Has anyone seen OVCF's "50,000 jobs and $3.6B of economic activity"?

Thanks to the people at Techvibes, I was able to find out that the Government of Ontario believes that the Ontario Venture Capital Fund has been a huge success; far more so than I had ever imagined:

The new fund will build on the Ontario Venture Capital Fund, created in 2008. The existing fund has raised $750 million in private capital, generated $3.6 billion worth of economic activity and created over 50,000 jobs.

As regular readers know, OVCF was announced by the Liberals in 2007 (see prior post “$165MM MRI Fund: blessing or curse?” Dec. 3-07), and Northleaf Capital Partners got the mandate to pick GPs in June 2008. Things then went quiet. In February and March 2009, Northleaf committed probably $40 million of OVCF capital to XPV ($20M) and Georgian Partners ($20M). Another $1.8 million went into a direct investment in Achievers in June 2009, a high profile investee of JLA Ventures (a predecessor fund to the BlackBerry Partners Fund and Relay Ventures) and Grandbanks Capital at the time; both funds were perfect candidates for OVCF, and it made sense to get to know everyone better.

Although Northleaf backed a great management team, a sub-$2 million investment seemed beyond the core OVCF mandate of recapitalizing Ontario-focused VC funds; neither Grandbanks nor JLA had OVCF as a limited partner at the time, so it wasn’t as though Northleaf was leveraging their GP universe to add to its already indirect investment in Achievers via a top-up, direct tranche. It did buy Northleaf a press release, and it looks as though the government will make great money on the investment, but it could only have been a distraction and likely prolonged the slow deployment process that had become apparent by late 2009. Other direct company investments include BlueCat Networks (alongside Bridgescale), Fresco Microchip (with Celtic House) and Polar Mobile (with Georgian Partners). Some will work out, but that was the OETF’s reason for being, not OVCF.

In the end, it took Northleaf three to four years to get the majority of the $205 million committed to funds. $50 million went to BlackBerry Partners II in 2011, which changed its name to Relay Ventures when it circled and closed in March 2012. It wasn’t until late May 2012 when Northleaf pulled the trigger on $70 million of the $205 million, and actually committed to key GPs Celtic House, Lumira, and Rho in a mad orgy of press releases just before the 2012 CVCA Annual General Meeting.

That means that $120 million of the OVCF’s entire $205 million only got rolling less than a year ago.

How these four funds, with the valiant help of XPV, Georgian, and Extreme Venture Partners, could have so quickly put out their dough and already created “50,000” jobs and “$3.6 billion of economic activity” is anyone’s guess. No Canadian innovation fund has been more active than ours over the past six years, with 56 new transactions in total (cheque sizes of $2 million – $15 million). Despite all of that activity, we’ve tracked the figures and can proudly say that our $385 million of lead transactions helped entrepreneurs create and/or preserve just over 7,000 jobs between our Funds III and IV.

According to the CVCA’s last VC Impact study, the entire venture capital industry created about 80,000 direct jobs at home and abroad between 1996 and 2007. Via 2,175 company investments. The entire industry. Over 11 years. During the heyday.

The Liberal government has every reason to continue to support Ontario’s entrepreneurs. OVCF I was poorly managed, and Northleaf didn’t live up to expectations. Former Liberal Finance Minister Dwight Duncan said as much to an audience at the York Club last year: “it hasn’t gone as we expected”. The local VC industry is still in recovery mode, and Ontario needs to replace the manufacturing jobs that aren’t coming back. OVCF II is worth pursuing for a host of reasons, provided the mistakes of the past are fixed (see prior post “Here’s hoping OVCF 2.0 fixes the bugs in version 1.0” Mar 20-13).

There’s no need to justify it using gobblygook data.

MRM