BDC Capital is a committed investment partner. Every day, we work with promising entrepreneurs and management teams, as well as investors in both the private and public sectors, to bring great ideas and smart capital together.
Our selection criteria
It is important to understand that venture capital investment is a highly specialized form of financing. The fact is, it is not right for all businesses. This means that BDC Capital has to be extremely selective in matching the right financing to the right business opportunity. On average, we will review more than 1,000 business plans per year for prospective ventures, apply our rigorous selection criteria, and then partner with the most promising companies. We use the following selection criteria when assessing a company’s potential for venture capital funding:
Your company must have a distinct, sustainable and competitive advantage
Your company has intellectual property, substantial proprietary knowledge and technology ownership that provide significant barriers to entry as well as freedom to operate within the targeted vertical sector.
A technological platform
You have developed, or are currently developing, technologies with broader applications than a single product or market.
A highly skilled and committed management team with entrepreneurial flair
You may not have a full team in place at the time of our investment, but you are market-oriented and have the sound business instincts and experience that fit with your new role in the proposed venture. A commitment to partnership is key.
A clearly defined and realistic business plan
You have a clear strategy for success. You can quickly position your company in the competitive arena, and your highly focused management team is able to adapt to change.
A market opportunity to support fast and long-term growth
Your market is large enough to sustain many players with substantial revenues and high growth rates. The market must be international in scope, with a clear path to commercialization.
Dominant leadership in the marketplace
Your business could lead to a merger, strategic acquisition, or listing on a public exchange.
A readily perceivable, constructive exit strategy
We seek return on investment commensurate with risk. Our exit is normally through an Initial Public Offering (IPO), a strategic sale or, in the case of companies with a strong recurring cash flow not wanting to sell or list their company, a leveraged management buy-out. We prefer investment opportunities that offer a three-to-five-year exit window.
A syndicate of venture capital investors
Building your company into an industry leader will require large amounts of capital and a shared goal of creating value. That is why we prefer to partner with other institutional funds that share our selection criteria and investment focus.
Inevitably, some prospective opportunities do not meet our selection criteria or present the type of growth that is suitable for venture capital funding. But as part of our commitment to helping Canadian ventures achieve commercial success, we immediately refer companies that don’t meet our criteria to the proper financing alternative within the bank.
How we invest
We invest strategically because we believe in smart money. Typically we will invest as part of a syndicate either as lead, co‑lead or follower. Our initial direct venture investments usually range from $250,000 to $3,000,000 and are part of a financing round that may range from $1,000,000 to $10,000,000. It takes time and patience to grow a world-class company, often requiring multiple rounds of investment and this is something that we include in the planning process.
To help our partners achieve commercial success, we provide unfettered access to our team of experts. Often, we will seek representation on the Board of Directors of our investee companies, and we encourage sound governance practices through the creation of a strong and well-balanced Board of Directors. We never own more than 49% of a company’s shares.