$150M venture fund could help Waterloo tech firms

Business Development Bank of Canada (BDC) Capital announced a new $150 million investment fund on Wednesday that will focus on companies that need mid-level funding.

Waterloo software developer Axonify has already benefitted from BDC Capital investment


A new $150 million venture fund has been launched to help more mature startup tech companies, like those in Waterloo region, which often find it hard to source mid-level funding.

The Business Development Bank of Canada (BDC) Capital announced the new initiative on Wednesday. It is the second fund by BDC's capital IT venture fund group, doubling their total funding to $300 million.

Eleven investments have already been made out of the fund, including money for Waterloo software developer Axonify.

"The Kitchener-Waterloo area … has been a hotbed of entrepreneurial activity and really, over the last five years, you've got over 1,800 start-ups happening," Ron Warburton, a senior manager with the venture fund group, told The Morning Edition host Craig Norris Wednesday.

"One of the things we're looking to do with this fund is take all those companies that have raised the seed money and are looking for later-stage fund with the intention to grow them into the larger companies that you have in Waterloo."

Fund will help companies compete

There is a gap in mid-level funding for new businesses, Warburton said. This could be because helping out a brand new startup is an exciting time investors want to be part of, he said. But it also means many Canadian companies have had to turn to American investors to fill the need for what is called A- and B-round funding.

Rob Warburton is a managing partner with the BDC Capital IT venture fund. (BDC Capital)

The news of a fund like BDC's is great for entrepreneurs out there who has raised seed money, Warburton said, because it means they have "another opportunity to reach out and to raise that next round of funding, an A-round or a B-round, that's so important to take them to the next level to compete on a worldwide basis."

'Canada needs more anchor companies'

The federal government has said it will review a report released Tuesday that said building small and medium tech firms into billion-dollar companies is a key challenge for Canada's economy.

The report was commissioned by the federal and Ontario governments.

As well, earlier this month, Wind Mobile founder Tony Lacavera announced he started a $100 million fund to keep Canadian tech firms in Canada.

These are good steps to building a better tech industry in Canada, but while the federal government can aid the industry, Warburton said it is the the private sector that needs to step up to help businesses grow.

"Canada needs more anchor companies. It needs more of the BlackBerrys and OpenTexts so that we can spawn and spin out additional companies and be able to, essentially, export our technology worldwide," he said.