“The evolution of the Canadian ICT industry has reached a tipping point”
Canada continues to see an increase in investment activity around the information and communications technology (ICT) sector. According to the CVCA’s H1 2017 VC & PE Canadian Market Overview, a massive 68% of all venture capital deals in the first half of this year were in the ICT sector. Tech also saw the biggest share of total VC dollars, with $1.1B invested across 158 deals.
Interestingly, there’s also been an increase of Canadian private equity investment in the sector as well. ICT companies captured 17% of all PE deals in the first six months of 2017—a 7% increase compared to 2013.
The Business Development Bank of Canada (BDC) and its finance solutions division, BDC Capital, also have a keen interest in Canada’s booming ICT sector. Started in 2011 and initially focused on Seed and Series A investments, the BDC IT Venture Fund migrated its approach reflecting the market and is now investing in Series A and Series B.
The Fund’s team includes entrepreneurs, founders, operators and investors. The infusion of experts and industry leaders combine to deliver world class results.
Robert Simon, Senior Managing Partner, BDC IT Venture Fund, says Canada’s in a pivotal moment—particularly the ICT sector.
“The evolution of the Canadian ICT industry has reached a tipping point. World class talent, a critical mass of companies and ground-breaking research have combined to create fertile ground for technology investing,” explains Simon. “The missing ingredient to the continued ascent of this ecosystem is the right capital, at the right time with the right team.”
There’s approximately ten thousand ICT companies that currently call Canada home, with an average annual revenue of over $2M based on BDC Capital’s own primary data collection. Simon says the Fund meets over a thousand of these companies on an annual basis and, has interacted with nearly five thousand companies over the last few years.
The BDC IT Venture Fund is a thesis and data-driven investment vehicle. Simon breaks down their core hypotheses.
“One, financial services will be embedded in consumers’ and businesses everyday applications and processes and; two, billions of industry specific datasets exist that, once combined with machine learning, can transform industries, processes and applications.”
Simon elaborates on how the BDC IT Venture Fund mines for the right partners.
“We utilize a data-driven approach and fundamental research to unearth hidden opportunities within this diverse ecosystem that embody or leverage our theses,” says Simon. “This approach of investing at the accelerating growth stage of a company’s’ journey means that risk adjusted returns in the latest fund are top quartile according to Cambridge Associates.”
Once invested, the Fund takes an active approach delivering value through multiple active roles. The Fund also typically leads or co-leads the investment and takes a seat on the board.
In collaboration with entrepreneurs, BDC Capital adds value through activities that don’t end with strategic analysis. Simon details the advantages of the fund.
“The Fund’s readily available global business development network is leveraged to enable partnerships and revenue for the portfolio company. We offer a full spectrum of capital markets partnerships that enhances options for entrepreneurs while technical experience is brought to product evolution and development. The fund also engages a full-time talent manager who works actively to identify candidates that can enhance management teams.”
Simon expects the Fund to be active and effective moving forward.
“The future is bright for the Fund with additional capital and partnerships on the horizon.”
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