Ministers announce call for venture capital proposals

Industry, Trade and Rural Development Minister Judy Foote and Minister of Finance and President of Treasury Board Joan Marie Aylward today announced that government is formally requesting proposals from interested parties for the establishment of a pooled venture capital fund in the province. This follows a commitment in Budget 2003 to issue a public call for proposals within 60 days.

"During government�s jobs and growth consultations, Newfoundlanders and Labradorians identified securing capital, in particular venture capital, as one of the major obstacles to the start up or expansion of a business," said Minister Foote. "In our Renewal Strategy for Jobs and Growth, government introduced several new measures to facilitate the flow of investment to small and medium sized businesses. Building on that momentum, Budget 2003 went even further to introduce more new measures, including a call for proposals for the establishment of a venture capital fund that would be supported by a provincial tax credit."

"Through the establishment of a venture capital fund, we hope to retain private investment capital in the province and make it more accessible to small and medium sized businesses across the province," said Minister Aylward. "Our objective is to target funds at growing and emerging sectors of the economy in all regions of the province that lack venture capital as a means of diversifying the economy and creating new jobs."

Through this initiative, a provincial tax credit will be made available to residents of Newfoundland and Labrador to encourage them to invest in a privately managed venture capital fund. The fund will, in turn, invest the pooled monies in a number of small to medium sized businesses. A tax based incentive for investors will lower the financial risk for investors and increase the probability of providing a reasonable rate of return to them by the fund. This is designed to make it more attractive for individuals and corporations to invest in Newfoundland and Labrador businesses.

Flexibility is provided in the call for proposals to allow for a provincially based labour sponsored venture capital fund or alternatives, including the possibility of support to a regionally or nationally based venture capital fund, if structured in a manner that meets provincial objectives.

The closing date for proposals is August 29, 2003. To obtain a copy of the Request for Proposals, please contact the Department of Industry, Trade and Rural Development at (709) 729-4851.

Media contact:

Tansy Mundon, Industry, Trade and Rural Development, (709) 729-4570
Josephine Cheeseman, Finance, (709) 729-0329

2003 05 27                                    1:40 p.m.