2017 Venture Capital Catalyst Initiative Performance Metrics – December 31, 2020

Backgrounder

To build on the momentum of the Venture Capital Action Plan (VCAP), the Government of Canada announced in 2017 the Venture Capital Catalyst Initiative (VCCI). As with VCAP, VCCI was implemented to support the continue development of Canada's venture capital industry and increase the availability of capital for innovative Canadian firms.
Through VCCI, the Government invested $371 million through three streams:

  • Stream 1 established a portfolio of four large, private sector-led funds-of-funds (HarbourVest Partners, Kensington Capital Partners, Northleaf Capital Partners, and Teralys Capital)
  • Stream 2 supported five fund managers with diverse fund management teams, new models, or were located in emerging regions (Brightspark, Build Ventures, Garage Capital, Highline Beta, and TandemLaunch)
  • Stream 3 invested into three venture capital funds with investment strategies focusing primarily in the clean technology sector (ArcTern Ventures, Cycle Capital, and Renewal funds)

The Government of Canada's investment under VCCI garnered significant investments from the venture capital industry. In particular, the four funds-of-funds managers attracted investments from a diverse set of investors that included pension funds, high-net-worth individuals, corporations, banks, and the government of Quebec. Leveraging the federal government investment, the four funds-of-funds raised $1.176 billion, including $840 million from private investors.

The fund managers have completed their fundraising activities and are now beginning to make investments. As of December 31, 2020, at least 153 Canadian companies have been supported under the program and have received a combined $553 million in capital from all investment sources.

Key VCCI metrics

Section 1: VCCI funds-of-funds program overview

Metrics in this section relate to the activities associated with the four VCCI funds-of-funds.

VCCI funds-of-funds fundraising

Table 1: Capital raised by the VCCI funds-of-funds
Fund-of-fund Raised capital
HarbourVest Canada Growth Fund II $326,250,000
Kensington Venture Fund II $150,000,000
Northleaf Venture Catalyst Fund II $300,000,000
Teralys Capital Innovation Fund 2018 $400,000,000

The four funds-of-funds raised $1.176 billion from public and private sector investors, including approximately $279 million from the Government of Canada.

Chart 1: Type of investors participating in VCCI

Pie chart illustrating the type of investors participating in VCCI (the long description is located below the image)
Description of chart 1
Type of investors participating in VCCI
Total commitments (C$M) % of total
Government of Canada 279.0 24%
Provinces 57.1 5%
Pension funds 233.5 20%
Financial institutions and insurance companies 105.0 9%
Foundations and endowment 26.5 2%
Retail funds 172.5 15%
Strategic corporations 13.0 1%
High net worth individuals and family offices 282.7 24%
General partners 7.0 1%
Grand total 1,176.3 100%
Table 2: Nationality of investors participating in VCCI
NumberFootnote 1 of investors Total commitments (C$M) % of total
Canada (private sector) 30 752.8 64%
Canada (public sector) 2 336.1 29%
Europe 3 42.5 4%
United States 6 13.2 1%
Rest of world 2 31.8 3%
Grand total 43 1,176.3 100%

Portfolio allocation across the four funds-of-funds

Table 3: Breakdown of direct and indirect investments by the funds-of-funds (as of December 31, 2020)
Total commitments (C$M) % of total
Direct investments in Canadian companies 73 74%
Direct investments in non-Canadian companies 25 26%
Total direct investments in companies 98 100%
Commitments to Canadian funds 474 74%
Commitments to non-Canadian funds 165 26%
Total fund commitments 639 100%

Funds-of-funds commitments to Canadian VC funds

Table 4: Distribution of fund-of-fund commitments across Canada
(as of December 31, 2020)
Location of fund manager HQ Number of funds Total commitments
# % of total C$M % of total
BC 8 33% 80.8 17%
ON 11 46% 244.8 52%
QC 5 21% 148.7 31%
Total 24 100% 474.3 100%
Table 5: Primary stage focus of Canadian fund-of-fund commitments (as of December 31, 2020)
Primary stage focus Number of funds Total commitments
# % of total C$M % of total
Seed 4 17% 36.3 8%
Early venture 14 58% 288.8 61%
Late venture 1 4% 13.3 3%
Growth equity 5 21% 136.0 29%
Total 24 100% 474.3 100%
Table 6: Primary sector focus of Canadian fund-of-fund commitments
(as of December 31, 2020)
Primary sector focus Number of funds Total commitments
# % of grand total C$M % of grand total
Energy & cleantech 1 4% 10.0 2%
ICT 17 71% 390.5 82%
Life sciences 6 25% 73.9 16%
Grand total 24 100% 474.3 100%

Financial returns

Table 7: Performance of the VCCI funds-of-funds portfolio
(program inception to December 31, 2020)
(C$, 000s) Amount committed to VCCI funds-of-funds Capital
calledFootnote 2
% called Cash
distributedFootnote 3
Fair
valueFootnote 4
Total
valueFootnote 5
Total
value to paid-inFootnote 6
Funds-of-funds 737,437 279,748 37.9% 17,706 391,438 409,144 1.46x

Section 2: VCCI Stream 2 program overview

Metrics in this section relate to the activities associated with the five venture capital funds selected under Stream 2, which together received a commitment of up to $42.5 million under VCCI.

Commitments to the Stream 2 funds

Table 8: Government of Canada Investment in the VCCI Stream 2 funds (as of December 31, 2020)
Fund Committed capital
Brightspark Canadian Opportunities Fund $17.5 million
Build Ventures II $5 million
Garage Capital IIIFootnote 7 $10 million
Highline BETA $3.375 million
TandemLaunchIII $5 million
Table 9: Primary stage focus of the VCCI Stream 2 fund commitments
(as of December 31, 2020)
Primary stage focus Number of funds Total commitments
# % of total C$M % of total
Seed 3 60% 18.4 45%
Early venture 2 40% 22.5 55%
Late venture 0 0% 0 0%
Growth equity 0 0% 0 0%
Total 5 100% 40.9 100%
Table 10: Primary sector focus of the VCCI Stream 2 fund commitments
(as of December 31, 2020)
Primary sector focus Number of funds Total commitments
# % of grand total C$M % of grand total
Energy & cleantech 0 0% 0 0%
ICT 5 100% 40.9 100%
Life sciences 0 0% 0 0%
Grand total 5 100% 40.9 100%

Financial returns

Table 11: Performance of the Government of Canada VCCI Stream 2 funds investment
(as of December 31, 2020)
(C$, 000s) Amount
committed
Capital
calledFootnote 2
% Called Cash
distributedFootnote 3
Fair
valueFootnote 4
Total
valueFootnote 5
Total
value to paid-inFootnote 6
Stream 2 funds 40,875 9,497 23.2% 0 10,156 10,156 1.07x

Section 3: VCCI Stream 3 program overview

Metrics in this section relate to the activities associated with the three venture capital funds selected under Stream 3, which together received a commitment of up to $50 million under VCCI.

Commitments to the Stream 3 funds

Table 12: Government of Canada investment in the VCCI Stream 3 funds
Fund Committed capital
ArcTern Ventures II $10 million
Cycle capital Fund IV $20 million
Renewal4 investment Fund $20 million
Table 13: Primary stage focus of the VCCI Stream 3 fund commitments
(as of December 31, 2020)
Primary stage focus Number of funds Total commitments
# % of total C$M % of total
Seed 0 0% 0 0%
Early venture 2 67% 30 60%
Late venture 1 33% 20 40%
Growth equity 0 0% 0 0%
Total 3 100% 50 100%
Table 14: Primary sector focus of the VCCI Stream 3 fund commitments
(as of December 31, 2020)
Primary sector focus Number of funds Total commitments
# % of grand total C$M % of grand total
Energy & cleantech 3 100% 50 100%
ICT 0 0% 0 0%
Life sciences 0 0% 0 0%
Grand total 3 100% 50 100%

Financial returns

Table 15: Performance of the Government of Canada VCCI Stream 3 funds investment
(as of December 31, 2020)
(C$, 000s) Amount
committed
Capital
calledFootnote 2
% Called Cash
distributedFootnote 3
Fair
valueFootnote 4
Total
valueFootnote 5
Total
value to paid-inFootnote 6
Stream 3 funds 50,000 14,876 29.8% 0 14,611 14,611 0.98x

Section 4: Overall VCCI Program Overview

Metrics in this section relate to the overall activities associated with the four funds-of-funds and the eight venture capital funds that received VCCI investment.

Commitments to Canadian Venture Capital Funds

Table 16: Primary Stage Focus of Overall VCCI Commitments to Canadian Funds
(as of December 31, 2020)
Primary Stage Focus Number of funds Total commitments
# % of total C$M % of total
Seed 6 20% 54.7 10%
Early venture 17 57% 341.3 60%
Late venture 2 7% 33.3 6%
Growth equity 5 17% 136.0 24%
Total 30 100% 565.2 100%
Table 17: Primary sector focus of overall VCCI commitments to Canadian Funds
(as of December 31, 2020)
Primary sector focus Number of funds Total commitments
# % of grand total C$M % of grand total
Energy & Cleantech 5 17% 60.0 11%
ICT 19 63% 431.3 76%
Life sciences 6 20% 73.9 13%
Grand total 30 100% 565.2 100%
Table 18: Cleantech sub-sector breakdown across all streams of VCCI
(as of December 31, 2020)
Cleantech sub-sector % of capital invested in the clean technology sector
Circular economy 29%
Energy efficiency 40%
Food and agriculture 21%
Transportation 10%
Grand total 100%
Table 19: Proportion of underlying Canadian VC fund managers supported under VCCI that raise follow-on funds
(as of December 31, 2020)
Number of Canadian fund managers supported under VCCI Total that raised follow-on funds % of total
24 4 17%

Investments in Canadian companies

Total invested in the 153 Canadian companies that received support under VCCI was $553 million, as of December 31, 2020. This includes investments by funds-of-funds, underlying portfolio funds, and funds selected under Streams 2 and 3.

Table 20: Distribution of overall VCCI investments in companies across Canada
(as of December 31, 2020)
Location of company HQ Number of companies
# % of total
BC 12 8%
AB 5 3%
SK 1 1%
MB 1 1%
ON 90 59%
QC 40 26%
NL 1 1%
NB 2 1%
NS 1 1%
Total 153 100%

Chart 2: Primary stage focus of overall VCCI investments in Canadian companies (as of December 31, 2020)

Pie chart illustrating the primary stage focus of overall VCCI investments in Canadian companies (the long description is located below the image)
Description of chart 2
Primary stage focus of overall VCCI investments in Canadian companies
(as of December 31, 2020)
Stage at initial investment Number of companies
# % of total
Seed 82 54%
Early venture 46 30%
Late venture 10 7%
Growth equity 15 10%
Total 153 100%

Chart 3: Primary sector focus of overall VCCI investments in Canadian companies (as of December 31, 2020)

Pie chart illustrating the primary sector focus of overall VCCI investments in Canadian companies (the long description is located below the image)
Description of chart 3
Primary Sector focus of overall VCCI investments in Canadian companies
(as of December 31, 2020)
Primary sector Number of companies
# % of total
Energy & Cleantech 13 8%
ICT 116 76%
Life sciences 24 16%
Total 153 100%