The Atlantic regional venture capital fund will be managed by Patrick Keefe, now the Vice-President of Investment at Innovacorp, and include a $5 million contribution from Technology Venture Corp. of Moncton, the three Maritime Provinces announced Wednesday.

The provinces said they will launch the fund with an initial capital of $37.5 million, including investments of $15 million from both Nova Scotia and New Brunswick and $2.5 million from Prince Edward Island. Nova Scotia Premier Darrell Dexter initiated the fund last year by announcing his province’s contribution and inviting the other provinces to participate.

“What we want to do now is find 10 to 12 fantastic deals in Atlantic Canada,” said Keefe, who has greatly accelerated the investments by Innovacorp in the past year or so. He added the fund will probably reach $50 million to $60 million with further contributions, including investment from at least one more private investor.

Keefe said the seven- to 10-year fund will invest in tech, cleantech and some life sciences companies, stipulating that the latter would be more in the medtech space than in drug discovery projects that require tens or hundreds of millions of dollars in investment.  The fund will invest public money in Atlantic Canada, but has the authority to invest the private contribution in other parts of Canada. Keefe said he would use this proviso to build relationships with investors in other parts of the country.

The highlight of the press release yesterday has to be news of the investment by Jon Manship’s Technology Venture Corp. Manship started his fund after selling his company Spielo International to GTECH Corp. of Rhode Island in 2004, reportedly for $150 million. TVC has been quietly investing in companies in the region, and last September joined the New Brunswick Innovation Foundation in a $500,000 investment in Inversa Systems Ltd. of Fredericton, whose technology assesses the strength of metal and concrete structures.

The fact that an entrepreneur and investor of Manship’s calibre is backing the fund demonstrates the confidence of the market in Keefe’s ability to run a VC fund. When the fund was first proposed, the worry was that the manager would be a political appointment and private money would shy away. That was a key consideration because the Business Development Bank of Canada wanted to see a private contribution before it would invest.

“As a region, we have the ideas and the entrepreneurial talent to execute them but one of the issues inhibiting sustained growth is a lack of venture capital,” said Manship in a press release. “We are pleased to participate as the lead private investor in supporting this important initiative to begin to address this challenge.”

People familiar with the matter say Innovacorp and the three provinces are in talks with three more possible public sector investors: the Government of Newfoundland and Labrador, BDC and the federal government, which has set aside $400 million for venture capital investment.

The announcement yesterday is a victory for Jacquelyn Thayer Scott, the Interim CEO of Innovacorp, who inherited the brief as Nova Scotia’s representative in the talks after Clifford Gross departed earlier this year. She has been so successful in the job that New Brunswick and P.E.I. now both recognize Innovacorp as the organizer of the fund, working on behalf of all three provinces, not just Nova Scotia.