BDC adds $400 million to cleantech fund

The Business Development Bank of Canada (BDC) is adding a second component of $400 million to its cleantech SME investment fund, set up in 2018 with an initial pot of $600 million.

Martin Vallieres
The Press

Now called the Climate Tech Fund, this second iteration increases to nearly $1 billion the amount of venture capital at BDC that is directed to the cleantech and climate positive impact sector.

The BDC, a federal state bank dedicated to financial and business support for developing SMEs, launched its first fund of 600 million in 2018 in order to “address the lack of venture capital necessary for commercialization and development in the Canadian clean and climate technology sector”.

Four years and 78 venture capital transactions carried out among 50 companies later, BDC management notes that the development risk capital needs of SMEs in the clean technology sector remain considerable.

According to the BDC, Canada currently ranks second in the Global Clean Technology Innovation Index, up from seventh in 2014.

However, “the clean technology sector still only attracts 5% of venture capital investments from businesses in Canada, compared to an average of 14% in other countries with a comparable economy”, points out its President and Chief management, Isabelle Hudon, during an interview with The Press.

Hence BDC’s motivation to continue to “play a leading role in helping Canadian SMEs in the cleantech sector dream bigger and become global champions of their technology,” reads its press release. presentation.

BDC also relies on its relationships with private venture capital investors to generate a high multiplier effect with its initial investments in SMEs with good development potential.

“In fact, it is in the cleantech sector that we have so far obtained the highest multiple of attracting private capital in addition to our own capital, in the order of six dollars from the private sector for one dollar from from BDC. This is three times more than the average of two to one that is measured among all the sectors of activity of our BDC Capital division,” underlines Mr.^me Hudon in discussion with The Press.

Direct and indirect investments

The BDC’s financial boost to clean technology SMEs is provided mainly through two types of direct investment: in equity securities or in debt securities convertible into equity of the companies concerned. BDC also invests indirectly through investments in investment funds managed by third parties.

Among the Quebec SMEs that are in the portfolio of the first component of BDC’s clean technology funds, we note two companies from the Montreal region: NanoXplore, producer of graphene technological materials, as well as GHGSat, which develops monitoring technologies. satellite of polluting emissions.

In the Quebec region, BDC’s clean technology fund is invested in Flo, a manufacturer of electric vehicle charging stations, as well as in the company H₂O Innovation, a specialist in advanced water treatment technologies, and at Flyscan, a company specializing in petroleum product leak detection technologies.