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BDC aims to help startups grow into large companies

BDC aims to help startups grow into large companies

Posted by PanamericanWorld on July 19, 2016

The Business Development Bank of Canada — already among the most active investors in Waterloo Region startups — is trying to forge even closer links with early stage tech companies and entrepreneurs in its search for the next Shopify or Stingray.

Jérôme Nycz, executive vice-president of BDC Capital, says the engineers and entrepreneurs needs more capital if another Shopify or Stingray is to emerge from the startup ecosystems here, and across the country.

"This is building Canada's future prosperity," Nycz says.

On Wednesday, BDC launched Premium Fests, a series of festivals dedicated to startups. The first one in Montreal brought together angel investors (individuals who invest in small startups or entrepreneurs), venture capitalists, startups and accelerator centres to share information and best practices, and jump-start collaborations. 

Too many Canadian startups hit $35 million in annual revenue before plateauing, Nycz says. More investment capital is needed to push those firms into the international big leagues.

"You can build a $35 million company in Canada quite easily, but to scale from $35 million to $150 million, that is the challenge," Nycz says. "And I think we have to pay attention to that."

There is a gap in what Nycz calls late-stage financing for growing technology companies that produce big exits, or huge paydays for founders when the companies go public.

"We don't have any large exits in Canada, and we don't have many companies in Canada with sales above $100 million," Nycz says.

That is true for the tech sector in Waterloo as well as across Canada, he says.

"How do you get enough fuel in the tank so they are able to accelerate growth and compete on an equal footing with their U.S. counterparts," Nycz says.

Nycz has been the executive-vice president of BDC Capital, the investment arm of the federal Business Development Bank of Canada, since 2013. He knows the startup scene in Waterloo Region well and is impressed by what's happening here.

"It is outstanding," Nycz says. "I brought my venture capital leadership team to Communitech last week. We had our leadership meeting there."

BDC Capital has contributed to venture capital funds raised by iNovia, Georgian Partners and Real Ventures that are heavily invested in local startups. 

"We are a limited partner in those three, and those funds are the most active in the region," Nycz says.

BDC has made 79 loans totalling $10 million to 40 local startups. BDC Capital has supported 37 companies in the region with about $30 million, he says.

The federal agency also put money into the Garage Fund, which was started by Vidyard co-founder and CEO Michael Litt. Nycz says he was impressed that a group of young entrepreneurs raised their own fund to invest in promising startups.

"The Garage Fund is a good example of identifying a good team," Nycz says. "And we think it could pick the next winner."

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