As discussed earlier, the covenants implemented under the LSVCC program are precisely the opposite of what would be an efficient investment vehicle.
5) For example, testimony before the Manitoba legislature in 1997, six years after Manitoba's LSVCC legislation was introduced, is consistent with this view; see http://www.
It is also possible that the people involved might have done a better job had the statutory constraints of the LSVCC program been designed differently.
There is reason for concern over this development, because evidence suggests LSVCCs are inefficient investment vehicles, charging high fees and yielding disappointing results: very few funds generate positive returns.
LSVCCs are tax-subsidized investment funds designed like mutual funds.
Most individuals invest in LSVCCs to take advantage of the tax savings that are provided through individual registered retirement savings plans (RRSPs)--indeed, LSVCCs typically advertise such savings as the most advantageous reason for investing in them (Cumming and Macintosh, forthcoming).
In sum, LSVCCs have fallen short of achieving their intended objectives for bolstering the Canadian venture capital market.
If LSVCCs are not working, are there better policy options?
Since part of the mandate of LSVCCs is to provide capital for entrepreneurs, it is worth addressing other legislative tools for facilitating entrepreneurship and the demand for entrepreneurial capital.
For its part, the United Kingdom has adopted a type of fund, similar to Canada's LSVCCs, known as the Venture Capital Trust (VCT).
Canada's LSVCCs are inefficient, may have poor governance structures, charge high fees, and earn economic returns that lag those of 30-day, risk-free treasury bills.
In place of LSVCCs, a variety of other ways exist to promote entrepreneurship and efficient entrepreneurial investment.