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.

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%