Montréal-based tax credit and government grant debt provider Finalta Capital has closed $31 million in new funding.
The round, which Finalta said in a statement is its eighth to date, was led by Fonds de solidarité FTQ, which has been an investor in the firm since 2017. According to Finalta CEO Maxime-Jean Gérin, the round also saw participation from two undisclosed institutional investors and three family offices.
Finalta Capital said it has surpassed $500 million in “cumulative financings” since launching in 2012.
Finalta provides loans to Canadian companies that have been accepted for government grants or tax credits, such as the Scientific Research and Experimental Development (SR&ED). Thousands of Canadian startups rely on tax credits like SR&ED each year, but there is often a time lag between when a startup can start spending on eligible costs, and when money actually lands in the bank.
Many startups, therefore, take out loans against eligible tax credits through lenders like Finalta to access non-dilutive liquidity more quickly. This can allow them to develop their product, make key hires, and scale their business without having to seek dilutive capital in the near term.
According to Finalta’s website, its loans can vary from $250,000 to $10 million, and financing is available to startups at the seed, growth, and expansion stages. The lender allows businesses waiting for the disbursement of eligible funds to borrow at interest rates it calls competitive.
In its statement, Finalta said it recently surpassed $500 million in “cumulative financings” since 2012. According to Gérin, Finalta has provided loans to 163 companies to date and currently has $150 million in capital available.
“With this round, Finalta Capital cements its position as a leading lender supporting highly innovative small and mid-sized businesses,” Gérin said in a statement. “Our aim over the next two years is to provide an additional $100 million to additional companies in the form of tax credit and government grant financing.”
Finalta, which makes loans through an evergreen fund, is not the only tax credit and grant lender in Canada. Vancouver-based Easly specializes in SR&ED financing options for Canadian companies, and has deployed over $180 million to more than 300 companies to date, according to its LinkedIn page. In 2021, Calgary’s OKR Financial also launched a $150-million fund to support early-stage technology startups in Canada in accessing funding, loans, and grants, while Boast.ai also offers quarterly cash advances against companies’ accrued SR&ED tax credits as collateral.
“Since 2012, Finalta Capital has become an important player in the financial ecosystem of innovation. We are therefore delighted to invest once again in the Finalta Capital fund so that it can continue supporting technology and manufacturing companies who want to speed up their growth through innovation,” Saloua Benkhouya, vice-president of private equity and impact investing for service industries at Fonds de solidarité FTQ, said in a statement.
The new funding will be used to support Finalta’s growth, including new hires.
Feature image courtesy Unsplash. Photo by Scott Graham.