Actually, according to data received from Macdonald and Associates and the ACVCC, without the shareholder recruitment efforts of the funds, market resources would certainly have declined due to outflows caused by institutional investors, such as pension funds and the subsidiaries of financial/industrial entities (in 1990-91, the market experienced net capital outflows, and in 1992, outflows and inflows were roughly even). Labour- sponsored funds have thus provided an important counter to negative cyclical effects.
It seems clear from 1994 data that the existing market share captured by labour-sponsored funds would be more sizeable still if inflows from elsewhere had not returned to pre-1990 levels in the last two years. However, even as broader supply has been restored, the funds still contribute most to a sharpening annual rise in total capital under management. In 1994, 53 percent of $1 billion in new capital was acquired by labour-sponsored funds, as was 52 percent of $775 million in new capital in 1993.Endnote 14
Finally, by having this supply impact, the funds have commensurately increased the role played by individual Canadians in the venture capital market. Indeed, as Figure 6 reveals, the recent entry of tens of thousands of individual investors (close to 100 percent of these entrants are fund shareholders - the remainder hold shares in publicly-traded institutions) has made them the overwhelming source of new resources at present. Along with those accrued benefits already noted, this trend ensures more diversity in supply. Prior to the emergence of labour-sponsored funds, the chief non-government suppliers were institutional investors - pension funds, large mutual funds and insurance companies, etc.
Labour-sponsored funds have also become one of the market's biggest investors. According to Macdonald and Associates, in 1993 the funds were responsible for more than one in every ten new and follow-on venture investments and approximately 25 percent of the dollar value of all such investments.Endnote 15 In that year, as in previous years, the lion's share of this investment activity was that of the Fonds de solidarité.
The subsequent year was something of a watershed for labour-sponsored funds as an investor type when the Fonds de solidarité was joined by relative newcomers Working Ventures and Working Opportunity, among others (e.g., the Integrated Growth Fund). Intensified investing on the part of these two - Working Ventures, for example, began adding to its portfolio at an accelerated rate of $5 - $10 million per month in 1994-95 after having dispensed with initial capitalization and the removal of some legal and regulatory obstructions - greatly augmented the collective market representation of the funds.