Start-up business boosted by $50M

September 02, 2009

By HANK DANISZEWSKI

A new regional agency will funnel an extra $50 million to start-up businesses in southern Ontario.

The announcement was made yesterday in the London office of the Business Development Bank of Canada (BDC) by federal Minister of State Gary Goodyear.

Goodyear is in charge of the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) that was launched last month.

Headquartered in Kitchener, FedDev Ontario is in charge of distributing $1 billion in economic stimulus over the next five years.

Goodyear said the new venture capital would be distributed by BDC offices in Southern Ontario that provide investment for new or expanding companies. 


"Our government will build capacity in small- and mid-sized businesses in the region, especially in those sectors that represent the next generations of jobs," said Goodyear.

The BDC will invest $35 million directly into new or expanding companies and the remaining $15 million will be invested indirectly through various venture capital funds.

Jacques Simoneau, the BDC's executive vice-president of investment, said the agency usually devotes about $35 million annually to venture capital funding in southern Ontario.

He said the FedDev Ontario contribution will boost venture capital funding to more than $50 million a year in the next few years.

Simoneau said money invested by the BDC typically leverages four times as much in private investment.

"Technology funds in Ontario are struggling to secure needed financing. Our support is more important than ever," he said.

Goodyear acknowledged Southern Ontario's manufacturing sector has borne the brunt of the recession.

Although there are signs of recovery, he said the federal government is committed to following through on programs to kickstart the economy through public investment.

"Recovery is a tentative and fragile thing. It is not time to take our foot off the gas," he said.

Joe Preston, MP for Elgin-Middlesex-London, said the additional venture capital funds would speed economic recovery in the London area.

"These funds are targeted and timely and aim to provide that little bit up front to help Ontario's economy find its feet," he said.

Hank Daniszewski is a Free Press business reporter. hank.daniszewski@sunmedia.ca