Performance Metrics for VCCI 2017 – December 31, 2021

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, 2021, at least 302 Canadian companies have been supported under the program and have received a combined $1.4 billion 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

Description of chart 1
Type of investors participating in VCCI
  Total commitments (C$M) % of total
Government of Canada 278.9 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 31.7 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, 2021)
  Total commitments (C$M) % of total
Direct investments in Canadian companies 137 84%
Direct investments in non-Canadian companies 25 16%
Total direct investments in companies 162 100%
Commitments to Canadian funds 690 79%
Commitments to non-Canadian funds 186 21%
Total fund commitments 876 100%

Funds-of-funds commitments to Canadian VC funds

Table 4: Distribution of fund-of-fund commitments across Canada
(as of December 31, 2021)
Location of fund manager HQ Number of funds Total commitments
# % of total C$M % of total
BC 10 28% 124.3 18%
ON 19 53% 380.7 55%
QC 7 19% 185.6 27%
Total 36 100% 690.7 100%
Table 5: Primary stage focus of Canadian fund-of-fund commitments (as of December 31, 2021)
Primary stage focus Number of funds Total commitments
# % of total C$M % of total
Seed 9 25% 113.7 16.5%
Early venture 15 42% 263.5 38.1%
Late venture 4 11% 78.9 11.4%
Growth equity 8 22% 234.6 34.0%
Total 36 100% 690.7 100%
Table 6: Primary sector focus of Canadian fund-of-fund commitments
(as of December 31, 2021)
Primary sector focus Number of funds Total commitments
# % of grand total C$M % of grand total
Energy & cleantech 1 3% 10.0 1%
ICT 27 75% 549.1 79%
Life sciences 8 22% 131.6 19%
Grand total 36 100% 690.7 100%

Financial returns

Table 7: Performance of the VCCI funds-of-funds portfolio
(program inception to December 31, 2021)
(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 876,849 399,825 45.6% 32,684 783,771 911,839 1.62x

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, 2021)
Fund Committed capital
Brightspark Canadian Opportunities Fund $17.5 million
Build Ventures II $5 million
Garage Capital IIIFootnote 7 $10 million
Highline BETA $5 million
TandemLaunchIII $5 million
Table 9: Primary stage focus of the VCCI Stream 2 fund commitments
(as of December 31, 2021)
Primary stage focus Number of funds Total commitments
# % of total C$M % of total
Seed 3 60% 20.0 45%
Early venture 2 40% 22.5 55%
Late venture 0 0% 0 0%
Growth equity 0 0% 0 0%
Total 5 100% 42.5 100%
Table 10: Primary sector focus of the VCCI Stream 2 fund commitments
(as of December 31, 2021)
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% 42.5 100%
Life sciences 0 0% 0 0%
Grand total 5 100% 42.5 100%

Financial returns

Table 11: Performance of the Government of Canada VCCI Stream 2 funds investment
(as of December 31, 2021)
(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 42,500 19,696 46.3% 127 31,716 31,843 1.62x

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
(as of December 31, 2021)
Fund Committed capital
ArcTern Ventures II $10 million
Cycle capital Fund IV $20 million
Renewal4 investment Fund $20 million
Table 13: Primary stage focus of the VCCI Stream 3 fund commitments
(as of December 31, 2021)
Primary stage focus Number of funds Total commitments
# % of total C$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
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, 2021)
(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 22,778 45.6% 824 26,997 27,820 1.22x

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, 2021)
Primary Stage Focus Number of funds Total commitments
# % of total C$M % of total
Seed 11 26% 133.7 17%
Early venture 18 43% 316.0 40%
Late venture 5 12% 99.0 13%
Growth equity 8 19% 234.6 30%
Total 42 100% 783.2 100%
Table 17: Primary sector focus of overall VCCI commitments to Canadian Funds
(as of December 31, 2021)
Primary sector focus Number of funds Total commitments
# % of grand total C$M % of grand total
Energy & Cleantech 3 7% 60.0 8%
ICT 31 74% 591.6 75%
Life sciences 8 19% 131.6 17%
Grand total 42 100% 783.2 100%
Table 18: Cleantech sub-sector breakdown across all streams of VCCI
(as of December 31, 2021)
Cleantech sub-sector % of capital invested in the clean technology sector
Circular economy 19%
Energy efficiency 47%
Food and agriculture 19%
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, 2021)
Number of Canadian fund managers supported under VCCI Total that raised follow-on funds % of total
25 4 16%

Investments in Canadian companies

Total invested in the 302 Canadian companies that received support under VCCI was $1.4 billion, as of December 31, 2021. 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, 2021)
Location of company HQ Number of companies
# % of total
BC 35 12%
AB 10 3%
SK 2 1%
MB 2 1%
ON 179 59%
QC 63 21%
NL 2 1%
NB 3 1%
NS 6 2%
Total 302 100%

Chart 2: Primary stage focus of overall VCCI investments in Canadian companies (as of December 31, 2021)

Description of chart 2
Primary stage focus of overall VCCI investments in Canadian companies
(as of December 31, 2021)
Stage at initial investment Number of companies
# % of total
Seed 140 47%
Early venture 124 41%
Late venture 28 9%
Growth equity 10 3%
Total 302 100%
 

Chart 3: Primary sector focus of overall VCCI investments in Canadian companies (as of December 31, 2021)

Description of chart 3
Primary Sector focus of overall VCCI investments in Canadian companies
(as of December 31, 2021)
Primary sector Number of companies
# % of total
Energy & Cleantech 22 7%
ICT 248 82%
Life sciences 29 10%
Other companies 3 1%
Total 302 100%