According to a letter shared by the Canadian Venture Capital and Private Equity Association (CVCA), BDC Capital today launched the BDC Capital Bridge Financing Program meant to support venture-backed companies with matching investments.
The idea behind the program is to support Canadian companies impacted by COVID-19 that may not qualify for many of the existing federal government relief measures. Through the program, BDC is set to invest alongside venture firms and, according to the CVCA, BDC Capital will also accelerate more capital into General Partners (GPs) in Canada as well as increase its co-investment activity.
According to the CVCA letter sent to members and obtained by BetaKit, BDC Capital, the investment arm of the Business Development Bank of Canada, may match, via a convertible note, current financing rounds being raised through “qualified existing and/or new investors made in an eligible company.”
The program is something that the CVCA has been calling for, along with a number of other measures it hoped government would take to better support the innovation sector. Last week, The Logic reported that such a program was in the works and sources that spoke to BetaKit on background confirmed that BDC and the CVCA had been in talks and that a program much-aligned with the CVCA’s recommendations was imminent. Notably, BDC Capital executive vice president Jérôme Nycz is on the board directors for the CVCA.
In its letter, the CVCA noted it is pleased that BDC Capital has launched the program, adding that it is “ideal for high potential companies who have investor syndicates that are willing to support them.”
According to the letter, in order to be eligible companies must be Canadian-based, venture-backed, and have raised at least $500,000 in external capital before applying. Importantly, companies must also be specifically impacted by COVID-19.
It is noted that any matching investment from BDC Capital will be subject to due diligence review, agreement on terms of the investment, and approval by a BDC investment committee.
The CVCA claimed BDC Capital has already been in touch with some of its investment partners, but all venture capital firms are welcome to see if they are eligible for the program. Startups are being encouraged to speak to their shareholder or investors and companies directly in BDC Capital’s portfolio should speak to their partner.
BetaKit has reached out to BDC Capital and the CVCA for comment.
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