The government of Newfoundland and Labrador on Thursday embraced the startup economy by announcing a $10 million investment in Build Ventures and the creation of a new VC operation, the Venture Newfoundland and Labrador Fund.

In delivering the 2014 budget, Finance Minister Charlene Johnson said the government aims to support innovative businesses with high growth potential.

“Access to venture capital in emerging growth sectors, such as ocean and Arctic technology and other knowledge-based industries, will improve the global competitiveness of companies operating in those sectors, strengthen employment opportunities and drive economic diversification in Newfoundland and Labrador,” she said in the speech.

Managed by Rob Barbara and Patrick Keefe, Build Ventures launched in 2013 with investments from the provinces of Nova Scotia, New Brunswick and P.E.I., as well as the Business Development Bank, Moncton-based Technology Venture Corp. and the founders. The total funding of $48.5 million was sufficient to get the fund off the ground, but Barbara and Keefe never made a secret of the fact that they wanted more funding from both public and private sources.

In particular, they wanted funding from Newfoundland and Labrador so that Build would be a pan-regional effort. Meanwhile, in St. John’s, several influential business people were encouraging the government to make the investment in Build to encourage a greater flow of VC money into Newfoundland startups. (Disclosure: Both Build Ventures and the Newfoundland and Labrador Department of Innovation, Business and Rural Development sponsor Entrevestor.)

The fund has had an active presence in Newfoundland in the past year, sponsoring the activities of Startup NL and other groups related to the startup community.

Keefe said this morning that Build has now raised $65 million and is no longer raising money for its first fund. As well as the Newfoundland and Labardor government, the it has received additional funds from one institution and two individuals.

The Newfoundland and Labrador government is going one step further and setting up a provincially based venture fund, the Venture Newfoundland and Labrador Fund. Johnson said the details will be revealed later, but it can be assumed the goal will be to make seed investments in local startups with the hope of attracting co-investors, especially in later rounds.

The Venture Newfoundland and Labrador Fund will be the fourth VC fund overseen by a provincial government in the region. The others are the Innovacorp, New Brunswick Innovation Foundation and Nova Scotia Business Inc.

"We are delighted to have participation from Newfoundland and Labrador," said Keefe. "Given our region's size, a coordinated approach to early stage investment makes sense. We are also excited by the announcement of the Venture Newfoundland and Labrador Fund. We look forward to working closely with that fund once its launched."

Build Ventures has so far invested in three companies – Fredericton- and Washington-based Introhive, Halifax-based Affinio and Fredericton-based Smart Skin Technologies.