CATA, Matthews want national VC program modelled after Israel’s

Billionaire tech titan Sir Terry Matthews has teamed up with one of Canada’s largest tech lobby groups to call for the creation of a national venture capital strategy.

Matthews, along with the Canadian Advanced Technology Alliance (CATA),released “A Venture Capital Blueprint for Canada” today. The documenturges the federal government to formulate a national plan andinfrastructure to finance early stage companies.

Sir Terry Matthews and CATA arecalling for a VC system modelled after Israel’s Yozma program..

“Unless we take this opportunity to rethink Canada’s approach…we willnot have achieved much more than a short-term fix to the VC sector,perpetuating the classic ‘vicious circle’ within which both our VCindustry and tech sector industries are now trapped,” Matthews and CATAstated Tuesday in a news release.

Welsh-born Matthews founded orco-founded Ottawa tech firms MitelCorp., March Networks and Newbridge Networks, the latter of which wasbought by French telecom giant Alcatel SA for $7 billion in 2000. In1994, Matthews launched Celtic House Venture Partners, an Ottawa VCfirm that manages a combined portfolio worth $425 million across threeVC funds.

Among the blueprint’s key recommendations are suggestions about how thefederal government should dole out $400 million set aside for earlystage financing in the last federal budget:

-that Ottawa select a private VC firm to set up and manage a ‘funds offunds’ structure to “choose the best Canadian VC managers with which itshould invest the Crown monies”
-that the money would be invested in startups through the BusinessDevelopment Bank of Canada; BDC would place the money with top VC fundsacross Canada who would have to bid competitively for the rights toinvest it in startups
-that the Canadian government model its VC program after Isreal’s Yozmainitiative; set up by the Israeli government in 1993, Yozma saw 10 newVC funds established with each fund managing $20 million andcapitalized 40 per cent through government money and 60 per centthrough foreign investment; Yozma is credited with Israel’s rankingbehind Silicon Valley as the largest VC market in the world

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