The great LSIF myth

4 responses

  1. Alpha says:

    I don’t think it’s fair to compare returns for a private equity portfolio against that of diversified financial services companies. I think you would have to compare an 8-10 year ROR for an LSRF versus a regional-based or small-cap focuses private equity fund launched in the 1998-2000 time period.

    I actually think that killing off the LSIF is the best thing for Vengrowth, Growthworks, and VentureLink. I have had the opportunity to work in both the retail-focused and institutional focused investment business (fund-of-hedge-funds). And let me tell you, it’s like night and day. In retail, operating costs are easily 2-3x higher than institutional. Considerable and ongoing time commitment by the top staff is require for non-investment activities (marketing, regulatory, etc) versus institutional commitments (quarterly letter, dealing with sophisticated LPs, etc).

    I hope Vengrowth, Growthworks, and VentureLink all take the opportunity presented by the new Ontario Venture Capital Fund, by raising their first institutional-type fund, and transition their firms away from the retail business.

  2. matt roberts says:

    Mark, Another Great Post.

  3. Mark McQueen says:


    I included LSIF returns since inception where available, but that isn’t really the point I was making. Retail investors can’t invest in regional small cap private equity funds, so the returns aren’t as relevant to me as what the true alternatives were. Given how fixated folks are with brand, won’t our Provincial Finance Minister be surprised to learn that investors would have been better off investing in an LSIF Fund 3 years ago rather than one of these global powerhouse financial institutions – and that’s without considering the tax rebate.

    The Province benefits from the job creation that otherwise wouldn’t have happened. Joe/Jill Retail benefit from the gains in the value of their units.

    Classic win-win.


  4. Ian Graham says:

    excellent post Mark and great homework.

    I had always thought that the cancellation of the LSIF did a huge disservice to tech in Ontario. The funds were cancelled based on poor performance and in fact performed better only makes a bad situation somehow worse.

    both Quebec and BC which have programs similar to LSIF are experience more growth in their knowledge based economic sectors than Ontario. Perhaps the coming recession will give the powers that be cause to reflect on their dismal knowledge based economic policy.

    Throwing millions of dollars at a muscle car plant when gas prices are sky rocketing isn’t a stellar example of sound economic policy.

Leave a Reply

Your email address will not be published. Required fields are marked *