ShaneMcLean.com

Information on legal and business topics from Canadian business lawyer Shane McLean

More Details Out on the Ontario Emerging Technologies Fund

Posted by Shane McLean on August 16, 2009

In prior posts I have mentioned the Emerging Technologies Fund announced by the Ontario Government earlier this year with a pool of up to C$250M in funding (up to C$50M per year for 5 years).  Until recently information on the ETF has been spotty but in the last week of July the Fund Guidelines were released.  Some of the guidelines are old news but I believe that some have only been made clear for the first time with the release of the Fund Guidelines.  Here are some highlights:

  • The ETF is focused on private  companies with an “Ontario Footprint” and involved in (i) clean technologies; (ii) life sciences and advanced health technologies and (iii) digital media and information and communication technology.
  • An “Ontario Footprint” requires that (i) the company pays at least 50% of wages, salaries and fees to employees and contractors working in Ontario, (ii) the majority of the full-time employees must be working in Ontario and (iii) the majority of senior officers must maintain their permanent residence in Ontario.  If the company ceases to have its “Ontario Footprint” the ETF has a right to sell the shares back to the company at a predetermined price.
  • The initial investment in any company will not exceed C$5M, total investment will not exceed C$25M and the ETF will not be the largest single investor in any company
  • The investment round must be at least C$1M and not more than C$15M.
  • ETF will always co-invest with a “Qualified Investor” and will not invest more than the Qualified Investor
  • A Qualified Investor must present the co-investment opportunity to the ETF.  Companies may not seek investment directly from the ETF.
  • Venture Capital and Private Equity funds, angel investors, angel groups, pledge funds and other investment entities can apply to become a “Qualified Investor” provided they meet specific criteria.

The Fund Guidelines contain more detail so check them out.  At some point the ETF web site promises to start listing Qualified Investors.  Once that happens, companies can presumably approach those Qualified Investors to invest and apply to the ETF for co-funding.  Interestingly, the materials say that an investor can apply to become a “Qualified Investor” and submit a co-investment opportunity at the same time.  So, if you’re a company that has secured some investment, you should get one of your investors to apply to become a “Qualified Investor” to see if you can leverage their investment to get access to some of the ETF funds.

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