There’s a quiet revolution taking place in seed funding in Newfoundland and Labrador.

When Newfoundland and Labrador Finance Minister Charlene Johnson unveiled in her spring budget that the province would participate in two venture capital funds, she was signaling her government’s commitment to improve funding for companies on the Rock.

The province’s government is on board with a strategy to develop more startups and is therefore radically altering the seed funding of young tech companies.

Most visibly, the province has announced it will invest $10 million in Build Ventures, the regional VC fund. More quietly, it is working with GrowthWorks Atlantic, the Newfoundland and Labrador Angel Network and an as-yet-unnamed financial institution to develop the Venture Newfoundland and Labrador Fund. Complementing this effort, the government will soon allow private investors in the Venture fund to receive equity tax credits for the fund’s investments. In total, it will mark a huge advance in funding startups in the northeastern province.

“I hope that we can develop a community of funding societies here in Newfoundland and Labrador and across Atlantic Canada so that more of our entrepreneurs can be supported and help to grow our economy,” said Mark Dobbin, the founder of Killick Capital, one of the province’s prime funding bodies.

The most visible announcement so far was the investment in Build Ventures. The other investors are the three Maritime Provinces, the Business Development Bank and private investors, who together with Newfoundland have committed a total of $65 million.

Build so far has invested in tranches of $1.5 million, so the Newfoundland and Labrador government also wants to improve financing in the earlier phases of a company’s development.

An official with the provincial government, who asked not to be named, said startups in Nova Scotia and New Brunswick have an easier time finding seed funding than those in Newfoundland because of bodies like Innovacorp and the New Brunswick Innovation Foundation.

This Venture fund is meant to fill that gap, but it will be structured differently to allow maximum fire power. First, it will have a private fund manager in GrowthWorks Atlantic. GrowthWorks already has several investments in Newfoundland, such as Virtual Marine Technologies, adfinitum Networks and ClearRisk.

Members of NLAN will also be invited to invest in the fund. People in the community say NLAN has previously had trouble finding lead investors to identify target companies, draw up terms sheets and lead the funding. In the future, such tasks would be taken over by the fund manager. And the angels will be allowed to receive equity tax credits based on the fund’s investments. Newfoundland and Labrador’s current equity tax credit is granted only to individuals investing directly in Newfoundland companies.

The official said the government will contribute at least as much to this fund as it did to Build Ventures, meaning the new fund will be substantially more than $10 million. The hope is there will be a substantial body of money at the inception, and over time the government’s role in the fund will diminish as it attracts more private capital.

“We really feel that this is an area we have to build up to develop these great young companies,” said the official.

This article first appeared in our Spring 2014 Entrevestor Intelligence Report, which can be found here.