The Business Development Bank of Canada (BDC) has dedicated another $200 million CAD to early-stage Canadian startups developing transformative technologies for legacy industries—this time with an expanded focus on critical minerals.
“Canada’s productivity gap is especially acute in sectors like manufacturing, mining, and agriculture.”
Consistent with its $250-million predecessor, the federally-funded Crown corporation’s second Industrial Innovation Venture Fund will back companies at the Series A stage and beyond in AgTech, advanced manufacturing, and food tech, as well as startups building tech for industries like mining and oil and gas, including robotics, AI, and industrial software products.
In an interview with BetaKit, BDC Capital executive vice president (EVP) Geneviève Bouthillier said that the organization’s first Industrial Innovation Venture Fund “reinforced” its conviction that it can play a role in addressing Canada’s productivity woes by focusing on tech for traditional industries, which she noted could still use an “innovation boost.”
“Canada’s productivity gap is especially acute in sectors like manufacturing, mining, and agriculture,” Bouthillier asserted. “We believe that the technology that we will invest in [through] this fund will be helping industrial enterprises improve efficiency and remain competitive.”
While the Industrial Innovation Venture Fund’s strategy will remain largely the same this time around, BDC has made one notable adjustment to its mandate: Fund II will have an increased focus on companies developing solutions related to critical minerals.
The feds define critical minerals as those whose supply chains are threatened, could be produced by Canada, and play a role in supporting the country’s transition to clean energy, or its economic or national security. They are used in a range of products, from smartphones and laptops to electric vehicles, drones, satellites, and data centres.
Bouthillier attributed this shift to the importance of critical minerals “to Canada’s economic sovereignty and national ambitions,” growing demand for them, and their value to global supply chains. It also comes as Canada contends with a trade war with the United States that shows no signs of abating.
Launched six years ago, BDC’s first Industrial Innovation Venture Fund backed a total of 20 companies, including 4AG Robotics, Acerta, BinSentry, Kepler Communications, Maxa, MineSense, Nanoprecise, and Precision AI. It has exited Brizo FoodMetrics, Precision NanoSystems, and Sol Cuisine. Bouthillier said it is too early to speak to Fund I’s performance, but noted that it convinced the organization to pursue a second fund with a nearly identical thesis.
Bouthillier expects Fund II to back a comparable number of companies under the continued leadership of Aditya Aggarwal as managing partner.
With Industrial Innovation Venture Fund II, BDC hopes to help fill what it sees as a gap in Canada’s venture capital (VC) ecosystem for tech for industrial transformation.
This fund’s launch comes amid a particularly challenging VC market. Canadian VC activity continued to decline during the first half of 2025 amid ongoing trade and geopolitical uncertainty, according to recently released data from the Canadian Venture Capital & Private Equity Association, marking the lowest total since the onset of the COVID-19 pandemic in 2020.
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Uncertain macroeconomic conditions have created a challenging exit market and made it tougher for Canadian tech startups and the VC firms who back them to raise money. It has likewise led to greater caution among investors, especially at earlier, riskier stages.
Bouthillier said that BDC sees early-stage companies on a weekly basis that have groundbreaking tech but are unable to raise their first or second rounds of funding.
“This is where capital is needed at this moment,” she said.
Bouthillier, who became EVP of BDC Capital (BDC’s VC arm) last fall after taking over for Jérôme Nycz, said she sees a need for BDC to “step up” as other VCs wait on the sidelines. With this new fund and its other vehicles, she said the organization hopes to be “the steady hand in the market.”
Back at the time of its launch in 2019, BDC’s Industrial Innovation Venture Fund was designed to complement its longstanding Industrial, Clean, and Energy (ICE) Technology Venture Fund, which invested in early-stage startups developing solutions in areas like energy, industrial systems, security, and space, such as D-Wave and General Fusion. The ICE Fund has since ceased making new investments, and in 2023, BDC revamped and rebranded it as the more cleantech-focused $150-million Sustainability Venture Fund.
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Mandated to support Canadian entrepreneurship—with a focus on small and medium-sized businesses—and operate as a complementary player in the market, BDC is an arm’s length Crown corporation wholly-owned by the Government of Canada. It provides loans, VC funding, and advisory services to companies across the country. BDC’s venture arm, BDC Capital is Canada’s largest and most active VC, and it backs both tech startups and other VC funds.
As some of its existing funds come up for renewal, BDC has been forced to reevaluate where it focuses its efforts. Bouthillier said BDC’s goal is “to be where other investors are not, yet.” Every time a fund finishes making new investments, she said BDC must consider whether a gap in the market still exists and if it could draw more capital in by reinvesting in that space, while also remaining disciplined given its competing priorities.
Earlier this year, BDC announced nearly $1 billion worth of new commitments for both late-stage tech companies and funds, a figure that included $500 million for its Growth Venture Fund and $450 million for its Growth Equity Partners program.
As The Logic was first to report, however, BDC also closed its Intellectual Property (IP)-Backed Financing program and laid off staff on its Deep Tech Fund this year. Bouthillier told Betakit that BDC merged its IP Fund with Growth and Transition Capital because it realized the two divisions were competing internally. She also claimed that BDC is currently developing another deep tech-focused fund.
As to what role BDC might play in helping the Government of Canada ramp up its defence spending, Bouthillier said that it is still “too soon” to say but hinted that the organization will have more to share on this front at a later date.
Feature image courtesy BDC.