$205 Million Investment Fund To Grow Jobs Of The Future



    McGuinty Government Partners With Top Investors To Launch Ontario Venture
    Capital Fund

    TORONTO, June 11 /CNW/ -

    NEWS

    The new $205-million Ontario Venture Capital Fund is open for business.
    The fund will strengthen the ability of the province's venture capital
sector to support innovative, high-growth companies in Ontario by making it
easier for them to find the investment, expertise and support they need.
    The fund is a limited partnership between the Ontario government and
leading institutional investors to invest primarily in Ontario-focused venture
capital and growth funds. It has been established to address the lack of
investment funding in Ontario for innovative, high-potential companies.
Without access to long term investment capital and support, these companies
cannot grow and create jobs in Ontario. Early stage venture capital - funding
to emerging Ontario companies looking to grow - declined from $1.5 billion in
2000 to $236 million in 2007.
    The partners have unanimously selected TD Capital Private Equity
Investors (http://www.tdcapital.com/tdcapital/tdc/home.html), Canada's leading
private equity fund of funds manager, to manage the Ontario fund. Investments
decisions will be market-based and returns focused, with the aim of supporting
the most promising opportunities in Ontario. The partners will also seek
additional investors to grow the fund and anticipate holding a second closing
later in 2008.
    The leading institutional partners in the fund are:

    
    -   OMERS Capital Partners (http://www.omers.com/home.htm)
    -   RBC Capital Partners (http://www.rbccm.com/0,,cid-15895_,00.html)
    -   Manulife Financial
        (http://www.manulife.ca/canada/canada1.nsf/public/homepage)
    -   Business Development Bank of Canada
        (http://www.bdc.ca/flash.htm?cookie%5Ftest=1)
    -   TD Bank Financial Group (http://www.td.com/)
    -   Government of Ontario (http://www.mri.gov.on.ca/default.asp)
    

    QUOTES

    "This partnership will act as a catalyst in the venture capital
community. Together, we are investing in Ontario's future - helping Ontario's
innovative thinkers take their ideas to the next level, and ensuring that
innovative companies can access the capital they need to seize global market
opportunities while creating jobs right here in Ontario," said Minister of
Research and Innovation John Wilkinson.

    "Innovation and a strong climate for business are key pillars of our
five-point economic plan. The Ontario Venture Capital Fund will play a
critical role in supporting both," said Minister of Finance Dwight Duncan.

    "As patient venture capital investors, we're confident the Ontario
Venture Capital Fund can not only produce attractive returns but can also have
a significant impact on creating a virtuous cycle that will drive incremental
investment in world-class Ontario-based technology and innovation over the
long term," said Rob MacLellan, Chief Investment Officer, TD Bank.

    More quotes
    (http://www.mri.gov.on.ca/english/news/vclaunch061108_bd3.asp)

    
    QUICK FACTS

    -   Ontario's contribution to the fund is $90 million.
    -   Between 80 per cent and 100 per cent of the capital will be invested
        in Ontario-based and Ontario-focused funds. Up to 20 per cent of the
        capital will be available for direct co-investments
        (http://www.cvca.ca/resources/glossary.aspx), alongside fund
        managers, in Ontario-based companies.
    -   Ontario has the lowest after tax research costs of any of our
        neighbouring jurisdictions, making it a great place to start a
        technology company.
    -   Ontario's innovative companies are attracting venture capital; in
        fact 59 per cent of foreign venture capital invested in Canada is
        invested in Ontario.
    -   Ontario is committed to innovation: it's a part of the McGuinty
        government's five-point economic plan and is the focus of Ontario's
        $3 billion Innovation Agenda.

    LEARN MORE

    -   Ontario Announces Letter of Intent
        (http://www.mri.gov.on.ca/english/news/VCF111407.asp) For Fund
    -   Ontario's Innovation Agenda
        (http://www.mri.gov.on.ca/english/programs/oia/program.asp)
    -   Canada's Venture Capital and Private Equity Association
        (http://www.cvca.ca/news/)
    -   Backgrounder: Ontario: A Catalyst For Innovation
        (http://www.mri.gov.on.ca/english/news/vclaunch061108_bd1.asp)
    -   Backgrounder: Fund Details
        (http://www.mri.gov.on.ca/english/news/VClaunch061108_bd2.asp)

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    BACKGROUNDER
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                            WHAT THE PARTNERS SAY
    

    "Today's economic realities demand that Ontario lay a strong foundation
for a new generation of corporate leaders that will help drive future economic
growth. Initiatives such as the Ontario Venture Capital Fund are levers for
transforming ideas into tangible economic benefit and future prosperity for
Ontario communities." - Gordon M. Nixon, president and CEO, RBC

    "OMERS is pleased to be an integral part of this initiative and looks
forward to enhancing the market for venture and growth capital investments in
Ontario." - Paul Renaud, CEO of OMERS Capital Partners, the entity responsible
for OMERS' private equity investments.

    "BDC is pleased to be part of an innovative, new direction for Ontario's
venture capital market. This fund-of-funds will help technology firms access
the venture funding they need to commercialize their innovations and reach
their potential. Our participation in this fund, which will be managed by TD
Capital, is testimony of the confidence we have in Ontario's potential." -
Jacques Simoneau, executive vice-president, Investments, BDC

    "We are supporting this VC Fund because we think it's the right
initiative at a time when the supply of venture capital in Ontario is less
than optimal and investment returns have been rising." - William Eeuwes,
vice-president and head of Manulife's merchant banking arm

    
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    BACKGROUNDER
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                     ONTARIO: A CATALYST FOR INNOVATION
    

    Through Ontario's $3 billion Innovation Agenda
(http://www.mri.gov.on.ca/english/programs/oia/program.asp), the McGuinty
government is committed to strengthening Ontario's ability to support
innovative, high-growth companies in the province.
    An excellent example of this is the Ontario Venture Capital Fund (OVCF),
which brings together institutional investors and government - as limited
partners - to support emerging, innovative companies in Ontario.

    The Need for a Fund

    Innovative firms need capital - and entrepreneurial expertise - from
investors who are prepared to take on higher risks in pursuit of higher
returns.
    Companies are most in need of venture capital to survive and prosper
during start-up and growth phases. The average survival rate for start-ups is
quite low, often because they lack the experience and skills needed to attract
and partner with long-term investors.
    Funding for innovative companies has declined dramatically in Ontario
since its peak in the dotcom era of the late-1990s.

    
    -   In 2007, first time venture capital financing - the first investment
        a company receives - reached a 12-year low in Ontario.
    -   Early stage venture capital - funding to emerging Ontario companies
        looking to grow - declined from $1.5 billion in 2000 to $236 million
        in 2007.
    -   This decline in Ontario venture capital has coincided with greatly
        lowered investment by institutions such as pension funds and
        insurance companies. In 2000, institutional investors represented
        21 per cent of venture financings. This has dropped to one per cent
        or less in the period from 2005 to 2007.
    

    As institutional investors with large amounts of capital have largely
retreated from this investment area, innovative Ontario companies have had to
look outside the province for investment.

    Built on Best Practices

    To address this challenge, Ontario consulted with the venture capital
industry and examined best practices in over 30 jurisdictions. This research
helped to inform the principles that have shaped the Ontario Venture Capital
Fund:

    
    -   Partnership: To address the lack of investment and expertise for
        innovative companies, Ontario is acting as a catalyst to reengage
        institutional investors.
    -   Market-driven: Market-driven and returns-oriented approaches to
        innovation investment generate the strongest results in terms of
        economic development, new companies and new jobs.
    -   A Fund of Funds: To maximize the impact on the Ontario venture
        capital sector, and tap into investment expertise in the province,
        the fund needs to support the best venture capital funds - those with
        a track record of identifying and supporting successful, high-growth
        innovative companies. By investing in those funds, the OVCF will help
        strengthen the entire sector and make it attractive to ongoing,
        sustainable investment.
    

    Managed for Success

    To generate the kinds of returns needed to attract the sustained support
of institutional investors, the fund must be managed by an experienced fund
manager with a track record of success.
    The lead limited partners in the fund have unanimously selected TD
Capital Private Equity Investors
(http://www.tdcapital.com/tdcapital/pei/resources/TD_Capital_Private_Equity_In
vestors_Profile.pdf) as the general partner and manager of the fund.
    TD Capital has been investing globally in private equity since 1969. It
has invested in more than 200 buyout, venture capital, mezzanine and special
situations funds and direct co-investments with more than 70 leading private
equity fund sponsors.
    TD Capital currently manages over $2.5 billion in private equity
commitments through its global fund of funds program and a series of
separately managed accounts with customized investment strategies tailored to
meet the needs of individual institutional investors. TD Capital's 37-person
team is locating in Toronto, Canada and London, UK.

    Growing Ontario's Fund

    With the Fund established, the next step is to pursue a second round of
investment, with the goal of attracting additional investors to the fund.

    
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    BACKGROUNDER
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                                 FUND DETAILS
    

    What is it?

    The Ontario Venture Capital Fund (OVCF) is a limited partnership between
the Ontario government and leading institutional investors to invest primarily
in Ontario-focused venture capital and growth funds that support innovative,
high growth companies.

    Investment Focus

    The OVCF's objective is to generate superior, long-term risk-adjusted
returns for its investors, thereby promoting a globally competitive venture
capital industry in Ontario - one capable of supporting and developing
promising, innovative Ontario-based enterprises.

    Structure

    The OVCF is structured as a fund-of-funds
(http://www.cvca.ca/resources/glossary.aspx) that makes investments primarily
in funds that in turn invest directly into high-growth companies.
    Between 80 and 100 per cent of the capital will be invested in these
underlying funds, with up to 20 per cent of the capital available for direct
co-investments (http://www.cvca.ca/resources/glossary.aspx), alongside fund
managers, in Ontario-based companies.
    Between 80 per cent and 100 per cent of the fund investments will be
invested in Ontario-based and Ontario-focused funds. Up to 20 per cent will be
available for investment in other venture capital funds.
    Between 75 per cent and 100 per cent of the fund investments will be
invested in venture capital and growth-oriented funds. Up to 25 per cent will
be available for investment in other Ontario-focused private equity funds that
make investments in small and mid-market companies.

    Total Capitalization

    The fund held its first closing on June 6, 2008 with $205 million in
capital commitments from the Ontario government and private sector investors.
It will seek to add additional investors as limited partners and anticipates
having a second closing later in 2008.

    Investment Period

    The fund will begin investing in 2008 and, subject to prevailing market
conditions, is expected to have an active investment period of between three
and four years.

    Anticipated Outcomes

    In addition to providing investors with superior long-term returns, the
fund will help to:

    
    -   Promote the creation of a globally-competitive venture capital
        industry in Ontario which supports Ontario-based innovative companies
    -   Increase the supply and effective deployment of investment capital in
        Ontario by supporting top-performing fund managers
    -   Increase the level of institutional investments in venture capital in
        Ontario
    -   Improve the flow of capital at all stages of investment in innovative
        Ontario companies

    Fund Manager

    After an extensive request for proposal process, TD Capital Private Equity
Investors ("TD Capital")
(http://www.tdcapital.com/tdcapital/pei/resources/TD_Capital_Private_Equity_In
vestors_Profile.pdf), Canada's leading private equity fund of funds manager,
has been unanimously selected as the general partner and manager of the fund.
All investment decisions for the OVCF will be made by TD Capital. For further
details on the fund, contact TD Capital at 416-308-6316;
peinvestors@tdcapital.com.

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For further information:

For further information: Sandra Watts, Minister's Office, (416)
314-7067; Perry Blocher, MRI Communications Branch, (416) 326-7717

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ONTARIO MINISTRY OF RESEARCH AND INNOVATION

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