BDC shares more detail on $100-million Thrive Lab, including $35-million co-investment commitment

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Initial phase will focus on early-stage, women-led businesses with social impact.

The Business Development Bank of Canada (BDC) has officially launched its Thrive Lab for women entrepreneurs at Startupfest, unveiling more details about the types of companies it will support.

Over the next five years, BDC’s Thrive Lab plans to provide $100 million CAD in equity and “equity-like” investments, plus training and support, to at least 100 women-led businesses across sectors with a commitment to social impact. It will target firms aligned with United Nations Sustainable Development Goals relating to food security, reduced inequalities, health and well-being, education, and responsible consumption.

“What matters to us is what is the social impact that the business will bring to society.”
– Sévrine Labelle, BDC

“We really wanted to build on this natural strength that women are bringing to our economy, at a time when I would say we need more of those changemakers and we need to be there to support them,” Thrive Lab managing director Sévrine Labelle told BetaKit in an interview. “I think that’s totally aligned with BDC’s core value and its reason for being.”

As part of Thrive Lab’s first phase, BDC intends to co-invest $35 million in women-led businesses at the earliest stages of development, such as the pre-seed level. The organization intends to do so alongside ecosystem partners such as incubators, accelerators, and angel groups, with the goal of assembling a portfolio of 75 companies across Canada. BDC told BetaKit that it is still working to confirm these partners.

Research indicates that women entrepreneurs are underfunded relative to their male counterparts, and face a variety of gender-specific roadblocks raising capital. PitchBook data previously shared by BDC shows that women-founded businesses received only three percent of venture capital (VC) funding in Canada in 2022. Meanwhile, only 15 percent of seed capital was invested in women-founded and co-founded Canadian businesses last year.

Building on the groundwork laid with its Women in Technology (WIT) Venture Fund, BDC unveiled its broader Thrive platform last September to help fill this gap, committing half-a-billion dollars to women entrepreneurs and investors across Canada. BDC is thinking bigger with its $500 million Thrive platform, which includes Thrive Lab, the $300 million Thrive Venture Fund for seed, Series A, and Series B firms, and $100 million for women-led investment funds.

Labelle joined Thrive Lab, which was initially supposed to launch this spring, in March. Asked about the delay, Labelle said she spent the past few months conducting research and a “listening tour,” so as to ensure that the initiative was bringing something new and complementary to the Canadian market.

RELATED: With new Thrive platform, BDC commits half-a-billion dollars to invest in Canadian women-led startups and funds

During her meetings with dozens of women entrepreneurs and more than 50 ecosystem partners across the country, Labelle said one of the things that stuck out to her was “how women are leading us toward a more sustainable future,” pointing to some data that backs this up: a 2019 Startup Canada report that found 58 percent of social entrepreneurs in Canada identify as women.

According to Labelle, Thrive Lab will support “double-bottom-line” companies in both the tech space and beyond. “What matters to us is what is the social impact that the business will bring to society,” she added.

In a statement, BDC president and CEO Isabelle Hudon said Thrive Lab “will play a catalyst role in creating a more sustainable economy, one women-led, socially-minded company at a time.”

Labelle described the Thrive Lab as complementary to not only the Thrive Venture Fund and indirect investment envelope but also to BDC’s Climate Tech Fund and Sustainability Venture Fund. “With the Lab, what we’re helping to do is really to create a pipeline of [a] new generation of businesses that will tomorrow be able to nourish those different funds and partners across Canada,” she said.

RELATED: Michelle Scarborough explains why BDC is thinking bigger with Thrive platform

Thrive Lab will rely on the expertise and capacity of Canadian ecosystem partners with a history of backing women entrepreneurs who can add some additional capital or support to the types of companies it plans to target. “To double [down] on that and to really help them go further, that’s the value that we will try to bring,” said Labelle, who noted that Thrive Lab has already engaged in discussions with a number of prospective partners.

“For BDC, the Thrive Lab is a rich opportunity to address a market gap by bringing complementary capital to private sector partners that have a deep knowledge and expertise working with the earliest stage women-led businesses,” Hudon said in a statement.

According to Labelle, most of Thrive Lab’s early-stage investments will be convertible notes or simple agreements for future equity (SAFEs). Over time, Labelle said that Thrive Lab may explore other types of investment, such as undisclosed financial instruments deployed in the social impact investing space.

Thrive Lab intends to announce its partners in the fall and open up applications to women entrepreneurs then.

When Thrive was first announced last September, Michelle Scarborough, managing partner of BDC Capital’s WIT and Thrive Venture Funds, told BetaKit that part of Thrive Lab’s work will involve exploring innovative equity investment models that BDC could deploy to support firms that don’t fit the traditional VC mould.

Asked whether that is still part of Thrive Lab’s plans, a BDC spokesperson told BetaKit that Thrive Lab’s model has evolved over time since it was announced and Labelle was appointed in March. The spokesperson said that the companies Thrive Lab will invest in through its first phase will be too early for VC funding, but beyond this phase, Thrive Lab’s investment approach remains to be determined and will be flexible based on the needs of women-led businesses.

For now, Thrive Lab’s focus is on first finding the right partners and then deploying the $35 million it has allocated toward its initial phase. The remaining $65 million will also go directly to women-led businesses that fit within Thrive Lab’s focus, but how exactly it will be spent remains to be determined.

“We really want to focus on building that foundation, that first program for the Lab, over the first year,” Labelle said. After that, Thrive Lab will turn its attention to its following phases, which may include supporting these firms across other stages of their development.

Labelle has already recruited a director of investment and innovation and is looking to fill more Thrive Lab roles over the coming weeks, with the goal of having its team in place by the end of the summer. Thrive Lab intends to announce its partners in the fall and open up applications to women entrepreneurs at that time.

UPDATE (07/12/23): This story was updated to note a response from a BDC spokesperson.

Feature image courtesy BDC.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache. He was also the winner of SABEW Canada’s 2023 Jeff Sanford Best Young Journalist award.

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