Business & Economic Development – Funding & Tax Credits – Innovation Growth Side Car Fund

Frequently Asked Questions

  1. What is the Manitoba Innovation Growth Fund?
    The Fund is designed to help Manitoba investors support emerging ventures by either investing in more deals per year or increasing the size of the investment so the venture can achieve additional milestones.  It does this by providing a top-up to the investment by the private sector investor.
  2. What type of company is this program designed to assist?
    The Fund is designed to aid ventures that have the potential to provide a return to early stage equity investors, commonly known as angels, consummate with industry norms, for example, a 10X cash return.
  3. Who will determine if my company is eligible?
    The venture’s investors will determine if they wish to use the Fund.
  4. Who would be considered an eligible private sector investor?
    Eligible private sector investors include individuals and corporations who are registered with the Manitoba Securities Commission as sophisticated investors.
  5. What is the minimum and maximum investment under the program?
    The Fund can invest $200,000 - $500,000 in a venture, but will never account for more than 50% of the total investment.
  6. What is the typical length of investment term?
    There is no set investment term as this is patient money. The Fund will exit at the same time as the private investors due to either a merger and acquisition or IPO.  Based on current industry norms, an average hold of 5-8 years for IT companies and over 13-15 years for life science companies is anticipated.
  7. Can I get more than one investment under the program?
    Yes, multiple rounds are allowed but the total investment by the Province cannot exceed $500,000 and 50% of the total investment.
  8. What is the definition of a “High Growth” company as it relates to the Fund?
    This is sector dependent and is determined by the investors and industry norms. Such decisions are typically based on recent investments in comparable firms across North America.
  9. Who will review deals submitted to the Fund?
    An Advisory Council of five individuals will review all proposed deals.  They will review the due diligence performed by the private sector investors, terms sheet and cap table in making their decision. In cases where a deal is rejected, the Council will provide the investors with the reason for their decision and make recommendations for future actions.  This can include a referral to CSB Stream 2 for ventures deemed not ready for an investment at this time to advice on internal venture issues or details in the term sheet that should be reviewed.  Upon addressing the identified issues, investors are free to reapply.
  10. Will the 5 member Advisory Council have domain experience in all of Manitoba’s priority sectors? (ie. do they understand the commercialization cycle in my sector and have they invested in this sector in the past?)
    Given the broad nature of Manitoba’s economy the Fund and Council are sector agnostic.  As with all investors, in cases where they are unfamiliar with a sector they will consult with investors more experienced in the sector.  This will be done either through personal networks or relationships established between Growth, Enterprise and Trade and angel groups/VC firms across North America. 
  11. Does investing on the “same terms and conditions” mean both debt and equity?
    Yes.  Based on current trends it is anticipated many of the investments will use convertible debt.
  12. Will government be executing its own process of due diligence on the project also, or will it rely on the due diligence of the private investor?
    Sidecar funds by definition rely on the due diligence of another party, in this case the private sector investors. The Council’s role is merely to verify this due diligence and to ensure the valuation used and terms are reasonable given current industry conditions.
  13. Will government come in with their investment at the same time as the private investor?
  14. Is a single private investor sufficient to secure investment by government under the fund?
    Yes.  Given the amounts involved however we anticipate most deals will involve two, or more, investors.
  15. What happens if my investor(s) pull out?
    This isn’t an issue if it occurs prior to the completion of the deal as the investors are responsible for bringing the deal to the Fund.  Investors can only exit during the deal under the terms specified in the investment agreement.
  16. Can I use the program in conjunction with the Small Business Venture Capital Tax Credit?  How about other government programs? (stacking rules)
    Yes. Stacking rules don’t apply in this case because the benefit flows to the investors.  The 50% limit on provincial funding, including tax credits and grants applies to the venture.
  17. How do I apply?
    Investors can apply once they have completed the deal with the venture’s management team.
  18. How long will it take to secure approval under the fund?
    There is no set limit on the time required but given that all Council recommendations must be approved by Treasury Board, investors should expect a minimum six to eight week process.

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