An increasing amount of investment capital is made available by Canada's institutional venture capital firms. The total capital managed by Canadian venture investors is approximately $2.3 billion, a sum that is growing by about $800 million per year in new commitments (Gittins, 1988). While the venture capital market is small compared to investment in mature equity, venture investment has a significant impact on the Canadian small business sector. Venture capitalists are sophisticated investors, combining equity participation with managerial skills. By evaluating proposals for additions to their portfolios, venture capitalists act as filters in the new firm formation and expansion process. This process selects those firms that have the potential for above average financial performance, and thus the potential for above average returns on investment. This translates into high levels of employment creation, exports, and research and development activity (Green et ale 1988).