Ontario’s Emerging Technology Fund: Fuhgeddaboutit

While we were all heading off for the long weekend, those scamps at the Ontario Ministry of Research and Innovation were busy launching their long-awaited guidelines for obtaining matching funds from the Emerging Technologies Fund. You can view them over here, but make sure you bring your time machine with you so that you, too may travel back in time to a place where these guidelines might be relevant.

By creating a process so onerous that no self-respecting angel would bother, the OCGC has narrowed the ETF so that matching funds are essentially available only to for VC investments made in Ontario companies. What VCs would these be? I ask you. The ones receiving funds from the Ontario Venture Capital Fund, which is also managed by this same group? (PS, there aren’t any, unless you count the two commitments made to local venture capital funds which have yet to close)

Certainly the guidelines can’t be aimed at matching US VC investments, since it requires that the ETF’s investment be bought out if at any point the funded company loses a significant Ontario footprint. Most US VCs ascribe to the “scale sales and executive team in a US office” approach to building a company.

The most meaningful investment activity in Ontario in the last two years has been that done by angel investors. As a reward for their engagement, they now must complete a lengthy application, including a statement of their net worth and the names of several personal references, before their investments may be considered for matching money.

It also is not clear who is vetting and assessing these applications or how this can be done in a timely manner: the Fund is administered by the Ontario Capital Growth Corporation, whose board of directors consists of 4 senior public sector employees that have been allocated to the OCGC on a part-time basis.

The ETF was a really brilliant policy initiative that could have accelerated the growth of all those Ontario start-ups that stayed the course in the last two years. The impact of the guidelines? I’m hoping someone has a better view than I.