BDC’s New $250m Innovation Fund Aims To Keep Canada Competitive

BDC Capital today announced that it is launching a $250 million Industrial Innovation Venture Fund targetting early to late-stage firms in agriculture and food technologies, resource extraction technologies, and advanced manufacturing. It is one of the BDC’s largest Canadian venture capital funds since the inception of its ICE Venture Fund in 2001.

Via BDC,

“Industrial sectors tend to be slow to digitalize, yet these sectors often represent areas where Canada has a global competitive edge,” said [Jérôme Nycz, Executive Vice President, BDC Capital].

“The fund’s goal is to meet the urgent demands of the next generation of forward-thinking business leaders who want to participate in the industries that drive the Canadian economy.”

Kim Furlong, CEO of the Canadian Venture Capital and Private Equity Association (CVCA), welcomed the news saying,

“With this new $250 million fund, BDC Capital is encouraging innovation in traditional industries where venture capital has not yet engaged at a large scale in Canada,” said Kim Furlong . . .

Despite significant growth in Canadian venture capital, Ms. Furlong has a point. 59% of Canadian venture capital dollars went towards Canada’s ICT sector in Q1 2019, leaving other companies—such as cleantech and life sciences firms—to fight over the scraps.

Industrial Innovation Venture Fund Builds Off ICE

Though meant to stand entirely on its own, BDC’s Industrial Innovation Venture Fund shares a strong commonality with the ICE Venture Fund: both seek to modernize Canada’s legacy sectors.

To date, nine of the BDC’s ICE Venture Fund companies have achieved successful exits. One such success story is Bit Stew, a data integration platform for the industrial internet. Bit Stew was acquired by GE for US$153 million in 2016, just one year after the BDC invested in them under the ICE Venture Fund.

Another example of a successful ICE Venture Fund company is quantum-computer manufacturer D-wave Systems, who the BDC invested in back in 2002. D-wave has since then commercialized its technology and sold products to some of the most renowned organizations in the world, including Lockheed Martin, NASA, and UCLA.

Given the success of the ICE Venture Fund thus far, the Canadian industrial tech sector clearly warrants a deeper focus from investment banks like the BDC.

Canadian Venture Capital Grows With Industrial Innovation Venture Fund

With Canadian competitiveness continuously in question, investment programs like the BDC’s Industrial Innovation Venture Fund are more important now than ever. They not only encourage Canadian companies to invest more into R&D, but they inspire confidence in overseas investors. Though the Industrial Innovation Venture Fund and the ICE Venture Fund may have the potential to overlap, the end result will likely be a more well-defined ecosystem for Canadian venture capital—a necessary element for the continued growth of markets like the TSX Venture.