led venture capital industry in Canada, the government will be instead partnering with provincial governments and the private sector to invest in new or existing venture capital funds of funds. “Allowing the private sector to manage funding of business grants in Ontario and other provinces will encourage growth and ensure that the resulting investments are market-driven,” the Prime Minister said speaking with regards to the nature of how the funds will be doled out to early-stage Canadian firms.
Under scoring the importance of the planned small business government grants the federal government responded to questions regarding the plan on its website stating, “Canada’s long-term economic competitiveness in the emerging knowledge economy will be driven by globally competitive, high-growth businesses that innovate and create high-quality jobs. Venture capital plays an important role in the knowledge economy, providing the capital needed for innovative small and medium-sized enterprises to grow and create high-value jobs.” Surely the message Ottawa is sending early-stage Canadian firms and venture-capitalists is exciting news and will likely help give a boost to small, innovative firms that have struggled to find their financial footing amid tough economic times following the most recent recession.
Other Canadian Government Grants and Loans
In other Canadian government funding news, it was announced this week that the Small Business Internship Program (SBIP) will be discontinued as of the end of March this year. While this is unfortunate news for several small businesses that took advantage of the program there remain a number of beneficial Canadian government grant options available to firms of all sizes, some of the most popular include:
- iSTEM: FedDev Ontario has been funding a hiring program for grads from Science, Technology, Engineering, Math (STEM) graduates called the Graduate Enterprise Internship (GEI) Program, also referred to as the iSTEM Program. The program provides funding for small business to provide wages and mentorship opportunities to young graduates in their field of study.
- IRAP Youth Employment Program (YEP): Designed to assist funding of youth with no restrictions. The Graduate can work in most areas of the company from business development to technical, or customer service/administration.
For more on these business funding grants as well as information on a variety of other Canadian government grants stay connected with Mentor Works Ltd. updates via their Canadian Government Funding Blog, or by contacting a Government Funding Expert for a free consultation. You can follow Mentor Works’s activity on Facebook, Twitter, LinkedIn, and Google+. We also invite you to our next Free Canadian Government Funding Workshop on Wednesday February 27, 2013 at 10am in Burlington, ON.