Sudbury venture capitalists get $3 million boost from FedNor
SUDBURY -- Budding entrepreneurs, looking to get a leg up in Sudbury's tech sector, can now access some potential help through the Sudbury Catalyst Fund.
Politicians, officials and stakeholders gathered in downtown Sudbury to announce the creation of the $5 million fund Wednesday morning and to celebrate FedNor's contribution of roughly $3 million to it.
"Our government is focused on investing in communities and this is just a great example, but at the same time, it's because the community came together," said Sudbury MP Paul Lefebvre.
According to those behind the idea, the venture capital fund is designed to support early-stage and innovative ventures that are primarily located in the tech sector.
"This is economic prosperity. These are jobs. This is using this funding as a lever to give opportunities to entrepreneurs that have these great ideas, who may not be able to get financing from a bank," said Lefebvre.
The Sudbury politician says this was Sudbury-specific because of all the partners that were able to come to the table. He's hoping it'll serve as a model for other communities across the country.
"This is a great announcement for us, for the region," said Sudbury's Deputy Mayor Al Sizer. "In order to run this city, we cannot expect that residential taxes will carry us forward. So, we need business development. We need businesses locating here, hiring here and this will go a long way to helping attain that."
The program is run in conjunction with Northern Angels, a group of "angel" investors or high-net-worth individuals, who are looking to invest in the technology sector in Sudbury.
If applicants get the green-light or an angel investor, they have the ability to apply for this co-investment to help them launch their start-up ventures.
"One of the core challenges that many start-up companies face is access to capital. And why do we care about that? Well, the vast majority of job creation comes from early-stage tech companies. In fact, of all new companies started today, only four to 10 per cent of those companies become high-growth firms, but the top one per cent of all those new high-growth firms generate two-thirds of the job creation, not only for our community but communities across Canada," said NORCAT CEO Don Duval, who is a co-manager of the fund. "We believe we have a vibrant pool of net-worth 'angels' in our community. We've always had it, but we've worked very hard to unlock and educate these individuals that beyond philanthropy, which is critically important to our community, there's also a role for you, with capacity to invest, to take a role within a company, take a board seat and help this company grow."
Duval helped spearhead the creation of the Sudbury Catalyst Fund to give entrepreneurs the help they need to develop their product here in the community.
"There's a vibrant tech ecosystem," said Duval. "When we host educational events about entrepreneurship, our attendance is, again, relative to our population, disproportionately higher than other regions, including Toronto and Waterloo. So, there’s a huge appetite and interest in our community to become an entrepreneur, to become a tech-entrepreneur."
The pilot program is expected to help 20 start-up companies expand, allowing them to develop their products and technologies. It's also expected to create up to 60 full-time jobs.
It does not, however, solve the issue of the labour shortage facing communities across northern Ontario, including Greater Sudbury.
"We have the Rural Immigration Pilot Project that we launched. We signed with the municipalities in Timmins, North Bay, Sudbury, Sault Ste. Marie, so that immigration pilot project will look at attracting newcomers for skilled jobs. But also link to that, we have to look at investing in businesses to hire our graduates, give them experiences and develop that pool of talent locally. And this fund, if any of these funds are provided to the private sector and entrepreneurs, the investments have to stay in northern Ontario, and that's the growth that will happen here and you have to do a bit of both," said Nickel Belt MP Marc Serré.
Lefebvre and Serré are hopeful the city will see an immediate impact from the Sudbury Catalyst Fund, with potential benefits as early as this summer.