Standing Committee on Public Accounts

Comité permanent des comptes publics

For immediate release

Ottawa, November 02, 2016 -

The Government of Canada properly assessed the policy need for the Venture Capital Action Plan (VCAP), successfully established two large private sector-led funds-of-funds, recapitalized two large private sector-led funds-of-funds, and invested directly in four existing high-performing Canadian venture capital funds, but better performance indicators and public disclosure are needed to assess whether VCAP will meet its stated objectives, according to a report of the Standing Committee on Public Accounts tabled today in the House of Commons by the Hon. Kevin Sorenson, Chair of the Committee.

On 14 January 2013, the government announced that VCAP would make available:

• 250 million to establish new, large, private sector-led national funds-of-funds;

• up to $100 million to recapitalize existing large private sector-led funds-of-funds; and

• an aggregate investment of up to $50 million in three to five existing high-performing venture capital funds in Canada.

In Spring 2016, the Office of the Auditor General of Canada (OAG) released a performance audit entitled Report 1—Venture Capital Action Plan in which it examined whether the Department of Finance Canada, Innovation, Science and Economic Development Canada (ISED), and the Business Development Bank of Canada (BDC) properly assessed the policy need, and designed and implemented VCAP in order to meet its stated objectives.

The OAG concluded that these three organizations assessed the policy need for VCAP and subsequently held extensive consultations with stakeholders to determine how to allocate the money. However, according to the OAG, the selection of fund managers did not always adhere to sound practices because the process had important shortcomings with regard to fairness, openness, and transparency. The OAG also concluded that VCAP activities were properly monitored; however, better performance indicators would help to measure the policy outcomes of the initiative and inform future policy decisions. Furthermore, better public disclosure of VCAP’s performance could benefit the Canadian venture capital market, Parliament and Canadians. Finally, VCAP did not include an exit strategy to foster the transition to a self-sustaining, privately led ecosystem.

In this report, the Committee made three recommendations that seek to ensure that the Department of Finance Canada and ISED, in collaboration with BDC, properly address the issues identified in this performance audit.