BDC Capital has committed $160 million in intellectual property (IP) development financing to support IP-rich companies scaling in Canada.
This financing is intended to provide companies offering intangible assets with funding, in the form of sub-debt, convertible debt, and equity, to get their products to market and scale. BDC Capital called the funding “customized, patient capital that recognizes the strength and value of a company’s IP strategy and portfolio.”
The financing is targeted toward growing companies in knowledge-based industries with valuable IP portfolios that include patents, design, and trade secrets. Companies looking to receive financing should also have at least $1 million in annual revenue.
“Intangible assets, like intellectual property and data, have long been undervalued by institutional investors.”
“Companies offering intangible assets like IP often struggle to access capital,” said Jérôme Nycz, executive vice president at BDC Capital. “Our goal is to lead by example and fill this gap by providing the capital IP-rich companies need to enable commercialization, increase competitiveness, and expand globally. Our hope is to inspire like-minded stakeholders to work alongside us to support even more companies and make Canada a leader in the IP space.”
To support this financing and other IP initiatives, BDC Capital has also onboarded a new team from alternative commercial lender, Quantius. The team will consist of five people, according to The Globe and Mail, and will be responsible for delivering the funding and facilitating advice to companies. Lally Rementilla, who will serve as managing partner, will lead the new team. Rementilla was responsible for launching and leading Quantius prior to joining BDC Capital.
“We are thrilled to launch this financing solution that will build and maintain a strong network of IP leaders within the Canadian IP ecosystem,” Rementilla said. “Together, we will help Canadian companies leverage and protect their IP and continue to position Canada as a leader in the innovation economy.”
According to a report from an Ontario expert panel led by Jim Balsillie, chair of the Council of Canadian Innovators (CCI) and co-founder of BlackBerry, on IP released earlier this year, Canadian startups holding registered IP rights are three times more likely to have expanded domestically and over four times more likely to have expanded internationally.
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That same expert panel report determined that although 59 percent of Ontario’s small to medium-sized enterprises are at least slightly aware of patents, only two percent of SMEs hold at least one.
Another study from Ocean Tomon found that in 1975, S&P 500 companies showed 83 percent of their corporate value came from tangible assets. In 2015, that number shifted to 84 percent of companies’ corporate value coming from intangible assets. BDC Capital noted that this same change should be expected in Canada.
“Canada’s most innovative and fastest-growing technology firms have often struggled to access traditional bank financing because intangible assets, like intellectual property and data, have long been undervalued by institutional investors,” Ben Bergen, executive director of CCI, said in a statement to BetaKit.
“This new envelope of funding from BDC focused on supporting IP-backed firms helps our members in their global pursuit of scale and we hope other institutions follow BDC’s lead in increasing access to strategic capital,” Bergen added.
Image source BDC.