A spokesman for International Trade Minister Mary Ng – seen here in Toronto on March 9, 2020 – whose department oversees the program, said despite ‘an internal decision by Hamilton Lane’ to drop out, the government was ‘encouraged’ that it will maintain an office in Canada and still invest here.
Cole Burston/The Canadian Press
U.S. fund management giant Hamilton Lane Advisors LLC has pulled out of one of the federal government’s signature innovation funding programs, less than two years after Ottawa pledged close to $80-million to the company to invest in the Canadian technology sector.
“Hamilton Lane is withdrawing its participation effective immediately,” a spokesman for the private fund manager told The Globe and Mail.
As a result, the Trudeau government’s venture-capital catalyst initiative (VCCI) program, which is supposed to pump $1.4-billion into the Canadian innovation sector, has fallen $275-million short.
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A government source said despite “an internal decision by Hamilton Lane” to drop out, the government was “encouraged” that it will maintain an office in Canada and still invest here. The program is overseen by small business and international trade minister Mary Ng.
The news surfaced days after the federal innovation, science and economic development department revealed it spent $1-billion less than planned in the past fiscal year, largely because of a delay in spending for innovation programs.
The VCCI program followed a successful venture-capital action plan (VCAP) launched in 2013 by Stephen Harper’s Conservative government at a time when the venture-capital industry was struggling to raise money in the wake of the 2008 recession.
Under VCAP, the government pledged $340-million, alongside $100-million from Ontario and Quebec, to four private-sector “funds-of-funds” managers on condition they raise $2 from private investors for every $1 from government.
The four managers, which in turn backed venture funds that directly backed startups, raised $1.4-billion from private and public sources, fuelling what is now a flourishing domestic technology sector. Last year, venture-capital firms invested $7.3-billion in Canadian technology companies, according to market data firm Refinitiv, second only to 2000 levels, adjusting for inflation.
The industry lobbied for a sequel, which came with some strings attached. While Ottawa still gave incentives to private investors by agreeing to be repaid only after they got their full capital back, plus 7 per cent, it insisted the winning managers raise $2.50 for every $1 Ottawa committed.
The government also pushed recipients to enhance diversity and increase the participation of women across the male-dominated venture capital sector.
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Another change was choosing five winners – Hamilton Lane, plus incumbents Teralys Capital of Montreal, Toronto’s Northleaf Capital Partners and Kensington Capital Partners, and Boston-based HarbourVest Partners LLC – to split a pie that had previously been divided four ways under VCAP.
The government announced the winners in June, 2018, giving them until year’s end to hit the “first close,” and one more year to reach final targets. With funding from both Ottawa and Quebec, Teralys met its $400-million target first, in December, 2018. Northleaf, Kensington and HarbourVest followed in 2019, raising $300-million, $150-million and $300-million, respectively.
But Hamilton Lane was delayed. It didn’t announce its Canadian staff until last spring – led by Michael Woollatt, former chief executive of the Canadian Venture Capital and Private Equity Association – and only got approval from the Ontario Securities Commission to raise funds in May.
By then the other funds were late into the fundraising process, leaving Hamilton Lane, an unproven entity in Canada, way behind. The government extended its deadline to June 30, but the U.S. fund manager still found it difficult to raise funds, the company’s spokesman said.
The government source said no decision had been made on how to allocate the unused funds. Industry sources, who were granted anonymity because they were not authorized to speak on the matter, said it was too late for the four other winners to take on additional money.
One suggested the government should create a fund for life sciences venture-capital firms, which have struggled to raise domestic funding outside Quebec. Another suggested the government create a new program to spur additional investments in innovation.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
