When it comes to venture capital, the Ontario government is substituting photo ops for policy.
With much fanfare, the province's Liberals launched the new $205-million Ontario Venture Capital Fund, or OVCF. Despite big-name backers, this fund-of-funds doesn't start to solve a growing problem.
More knowledgeable critics, such as venture capital fund Wellington Financial, have pointed out the many shortcomings at the OVCF, and ways to improve the venture capital community. To sum up the problems in brief, a fund with a wide focus and diffuse accountability isn't going to provide the long-term support needed at start-up companies.
To their credit, the Liberals have acknowledged there's a problem in this all-important sector. The press release that announced the new fund noted: "Early stage venture capital - funding to emerging Ontario companies looking to grow - declined from $1.5 billion in 2000 to $236 million in 2007."
What's needed is a nuanced policy aimed at starting and supporting the next Research In Motion. The OVCF doesn't create this kind of environment. It just gives the impression that the government is doing something, in the face of a failure in industrial policy.
TD Capital is running the new Ontario fund. The province has promised $90-million, with the rest of the capital pledged by OMERS Capital Partners, Royal Bank of Canada, Manulife Financial, the Business Development Bank of Canada and, surprise, surprise, Toronto-Dominion Bank.
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