VANCOUVER — B.C.’s $500-million strategic investment fund will start to deploy its money this fall in venture-capital funds that share its focus not only on profits but on people and the planet, before moving on next spring to direct investments in companies, according to its guiding policy document.

“We’re in diligence with a few opportunities right now. So the target is still by the end of this year to be able to announce some investments,” said Leah Nguyen, InBC’s chief investment officer, in an interview with The Logic. Her priority since she started in the position in April has been finalizing the organization’s investment policy statement (IPS), which was released on Tuesday.

InBC will invest in earliest-stage companies—pre-seed and seed—only through funds. Later-stage investments—Series A and beyond—could come from a number of different investment vehicles, such as equity, debt, or royalty- or revenue-based financing.

The organization is starting with funds instead of companies because “there is a gap in the ecosystem at that stage” and it wants to help increase investor activity in those rounds, Nguyen said. She’s also aware that many early-stage companies “require specific types of support in order to help them get to that next level of scale,” which InBC may lack the expertise or capacity to provide.

It plans to invest in both established fund managers and emerging ones. “I think that part of growing the investor base here is not just investing in fund managers who are on their fifth, sixth, tenth fund,” said Nguyen, “but also being able to invest in new ones so that we have new investors that can come to the table.”

InBC, first announced in September 2020 as part of the province’s COVID-19 economic recovery plan, intends to allocate roughly 70 per cent of its money to private equity and venture, with up to 30 per cent set aside to offer debt financing. It will focus on equity through at least the first half of next year, said Nguyen, while other models, such as debt financing, will take time to design. As it begins to offer debt instruments, InBC wants to ensure it does not displace incumbents or compete with private capital, she said.

Describing itself “as a patient investor,” the fund will act strictly as a minority shareholder. It will not own more than a quarter of an individual company or a third of a fund or fund manager. It will cap investments at $10 million for a fund, $25 million for a fund manager and $20 million for a company.

By early spring, InBC intends to announce its first co-investments, that is, investments in companies through funds in which InBC is a limited partner. It anticipates making its first direct investments in late spring.

The organization expects 15 to 25 per cent of its investments to be made at the pre-seed and seed stages, 30 to 45 per cent in Series A and B raises, and 35 to 50 per cent in Series C and beyond.

With a triple-bottom-line approach that prioritizes not only profits but people and the planet, too, InBC must consider a fund or startup’s environmental, economic and social impacts when deciding to invest. It will focus on investing in solutions that work toward net-zero emissions and other climate action advances, drive future economic growth in the province, advance reconciliation with Indigenous peoples, and improve life for under-represented people and communities in B.C. “Portfolio companies must clearly demonstrate their ability to drive change in alignment” with these objectives,” according to the IPS.

InBC will also consider whether its investments generate change that otherwise wouldn’t have happened.

Finally, it will prioritize businesses in, or with strong ties to, British Columbia. That comes down to several criteria, including locations of headquarters and percentages of leadership teams based in the province, said Nguyen. For funds, InBC will consider what proportion of their deal flows and portfolios are in B.C.; for companies, it will take into account the proportions of revenue, employees and supply chain based in the province. “The more of those things you have,” she said, “the stronger that connection.”