MONTREAL, Feb. 27, 2014 /CNW Telbec/ - Data released today by CVCA - Canada's Venture Capital & Private Equity Association shows a 31% increase in venture capital investments in 2013, with total venture capital financing reaching a six-year high of $2 billion. Jérôme Nycz, Executive Vice President of the Business Development Bank of Canada's (BDC) Subordinate Financing and Venture Capital divisions was upbeat about these latest numbers.
"The increase reported by CVCA is very encouraging, and it confirms a positive trend since the lows of 2010," says Nycz. He believes 2013's positive results are the fruits of an ecosystem coming together. "The fact is that venture capital has a real, tangible impact on Canadian businesses. We have been working hard in recent years with our partners to further stimulate Canada's venture capital ecosystem."
"It's clear that our venture capital ecosystem continues to gain momentum. We are excited by the impact our strategy has had to date." As VC investments hit rock bottom in Canada in 2010, BDC Venture Capital stepped up to the plate, conducting a thorough study of the situation and developing a multifaceted strategy for tackling the industry's biggest challenges.
Attracting and developing top-tier fund managers
An important part of its strategy included increasing its activities as venture capital Fund of Funds, backing Canada's established venture capital fund managers as they create globally-competitive investment returns by finding and backing the best Canadian entrepreneurs. In 2012, for example, BDC Venture Capital's Fund of Funds division committed $103 million to five venture capital funds, and those fund managers were all active investors in 2013, contributing to the increase reported in the CVCA data. BDC Venture Capital also financed, often as lead investor, several emerging Canadian early-stage and Series A funds, such as Version One Ventures and McRock Capital.
In addition, BDC Venture Capital looks to attract more top-tier foreign venture capital funds to Canada if they are willing to make commitments to being an active part of the Canadian ecosystem. EnerTech Capital of Pennsylvania and Sanderling Ventures of California, which recently established offices in Canada, represent two success stories of 2013. Interestingly, in today's report, CVCA indicates that foreign VC investments in Canada have more than doubled since last year.
Investing directly in promising Canadian tech companies
Another major prong of this strategy has been the creation of three new venture funds that are now actively investing directly in the IT, energy/cleantech and healthcare industries. Two of these funds were launched in 2013, making an additional $225 million of new money available for promising Canadian companies. According to CVCA's data, BDC Venture Capital invested nearly $75 million in 86 direct investments in 2013, making it the largest1 and most active venture capital investor in Canada.
Among CVCA's findings, the number of Series A and of seed and early-stage financing rounds, saw a 75% increase over 2010. This included investments made as part of BDC Venture Capital's efforts to help fill the early-stage financing gap by supporting Canada's top accelerators and most promising start-up companies. Its convertible note program, which invests an initial $150,000 in graduates of select start-up accelerators, disbursed $5.3 million in 2013 to 35 Canadian start-ups.
Helping increase private sector investments
In a new and separate effort, BDC Venture Capital is also facilitating the implementation of the Venture Capital Action Plan (VCAP) on behalf of the Government of Canada by providing independent expertise, undertaking due diligence, supporting negotiations with funds and other investors, and assisting in the deployment of VCAP investments. The program is a $400 million strategy launched in January 2013 to help increase private sector investments in early-stage risk capital. The BDC VCAP structure is responsible for channelling the Government's capital into new private sector led Funds of Funds being created, such as the Northleaf Venture Catalyst Fund, as well as directly into four existing high-performing venture capital funds selected under an open competition held in 2013.
About BDC Venture Capital
With more than $1 billion under management and more than 25 years of industry experience, BDC Venture Capital is an investor of choice focusing on IT, health, and energy/clean technology companies, as well as venture funds, with high growth potential. From seed through expansion to exit, our mandate is to help build outstanding Canadian companies, while working to create a sound financial ecosystem for Canadian technology ventures. Find out more at www.bdc.ca/vc or on Twitter @BDC_VC.
1 Largest in terms of market share (19%)
SOURCE: BDC Venture Capital
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Manager, Public Relations
Business Development Bank of Canada
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