At almost every press conference since social distancing measures have been applied, the federal and provincial governments have been revealing a series of economic measures to relieve the businesses affected by the COVID-19 pandemic. However, a lot of these programs’ eligibility qualifications have not been designed with venture-backed startups’ realities in mind. It has left them out of the relief funds they so desperately need. However, BCD Capital announced today a new funding program which may bridge the gap for some such venture-backed startups.
On April 9, BCD Capital soft launched its new Bridge Financing Program through a letter from the Canadian Venture Capital and Private Equity Association (CVCA). With this new co-investment program, BDC Capital will match investments made by qualified venture firms who are CVCA members in startups on a 1:1 basis, with a minimum of $250,000 and a maximum of $3,000,000. BDC Capital will invest using convertible notes, whether the financing round is a debt or equity round. It has not yes announced any discount rate, nor whether a valuation cap will be applied.
The Bridge Financing Program is addressed to startups already backed by BDC Capital and its affiliates, but also to startups who have not received BDC funding in the past. To be eligible, startups must be Canadian-based. They need to have raised at least $500,000 from venture firms in the past. They also need to be able to demonstrate that their operations have been negatively affected by the COVID-19 pandemic. The financing round must allow the startup to have a runway of at least 18 months following closing. BDC Capital will prioritize its investments based on the urgency of each applicant’s runway.
With the Bridge Financing Program, BDC Capital’s goal is to support startups who were performing well prior to the pandemic and make sure they have enough capital to survive this storm. BDC Capital will make more details available as of next week through webinars organized with CVCA, C-100 and Réseau Capital.
The Fasken Emerging Tech team will be on the lookout for any additional details about this new Bridge Financing Program. If your startup is currently raising funds, of will be doing so in the following weeks, do not hesitate to contact one of our team members to discuss your financing, and your eligibility for BDC’s Bridge Financing Program.