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BDC announces the creation of its new $150-million Sustainability Venture Fund dedicated to investing in businesses developing technologies that will support Canada and the world to meet sustainability and climate targets.
The Fund is a key component of BDC’s commitment to sustainability and part of its contribution to help advance Canada’s 2050 net-zero ambition. It will invest in technologies in line with four key United Nations Sustainable Development Goals (SDGs) leveraging Canada’s strengths and areas of opportunity: sustainable communities and cities, responsible production and consumption, climate action as well as clean and affordable energy.
Led by Joseph Regan, current Managing Partner of BDC Capital’s Industrial Innovation Venture Fund, this new Fund will be dedicated to making equity investments in sustainability-oriented businesses with SaaS, hardware-enabled software, and software-led business models. It will invest in seed to Series A and B, highly scalable and economically durable Canadian companies that are creating sustainability-enhancing technology systems, with light capital requirements over time.
This new Fund complements BDC Capital’s existing $400-million Climate Tech Fund II, which offers equity investment and flexible financing for clean and climate tech firms with higher, more intensive capital needs and those that are building technologies demonstrating material GHG emission reduction potential. With these two funds, the Bank now offers solutions broadly encompassing the entire spectrum of capital needs for technology firms oriented toward the net-zero transition.
“For us at BDC, it is important to translate our commitment to sustainability into tangible and impactful initiatives,” said Isabelle Hudon, President and CEO of BDC. “Innovation is imperative to speed the transition to net-zero, as much as it can spur the growth of our economy. With the new fund, we have an immense opportunity to ensure that Canadian start-ups have access to the capital they need to compete and drive meaningful impact to Canada’s journey to reach net-zero and meet its sustainability targets.”
See related article: The RBC Climate Action Institute Created to Inspire Action for Canada’s Net Zero Journey
“Climate and environmental sustainability will require trillions of dollars of investment globally over the coming years and forging our net-zero future will only be achieved by building a more coordinated approach. We need every actor’s expertise, know-how and resources aligned and in motion,” said Jérôme Nycz, Executive Vice President at BDC Capital. “This new fund allows us to help cultivate a nascent industry in Canada which has tremendous market potential globally, providing innovative solutions to operationalize resiliency and sustainability in an evolving world economy.”
Statistics show that despite the attention they attract and their impressive growth potential, Canadian start-ups in these sectors have traditionally been underfunded when compared with their competitors outside the country. For example, in 2021 only 5% of Canadian VC investment went into environmental sustainability, versus the global average of 14%. Furthermore, it is estimated that the scale of overall investments required for Canada to reach net-zero by 2050 is ranging from $60 billion to $140 billion per year on average.
“Sustainability technologies will be at the forefront of innovation all around the world. Over the coming decades, we will witness an acceleration of adoption across sectors and industries,” said Regan. He added “It is a privilege to be working to ensure Canadian innovators have the capital they need to develop and commercialize world-class technologies that have the potential to tackle the most urgent challenges of our time.”
Sustainability is a core pillar of the Bank’s renewed strategic vision to fulfill its role as a development bank even more ambitiously over the next few years. Acting as a catalyst to inspire action, BDC will work collaboratively to help entrepreneurs build strong and green businesses. This includes providing access to the capital, advice and networks needed to thrive, and helping build a clean, low-carbon, circular economy in line with Canada’s 2030 and 2050 climate targets. The Bank has committed more than $1.8 billion to sustainability initiatives, including $1 billion for its Cleantech and Climate Tech Funds.