BDC Launches New $150-Million Sustainability Venture Fund to Further Enable the Transition to a Net-Zero Economy
Montreal, April 18, 2023 – BDC today 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 Canadian companies developing sustainability-enhancing technology systems with the potential to deliver indirect GHG emission reductions.
The Fund will focus on SaaS, hardware-enabled software, and software-led companies. It will invest in seed to Series A and B highly scalable companies with capital and asset light business models.
“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.”
“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-oriented 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.”
The Sustainability Venture Fund complements BDC Capital’s existing $400-million Climate Tech Fund II, which offers equity investment and flexible financing for climate tech firms building technologies that have the potential to deliver direct material GHG emission reduction. Climate Tech Fund II focuses on hard technologies with more intensive processing, manufacturing capacity or infrastructure, and higher capital needs over time.
The clearest differentiators between both funds are the business models of the companies that they invest in, and the capital that they require. Whereas the Sustainability Venture Fund targets asset-light software businesses, the Climate Tech Fund II focuses on companies that are capital intensive and asset heavy. 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.
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.
About BDC Capital
BDC Capital is the investment arm of BDC, Canada’s business development bank. With over $6 billion under management, BDC Capital serves as a strategic partner to the country’s most innovative firms. It offers businesses a full spectrum of capital, from seed investments to growth equity as well as ownership transition solutions, supporting Canadian entrepreneurs who have the ambition to stand out on the world stage. Visit bdc.ca/capital.