While in Canada employer-sponsored pension funds do not currently fill the prominent venture capital supply role evident in some other countries, this has not always been the case. In fact, Canadian pension funds occupied a very formative position in the market during the 1980s. At that time, when the market was in a state of transition, so too were pension funds. As was discussed in Investing and Managing Pension Assets in Canada, mid-decade witnessed the initiation of regulatory reforms that ultimately gave pension funds much broader investment powers. Government changes to the prudential framework were most meaningful to public sector plans suddenly able to participate in capital markets for the first time.
These and other trends helped to precipitate the entry of several private and public sector pension funds, such as those associated with BCE-BIMCOR, the Caisse de dépôt, Canadian National Railways Pension, Canadian Pacific Pension Fund and OMERS, into the venture capital market. For a brief spell, Canadian pension funds followed the path forged by those in the United States in providing indirectly, through limited partnerships, most new capital commitments. This is shown in Figure 7. Supply by pension funds peaked at $185 million in 1987, but plummeted thereafter, reaching a low of $20 million in 1990. Aggregate participation has tended to average about $50 million per year since then.Endnote 41