Calgary-based debt and financing advisor OKR Financial has launched a $150 million fund aimed to support early-stage technology startups in Canada in accessing funding, loans, and grants.
“We are excited to deploy this $150 million to see more companies grow, scale and exit.”
The fund will specifically help companies looking to take advantage of SR&ED Tax Credits, asset-based lending, government grant financing or equity deals. The purpose of OKR Financial’s fund is to ensure companies can access non-dilutive funding and extend their runway until they receive their tax credit from the government.
OKR Financial has partnered with consulting firm Ayming Canada to provide businesses with capital to maximize government funding and tax credits through the fund. OKR said Ayming’s national and global footprint will enable the two companies to deploy this new fund to businesses.
“Working with Ayming, we are excited to deploy this $150 million to see more companies grow, scale and exit by providing them with non-dilutive solutions so they can put that capital to work immediately, without giving up equity,” said OKR Financial’s vice president of business development and marketing, Bhavik Chauhan.
The launch of this new fund comes at an important time for early-stage startups, as many are coming out of a tough financial year due to the COVID-19 pandemic. According to an early 2020 report, nearly half of Canadian tech startups reported a loss in value due to the pandemic. Another report from that time indicated the number of Canadian startups that had been “significantly impacted” by COVID-19 was slightly higher than the global average. The pandemic has, notably, changed the dynamic around accessing early-stage capital in Canada.
Many organizations, public and private, have stepped up their efforts to ensure startups receive adequate access to capital and growth. The Canada Revenue Agency (CRA) has made several changes to its existing SR&ED tax incentive program to support the tech community during the pandemic. The program provides over $3 billion to more than 20,000 businesses annually.
OKR Financial said though programs like SR&ED are “crucial to innovation and growth in the Canadian economy,” the disbursement of these tax credits and grants can take months. SR&ED has dealt with its own delays over the last year. In April 2020, the pandemic initially delayed nearly $200 million in tax credits for tech companies after the CRA paused business auditing as it moved to remote work.
OKR Financial is the latest Canadian company providing direct loans to companies applying for federal programs such as SR&ED. In February, Vancouver-based Boast.ai secured a $100 million credit facility to provide companies with up-front loans for their government research and development tax credits. Other Canadian operators providing advanced funding for SR&ED include: Easly, Finalta Capital, Fundsquire, and CAE Capital.
Companies such as Clearbanc also offer similar paths to capital for startups. In February, Clearbanc launched a ClearAngel, a product aimed to help companies at the earliest stages to receive revenue-share model funding from the Toronto-based company.
This is not OKR Financial’s first fund. The company operates what it calls a “family of funds,” which includes a venture fund, a debt-financing institutional fund, and a fund targeted toward angel investors and family funds.
OKR claims it has already provided approximately $400 million in funding to date to early-stage startups, such as TransPod, Axis Labs, and Inscape Studios.
Image source Unsplash. Photo by Amy Hirschi.