Alberta commits to $180 million investment in Canada’s venture capital sector

CALGARY – Alberta Premier Rachel Notley said the province will invest millions of public dollars into a national venture capital fund aimed at growing its small but growing technology sector. The commitment to invest…

Alberta commits to $180 million investment in Canada’s venture capital sector

CALGARY – Alberta Premier Rachel Notley said the province will invest millions of public dollars into a national venture capital fund aimed at growing its small but growing technology sector.

The commitment to invest public money into the Telus Horizon Fund comes as the province is in a race to secure international business investment with other Canadian provinces.

Notley said her government will spend $120 million of government funds into the venture capital fund, which is meant to provide investment capital to up to 25 companies and create 1,000 jobs over the next three years.

“We’re using public money to attract public investment and then using public money to get the private sector to invest more,” Notley said during a speech at the Alberta Innovates LaunchPad conference on Thursday.

She also announced her government will give another $80 million to the Alberta Trade and Export Partnership—the provincial organization that promotes trade and investment between Alberta and countries outside of Canada—to help attract foreign capital into the province.

The two investments are expected to create $200 million worth of investment capital, which will be divvied up among businesses in the province.

Notley said a report by the Canada Council for the Arts has identified 35 Alberta startups that are ready to take on the global tech industry and are at a “critical stage” when it comes to self-financing their business.

Companies in the category include Paycash, Pricedrop, Ridgway Watson, Mendenhall Distributed Storage, Versar, Poacher’s Brains and Rycsx.

Notley said the investments into the venture capital fund will “drive the collective investment activity” among the companies and help create a further 1,000 jobs within the private sector as a result.

However, not everyone was happy with the deal.

Dan Malecek, Alberta leader of the Progressive Conservative opposition, said the province should be investing the public money instead of using public funds to invest in a private venture capital fund.

He criticized Notley for “encouraging a culture of dependence on foreign investors and foreign money.”

He added, “Our goal should be to attract and attract more Canadian investors” in an effort to “create new jobs here in Alberta, while ensuring our investments help our economy.”

Although Canadian entrepreneurs have been encouraged by the province’s promises to invest in future business ventures, Canadian governments have been criticized by critics for financing venture capital funds in the private sector, which are mostly run by U.S. private equity firms.

That’s been happening since 2015, when the Canadian government invested $325 million in a venture capital fund run by Toronto-based Element Partners, which invests in startups.

“We are in Canada, with private investors who have money at their disposal to invest,” Michael Stewart, president of the Alberta Venture Capital Association, said on Thursday. “And they’re very comfortable and available to finance companies.”

National Venture Capital Association president Allan Leighton said Canadian startups are now attracting much more interest from private capital firms compared to the start of the 2000s.

“The interest is huge. It used to be a dream they had, and now they can realize it,” Leighton said.

Lawrence Roy, chief executive of Paycash, a Calgary software development company that operates in the emerging field of online payment processing, said that Alberta needs to create even more infrastructure to attract more investors to the province.

“So many other parts of the world, they’re really getting slammed with venture capital funds,” Roy said, pointing to the United States, where companies are charging record high valuations, “so we really have to get serious.”

A report from the Canada Council for the Arts, a federal agency that promotes the creative industries, issued a scathing report on Alberta’s investment in the venture capital sector last December, stating that the province “bought into the ‘invest or lose’ mentality” in 2009 by creating a provincial investment arm, Alberta Investment Management Corp.

Roy said the money “would have been better off being used to build up pools of money that would fall in to the hands of young companies that are building up their skills set and have a good idea of where they’re going.”

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