UPDATE 1-Canada sets venture-capital plan to keep entrepreneurs
* Allocates C$400 mln that was announced in budget
* C$250 mln to go to "funds of funds"
* C$150 mln to go to existing funds
* Trying to stem loss of entrepreneurs to U.S., elsewhere
MONTREAL, Jan 14 (Reuters) - Canadian Prime Minister Stephen Harper on Friday announced a plan to provide C$400 million ($408 million) in venture capital in a bid to stem the loss of young entrepreneurs to the United States and elsewhere.
The money will go into new and existing funds led by the private sector over a span of seven to 10 years.
"We will provide the resources needed to put Canada's venture capital industry on the path to sustainability and ensure Canada's high-potential firms have the resources they need to succeed," Harper said in a statement.
The overall amount was announced in the March budget, but the government has now decided how to allocate the money:
- C$250 million to establish new, private sector-led national "funds of funds" that will invest in other venture-capital funds, in partnership with institutional and corporate strategic investors as well as with interested provinces;
- Up to C$100 million to recapitalize existing large private sector-led funds of funds in partnership with willing provinces;
- Up to C$50 million in three to five existing, high-performing venture-capital funds in Canada.
"The principal focus here is on young entrepreneurs and the fact that we are losing young entrepreneurs and their businesses to American enterprises, to larger enterprises," said Finance Minister Jim Flaherty, flanking Harper at a news conference.
"We know of thousands of young entrepreneurs in Quebec and across the country that need the kind of support that is contemplated."
Montreal in particular is a hub for start-up companies involved in video games.
Harper, a Conservative who once railed against corporate welfare, said that his philosophy was the reason it was stressing the private sector's lead in the funds.
"We don't want governments to choose winners and losers by political criteria, and therefore we're working with the private sector," he said.