CIBC’s new envelope of capital is targeted mostly at funds in the United States.
CHRIS HELGREN/Reuters
With competition for venture capital funding heating up across the country, Canadian Imperial Bank of Commerce is aiming to expand its business in the United States, earmarking $300-million to invest mostly in U.S.-based venture capital and growth equity funds.
The bank announced a total capital commitment of $450-million on Wednesday, extending a strategy that has already seen CIBC Innovation Banking – the unit catering to tech and life-sciences companies, including startups – invest about $150-million as a limited partner in a dozen Canadian funds over the past few years.
The Toronto-based bank started making similar investments in U.S. venture capital fundsthis summer. And as Canada gets more crowded, CIBC Innovation Banking president and executive managing director Mark McQueen said he believes his unit has the potential to break into the top five U.S. financiers of tech and life-sciences companies.
“Dominating in Canada is impossible with, obviously, so many banks sharing a desire to focus on the early-stage economy,” he said in an interview. “But the U.S. is a much more mature and larger market, and a much bigger pie.”
Domestic competition has increased in technology banking since CIBC’s 2018 acquisition of Wellington Financial, which was led by Mr. McQueen. Rival banks have responded as demand for equity financing and venture debt from the burgeoning tech sector has exploded, fuelled by low interest rates and surging use of e-commerce, software services and health care technologies during the COVID-19 pandemic.
CIBC’s new envelope of capital is targeted mostly at funds in the United States that provide later-stage growth equity funding and participate in Series C funding rounds raised by maturing companies. As CIBC makes a broader push into the U.S. market through its CIBC Bank USA arm, after its 2017 acquisition of Chicago-based PrivateBancorp, its innovation banking unit sees a chance to grab a larger share of the highly competitive U.S. market.
“This next envelope will largely go to our best U.S. venture capital relationships,” Mr. McQueen said. “The last 24 months, we’ve certainly made lots of inroads in Canada … but our next push is to deepen the U.S. relationships.”
The bank’s strategy to invest in venture capital funds is one way CIBC aims to strengthen its ties to venture capital firms that can refer companies in need of growth capital to the bank. CIBC intends to make further investments in Canadian-led funds, but by doubling its capital commitment to venture fund investing it is aiming squarely at the U.S. market.
“Investing in the funds themselves, which is a five- or 10-year commitment, is a great way to tighten that relationship over a generation,” he said. “It’s a different way of embracing the ecosystem.”
The unit has been expanding rapidly, increasing its roster of clients to 275 from 85 in 2019. It has added offices in cities such as Boston, Chicago, Atlanta and Austin, Tex., for a total of 11 outposts in North America. Most recently, the unit hired a managing director in London to serve clients abroad, bringing its employees to 52, with six more joining this month and plans to nearly double its staffing levels to 95 over the next year.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
