Ontario’s economic development minister says the province is considering a proposal to launch a fund to match venture capital investments as part of its effort to help startups and scale-ups survive the COVID-19 pandemic. 

Vic Fedeli spent the past two days participating in the Collision from Home conference in Toronto, meeting online with companies from around the world and encouraging them to invest in the province. In an interview with The Logic Wednesday, he said the province is not planning any further cuts to supports for the tech sector, and is reviewing a proposal from the Ontario Capital Growth Corporation (OCGC) to invest more money into emerging companies.

Fedeli recently met with OCGC CEO Steve Romanyshyn to discuss the proposal, according to a source whom The Logic has agreed not to name because they weren’t authorized to speak publicly. “The OCGC proposal is interesting. We’re looking at it closely, but haven’t made any decisions yet,” Fedeli told The Logic.

Romanyshyn referred questions on the details of the proposal to the province, but said, “I can tell you that the government is considering many proposals as part of … the economic recovery to the COVID-19 pandemic, including options for tech companies.  However … I have not been informed of any decisions on any specific initiative.”

According to the source, the conversations are still in a preliminary phase, and the OCGC is open to a range of approaches depending on the government’s preferences. Among the possible models are two initiatives launched in a bid to support venture capital firms and tech companies during the Great Recession: the Ontario Venture Capital Fund (OVCF) and the Ontario Emerging Technologies Fund (OETF).

The $205-million OVCF closed in June 2008 and acted as a fund-of-funds investor that put money into VC and PE firms, which then made investments. The $250-million OETF was a co-investment fund designed to encourage private-sector capital by putting money into companies alongside investors. 

In March, The Logic reported that BDC Capital, a federal Crown corporation, was launching such a matching fund in an attempt to keep capital flowing to startups during the pandemic. Quebec is taking a different approach, offering direct investments in firms in exchange for equity stakes. 

The Ontario government is not meeting all proposals from the tech sector with such a warm reception. At the beginning of the pandemic, a group of over 230 Ontario tech CEOs sent a letter asking the province for emergency financial assistance—specifically, for additional investment in promising startups through the MaRS Investment Accelerator Fund, and more money for later-stage tech firms. Asked Wednesday whether the province would deliver on those requests, Fedeli was noncommittal. 

“Industries are asking for, combined, hundreds of billions in new money right now. We can’t fund them all, nor should we,” he said. “We’re going to be making announcements in the near future on new programs to help the economy recover, but keep in mind that spending more isn’t the only way to grow,” he said, adding that his government has cut billions in taxes with the goal of making Ontario a competitive environment for businesses. 

It has also cut some of the province’s tech support. Last year, it eliminated at least 21 programs designed to help tech firms grow, and cut millions in funding from tech accelerators including the Ontario Centres of Excellence, Communitech and MaRS. The cuts were made shortly before last year’s Collision conference, with the goal of encouraging private investment to replace some of the public money allocated for the tech sector. They were unpopular enough that Ontario Premier Doug Ford was booed at the event. 

But Fedeli said his government doesn’t foresee further reductions in funding for the province’s incubators. “We aren’t planning any cuts to the tech sector,” he said. “I think you’ll find that incubators and accelerators in the province are very, very happy with the support they’ve received from the provincial government over the past year.”

Before the pandemic, Fedeli led trade missions to countries including India, Japan and South Korea, and secured early commitments from companies to invest in Ontario. He plans to keep that work going by scheduling video calls around conferences like Collision. In the first two days of the conference, he’s met with representatives from eight countries. 

Ontario’s Ministry of Economic Development did not provide Collision with any funding. However, it has invested significant resources in the conference, which drew about 30,000 people last year. Fedeli is leading a delegation of 67 Ontario companies, and developed a parallel program with 22 online sessions for more than 500 international companies and technology buyers. 

“For the next six months at least, this is what attracting foreign direct investment is going to look like. I can meet with someone from Germany and then someone from California five minutes later. That’s definitely an advantage,” said Fedeli, adding that he still prefers in-person meetings and the impromptu gatherings that come from meeting people in the hallways of conferences. 

In addition to meeting with tech firms to attract foreign investment, Fedeli is targeting the automotive sector and said he’s particularly concerned about regions like Windsor, whose unemployment rate fell 19.1 per cent between February and May, far more than the provincial average. 

“I see great promise in autonomous vehicles. Uber is working on that in Toronto. BlackBerry is doing great things in Waterloo; there’s real potential for us there,” said Fedeli. 

The minister is hoping those industries will grow, in part, by attracting highly skilled foreign workers. Earlier this week, U.S. President Donald Trump suspended the H-1B visa program, which was used to attract some of the world’s top tech talent. Fedeli is hoping workers looking for a new country will turn their gaze north. Competition for those workers is already steep, but the minister has an idea for how Ontario can attract more of them. 

Fedeli wants to double the number of immigrants Ontario can nominate for permanent residence from 6,500 to 13,000. The province unsuccessfully requested the federal government make the increase a year ago, but he’s hopeful things will be different now. 

“Immigration drives innovation. We have a moment now where very talented people in the U.S. are looking for the next company they’re going to help. Ontario can be that place,” said Fedeli.