The Business Development Bank of Canada (BDC) has made its first investment through its new vehicle to help women entrepreneurs buy businesses.
“It became my personal mission to ensure more women could have success.”
Patricia Riopel, Magnum
BDC Capital’s Thrive Entrepreneurship Through Acquisition (ETA) Fund has invested $2 million USD in Montréal’s Magnum Capital Partners, a private equity (PE) fund that backs entrepreneurs looking to buy businesses. BDC’s $50-million ETA fund, launched last month, aims to finance women-led business acquisitions through search funds, management buyouts, and other avenues.
Magnum claims to be Canada’s first women-led PE fund operating with the search fund model, where it backs entrepreneurs looking to acquire businesses with solid track records and executives approaching retirement. Its first fund, launched this year, will help up to 40 entrepreneurs buy profitable businesses with between $1 million and $4 million in annual revenue, according to managing partner Patricia Riopel. The total fund target is roughly $20 million USD, she added.
The firm will invest between $500,000 and $1 million in each entrepreneur, helping fund their search before they’ve chosen an acquisition target. Riopel told BetaKit her interest in the unique model stemmed from her own experience buying the academic proofreading firm Scribendi.
“It became my personal mission to ensure more women could have success in this,” Riopel said in an interview.
Riopel served as president of Scribendi alongside CEO Enrico Magnani, who is now her partner at Magnum.
“We believe the search fund model offers a powerful pathway to entrepreneurship, and we are proud to make our first investment in this asset class with a firm led by a trailblazing woman who knows firsthand the challenges and opportunities of being a search fund entrepreneur,” Sévrine Labelle, managing director of BDC Thrive Lab, said in a release.
BDC’s fund includes $10 million for indirect investments in PE funds that finance search funds for women-led business acquisitions, like Magnum. It also offers $40 million for direct equity investments in search funds, management buyouts, and self-funded ETA hunts.
The Crown corporation launched this investment amid what the Canadian Federation for Independent Business calls a “succession tsunami,” as three-quarters of Canada’s small business owners plan to exit over the next decade. In Québec, where Magnum is based, nearly 10,000 businesses plan to transfer ownership over the next year, according to Repreneuriat Québec.
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Earlier this summer, BDC launched a separate, $100-million joint financing initiative with First Nations Bank of Canada geared towards helping Indigenous groups fund ETA deals, something that Labelle sees as a core part of BDC’s strategy going forward.
BDC’s Thrive Lab is designed to support women entrepreneurs, both through funds and directly into businesses and startups. According to BDC’s latest annual report, the development bank has directly supported 21,586 women entrepreneurs in Canada and is on track to reach nearly 23,000 by fiscal 2027.
Feature image courtesy Sévrine Labelle via LinkedIn.