The most important trend in the Atlantic Canadian startup community last year was that provincial government agencies played a smaller role in financing startups than funds based outside the region and local private venture capital funds.

The June 2014 Entrevestor Intelligence Report, which we’re publishing here today, focuses on startup financing in the region, especially on equity financing for innovative young companies. Providing equity financing for these innovative young companies was until recently the domain of provincial agencies — the Nova Scotia Crown corporations Innovacorp and Nova Scotia Business Inc., and the New Brunswick Innovation Foundation, a not-for-profit that has certain governmental roles.

But part of the plan has always been for these agencies to take a back seat as other sources of financing come into the region. And our data show the provincial agencies accounted for $17.2 million or 78 per cent of the venture capital funding for Atlantic Canadian startups in 2012. Then it dropped to $6.9 million, or 22 per cent in 2013.

Overall, venture capital financing in the region rose to $31.2 million in 2013 from $23.3 million a year earlier. The big reason for the increase is the huge jump in funding from institutions based outside the region. This shows that exterior funding groups are taking more notice of the startup opportunities in Atlantic Canada.

“There’s definitely a different attitude among co-investors coming into the region,” said Patrick Keefe, a partner at Build Ventures. “Their interest started to tick up after Q1 and Radian6 were sold (in 2011) and continued after GoInstant exited (in 2012).”

The research by Entrevestor shows that investments from these venture capital and private equity firms soared last year — to $15.4 million in 2013 from $800,000 in 2012. Last year, BDC Ventures made its first investments in the region in four years, and initiated its convertible debenture program with Launch36. Under that program, it issued $150,000 in convertible debentures to Analyze Re, Eigen Innovations, FoodTender, R17, and topLog.

Build Ventures itself represents the final trend we’re seeing in the venture capital space — the rise of private, local financial bodies. These groups invested $3.8 million in local startups in 2011, but more than doubled their contribution to $8.9 million in 2013.

So are the provincial agencies starting to wind down? Not a chance. The New Brunswick Innovation Foundation has been on a roll lately, booking two exits in the last three years and taking a leading role in the New Brunswick government’s $80-million innovation program.

There’s a review underway of venture capital in Nova Scotia, but no one expects the government to get out of this line of work. And Newfoundland and Labrador is now putting together a fascinating private-public partnership for financing startups — an initiative detailed in the Entrevestor Intelligence Report.

The report provides data on key federal funding programs, and details on Verafin, the Newfoundland company that received $60 million in private equity funding last month. The supplement also features the first directory for the region’s startup community.