BDC Capital has revealed more details about its Bridge Financing Program that was announced earlier this month. The goal for the program is to support Canadian companies affected by COVID-19 that may not be eligible for many of the existing federal government relief programs.
The funding will be issued in convertible notes and will start at $250,000.
The program will provide support to Canada venture capital (VC)-backed companies that have been impacted by the pandemic. The latest information provided by BDC outlines the program will issue capital starting at $250,000, as well as more eligibility criteria and requirements for VC firms.
BDC Capital is working in collaboration with VC firms on this initiative. In its most recent update on the program, the organizations said it may match a current financing round being raised through qualified investors into an eligible company with convertible notes starting at $250,000. BDC Capital said it will assess each applying VC firm and startup on a case-by-case basis.
According to BDC, the program is open to all VC firms, even those that are not BDC Capital partners. To be eligible, firms must have at least $10 million of committed capital and an investment strategy focused on Canada.
The most recent information also specifies that the applicants, including the sponsoring general partner, must have put together an equity round after February 1 to be eligible for matching funds. BDC said it will retroactively consider deals closed prior to deploying capital.
Startups looking for funds must be private Canadian companies with “proven results as a viable business” prior to COVID-19. The matching is open to all sectors.
While BDC has reportedly been exploring expanding the investment matching for angel investors and angel-backed companies, its latest update on the program states companies must be VC firm-backed and have raised at least $500,000 in external capital before applying.
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BDC said interested startups should also clearly show how the business has been impacted by the current COVID-19 crisis and should first speak to their shareholders and investors to see if this offering is right for them.
The Bridge Financing Program is something the Canadian Venture Capital and Private Equity Association had been advocating for, along with other measures it hoped the government would take to better support the tech sector.
The Bridge Financing Program has not gone without criticism from the VC community. One VC speaking with BetaKit likened the program to a “Trojan Horse,” and argued the matching offer through convertible notes allows BDC to cash in on deals and companies it might not have otherwise have had access to.
With files from Meagan Simpson.
Image source BDC.
