Christy Clark’s Liberals tap T.O. for B.C. tech fund management

If there is anything British Columbians love least, it’s a decision made in Toronto with their money.

Yet, get ready: that’s what the provincial government has decided to do in awarding the role of fund manager for its new tech strategy.

Two B.C. entities with local knowledge and venture capital investment expertise were shortlisted with Toronto-based Kensington Capital to run the $100 million fund of funds. Both local managers had a long list of B.C. technology and investment leaders on their teams. One had partnered with a major fund investor outside the province to help build even greater competence here, while the other featured leaders of three major local firms for a made-in-B.C. proposal.

But it didn’t matter. Surprisingly, the province didn’t consider the strengths of the local offices among the criteria. Both B.C.-based players lost to the one from the centre of the universe.

The contract fine points are yet to be finalized in negotiation with the province, so it remains possible the chosen firm might not cross the finish line. An official announcement should come this spring.

None of the firms in the process will discuss their bids or the outcome. The province is mum. But word leaked last week.

To be fair, Kensington has a track record as an investment house. It has done some business with B.C., including a few investments and helping the earlier Renaissance fund run by the provincial bureaucracy choose venture capital funds in which to invest. Mind you, many of those funds were from outside the province and have not been particularly active investors in B.C. Since 2014, Kensington has raised and run one of the smallest of four federal tech venture capital funds. 

But it has not been a big player in the fund-of-funds field and has not strayed often to the Left Coast. None of its management team is from here or based here. Its website lists only one B.C. member on the advisory board: Gerri Sinclair, former president of the Premier’s Technology Council. Its plan will employ locally to be the B.C. face of the company, a move many alien firms use when winning a local contract.

We could go into detail on the awful political optics of selecting a firm on the eve of an election without vast B.C. presence to spearhead the only tangible, plausible initiative in the province’s plan to invest in promising local companies in a sector crucial to our economic destiny.

Well then, let’s discuss, shall we?

When Premier Christy Clark rather hastily released the first of her two-part tech strategy in December, the sector endorsed the notion of a privately run fund manager choosing other funds in which to invest. There was some concern that $100 million wouldn’t go far, but it was a reasonable start.

The pickings are relatively easy in B.C., because there aren’t more than a half-dozen funds in this field, so the short-term work is not particularly heavy lifting. No, that strenuous stuff takes place over the longer haul – over at least the next 10 years.

The ambition of the strategy was to plant the seeds for an eventual fund-of-funds management competence here in B.C. as the investments returned generously.

A local approach would mean local insight and decision-making.

Surely at the outset, the province saw this as a politically popular opportunity. If anything, this was supposed to be the more solid of the twofold tech plan.

We will recall that the New Year’s Eve hangovers were barely over when a drunken idea emerged in January as Part 2 of the plan: B.C. was going to teach kids how to code in schools. Starting this fall, yet.

That there was a preposterous rush and no money attached to the idea – no capital for equipment, no funds for training or hiring – might worry some people.

No matter. It made for a lovely set of headlines.

Just guessing, but I suspect this decision will spur a different sort.

What I wonder: with an initiative so locally vital, why did the province not set criteria to guarantee local opportunity? 

Kirk LaPointe is Business in Vancouver’s vice-president of audience and business development.