Ontario government puts $250M Emerging Technology Fund on ice
Governmentspeak: when I say 5, I really mean 2.
Earlier this morning the McGuinty government informed the local venture capital community that it had decided to put their $250 million Ontario Emerging Technologies Fund on hold, 2 years into its 5 year deployment window.
First announced in March 2009, the Ontario Emerging Technologies Fund was the government’s direct co-investment fund. At the time, the OETF was to deploy $250 million over five years, “to a maximum of $50 million per year for each of the five years” according to then-Minister Wilkinson, to co-invest alongside local VCs and Angels in “innovative, high-growth, private, Ontario companies”.
The OETF was the second tool announced by the Province, along with the 2008-vintage Ontario Venture Capital Fund, as the Premier’s response to the government’s 2005 decision to essentially shutter Ontario’s longstanding Labour Sponsored Investment Fund industry. The local VC community welcomed the OETF concept initially, and provided the government with the basic parameters that would allow the OETF to quickly get to work; albeit four years after the LSIF decision.
The OETF will supposedly continue to support its existing portfolio of more than 25 promising Ontario-based innovation companies, but no new applications are being considered “for the next few months at least”, according to one source. VCs think the writing is on the wall, and that the entire program is going to suffer under the government’s budget knife.
Such a shame; the OETF was one of the few new Angel/VC initiatives out of Queen’s Park over the past five years that worked as designed. Ontario’s huge decline in VC capital marketshare nationally was slowed by the introduction of this program. And while MARS continues to get funded, the rest of the industry appears to have been thrown to the wolves.
Just as the Provincial Innovation sector is starting to get some wind at its back, with recent closings at Celtic House and Lumira, for example, a much-needed program is sacrificed on the budget cut altar.
This is not how you “drive innovation, secure jobs today, and creates jobs tomorrow”, to borrow the Government’s tag line of the past few years of press releases.
MRM
The LSIF market was rightly killed, however, I think that the Flow-Through model would be the most ideal (established market, familarity, etc)
Right at the end of a deal with the OETF as we speak. Slow admin and slip ups (their side) ended us up at the next meeting (June) to complete our round.
Our other (real) investors have been waiting since DECEMBER with cash in escrow behind the OETF to perform its rather odious process. We haven’t been able to access funds for this round until they did their thing.
Oy.
Thanks for stopping by.
I’m sorry to hear that tale of woe. I had thought OETF was keeping up with private sector timelines; that was one of the key elements of the original program design. Is the problem the Ontario Growth Capital Corp. or is an external manager involved on the government’s behalf?
MRM
Do you know how much of the $50M per year were effectively deployed? At the time of the OETF’s creation I questioned it based on the matching criteria (effectively excluding angels) – I’d like to know whether that factored into the limited success of the program. (http://www.growthtimes.com/2009/08/who-will-match-ontario’s-250m-emerging-technologies-matching-fund/)
MaRS getting continuous funding for a real estate project in the meantime is an aberration, but program funding in Ontario is based on personal politics not proofs of performance, and most entrepreneurs I talk to don’t expect a change in their lifetime. Sad.
It is a surprising move especially (as article mentioned) there has been a number of new VC funds announced over the past few months. It is very short sighted and comes at a time when Toronto-area startups are start to emerge with such stories as Wattpad and Engagio to name just a few