BDC Fact #3
For many entrepreneurs, the BDC has played a very positive role in the development of their business. In my experience, no group personifies this more than the BDC Venture Capital team.
One great story involves Bluestreak Technology, a Wellington Financial Fund III portfolio company. BDC has been involved as an equity investor for some time, along with FTQ and a U.S. seed stage VC fund. When called upon, BDC’s investment professional (Steve Abrams) has played the role of stand-in CFO, Board member, investment banker, chief negotiator and so forth. The natural things that you’d expect a VC to do when someone needed to step into the breech. In my mind, without the positive involvement of BDC’s VC group, Bluestreak may not have been around long enough to get to the stage where it could raise a US$20 million Series D round earlier this year. And what they are doing for customers like Orange appears to blow away the competition.
And Bluestreak isn’t the only company that benefits from BDC’s equity capital. For their 2007 fiscal year, for example, BDC Venture Capital authorized 68 direct investments totalling $106 million. To give you a sense of just how important those dollars were, consider this. For the 12 month period ending March 31, 2007, about 244 VC deals closed in Canada during that period where Canadian VC invested in Canadian firms: $1.068 billion in total was raised for these firms. That means BDC had a role in about 25% of those deals and put up about 10% of the capital for all Canadian-based VC funds. Now that is impact.
They also put about $45 million into three different VCs themselves via BDCs Fund-of-funds program. By their own guess (according to the 2007 BDC Annual Report), these $151 million of direct and indirect VC dollars leveraged $690 million from other investors. With only $1.4 billion flowing into Canadian firms from local and foreign VCs during that 12 month period (the $1.068 billion is a subset), that $690 million represents a very high percentage indeed of the $1.4 billion pie; even if it’s half right, they’re still big players on the scene.
One trait worth mentioning is the tradition at BDC’s VC group that they don’t lead Series A rounds (or later for that matter). You find them leading the charge on seed-stage deals, but when the rounds get larger or the companies mature, BDC Venture Capital is assiduous in ensuring that others lead the financings. A nice complementary touch, and one that very much fosters a collaborative domestic VC market.
Even if they represented “just” 10% of domestic VC investment dollars for the 12 months ending March 31/07, it is hard to imagine a Canadian VC scene without them in the mix. With ever-fewer VC doors to knock on (see post “Ontario politicians asked to address deteriorating VC climate part 2“, October 26-07), they play an important and positive role without a doubt.