The Nova Scotia government on Wednesday resurrected its plan to establish another venture capital fund in the province, and is seeking a private partner to lead the fund and most likely invest in it.

The government of Stephen McNeil first mooted the possibility of a new fund about two years ago. The VC community in and outside the region had expected a request for proposals, or RFP, in the winter of 2014-15, but none came through two winters.

Then the government earmarked $25 million for a new VC fund in the 2016-17 budget, and on Wednesday announced that it would spend about a year finding a private sector partner and establishing the new fund.

“When businesses have better access to capital, it means more jobs for Nova Scotians,” said Business Minister Mark Furey in a statement. “The creation of this fund will mean stronger communities and more opportunities for young people to live and work here in Nova Scotia.”

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The statement said Innovacorp, the government owned early-stage VC fund, would lead the search for the partner. It will be backed up by a selection committee comprising:

–- Rob Barbara, general partner with Build Ventures;

–- Charles Baxter, vice-president of investment with Innovacorp;

–- Dominique Belanger, managing director of BDC Capital;

–- Gilles Duruflé, the consultant whose 2014 report recommended changes in the funding ecosystem in Nova Scotia;

–- And Bernie Miller, senior executive adviser for the province.

The government would like the fund to be established in 2017.

The strong growth of startups in Atlantic Canada has ramped up demand for investment capital, and the success of companies in the region has piqued the interest of venture capital funds from outside the region. I was surprised at the Breakthru dinner in Fredericton 15 months ago when two VC fund managers from outside the region were talking about the Nova Scotia RFP and when it might come.

From the outset, people familiar with the project have said the province does not simply want someone who can manage a fund in Halifax. It wants a party that will bring its own capital to the fund, and possibly attract money from other parties, known as limited partners. That means the $25 million commitment from the province could turn into a $50 million or $75 million venture capital fund. With the private money, it would also have a mandate to invest outside of Nova Scotia, which would help the fund to build partnerships with other investors.

The announcement comes as the current VC bodies based in Halifax could reach the point in a year or two where they will be constrained in making new investments. Innovacorp has been investing about $5 million a year and is approaching the point at which it will need new funds, a few exits, or a new mandate. Build Ventures, the three-year-old privately managed fund, has invested in about a dozen companies. Again it could make a few more new investments, and then will have restrict itself to follow-on investments until it raises a new fund. GrowthWorks Atlantic has not raised money in years and has signaled that it is managing its existing fund rather than making new investments.

Disclaimer: Build Ventures and Innovacorp advertise on Entrevestor.