Big deal: Canada moves money into Les Appalaches

Canada's government has awarded $3.8m to the Capital expansion region Thetford fund to help diversify the economy in Quebec's Les Appalaches.

Canada is no stranger to venture capital investments, but news covered by Global Government Venturing often focuses either on a government-owned vehicle making a direct investment in a company or the national or provincial government launching a fund with a fairly wide geographic scope.

It is intriguing, therefore, that last week the federal government awarded C$5m ($3.8m) to the Capital Expansion Région Thetford co-investment fund to launch a VC vehicle aimed at Les Appalaches, a regional county municipality in southeastern Quebec.

The small sum could be deemed almost insignificant compared with other recent initiatives, such as VC firm Information Venture Partners' $96m second close of its fund a week earlier, with contributions from state-owned export credit agency Export Development Canada and BDC Capital, the investment arm of government-owned Business Development Bank of Canada. But what the latest fund might lack in monetary size, it makes up for in economic ambition.

The capital came from regional development agency Canada Economic Development for Quebec Regions (CED), through its Canadian Initiative for the Economic Diversification of Communities Reliant on Chrysotile, a seven-year initiative – it will last until the end of March 2020 – aimed at entrepreneurs and businesses in Les Appalaches and Les Sources.

Eligible startups under the initiative's rules are non-retail, but include small and medium-sized enterprises, business support organisations and non-profit entities.

Specifically, the cash may be used for activities such as expansion, product development, upgrading, extending or constructing facilities, equipment purchase or launching new businesses.

Thetford's stipulations, meanwhile, include the need for permanent job creation, investment in the project by the entrepreneur or startup itself, and co-investment from another fund. Applicants must also demonstrate that their targeted sector is not already saturated.

Les Appalaches, which contains just one city, Disraeli, one town, Thetford Mines, 13 municipalities and four parishes, is a relatively young region, having been formally established only in 1982.

With a population of less than 43,000, the region's economic prosperity is largely based on asbestos mining and hence in need of diversification – chrysotile being the most common type of asbestos.

Thetford plans to provide up to C$250,000 per project, meaning the fund would support at least 20 projects in the region, a significant number for a small population.

It will be interesting to see how successful the fund is, but as it is managed by established co-working space and incubator Espace Entrepreneuriat Région Thetford, it stands every chance of making an impact.

Joël Lightbound, minister for innovation, science and economic development and minister responsible for CED, was optimistic. He said: "The creation of a venture capital fund is excellent news for the region.

"Thanks to this assistance from the government of Canada, Capital Expansion Région Thetford will be able to continue supporting various business projects in Les Appalaches and thereby contribute to local economic development and job creation."

See more from this Government Report: Canada


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