The Business Development Bank of Canada is committing an additional $135-million to its venture fund that supports Canadian clean-technology startups which offer products and services to improve energy efficiency in businesses.
With the announcement scheduled for Wednesday, BDC Capital – the investment arm of the federal small-business bank – is increasing its focus on the clean-tech sector, a move that dovetails with the Liberal government's effort to capitalize on a global investment boom in energy efficiency and renewable power.
"Our goal is to intensify our support for innovative Canadian entrepreneurs who are leading the way in the transition to a low-carbon economy," Jerome Nycz, BDC Capital's executive vice-president, said in a statement to be released Wednesday.
BDC Capital launched a clean-tech fund in 2011 with $152-million aimed at a sector it calls Industrial, Clean and Energy Technology, or ICE, and said it showed a "strong performance" compared with international peers. The new investment will support 15 to 20 Canadian startup firms that demonstrate capital efficiency and the ability to scale up to commercial operations.
"The biggest opportunity in clean tech is energy efficiency," Tony Van Bommel, a managing partner with BDC Capital, said in an interview Tuesday.
Global research suggests there are massive opportunities to make profitable investments in hardware, software, electronics and advance materials that increase the energy efficiency of buildings and manufacturing facilities, Mr. Van Bommel said. "It's the low-hanging fruit where you can lever significant technologies to capture those savings."
BDC Capital acts like a private venture capital fund – taking seats on boards, making management decisions, using its contacts to build the business. It will work more closely with two other federal funding agencies, Sustainable Technology Development Canada and Export Development Canada. SDTC provides venture funding for startup companies at the pilot stage, while EDC has various funding programs.
The Liberal government has identified clean technology as a key job-creating sector that will benefit from the country's effort to reduce greenhouse gas emissions and to increase productivity in how businesses produce and consume energy. In discussions with provinces aimed at forging a pan-Canadian climate strategy, access to capital for the clean-tech sector has been identified as a major obstacle to capitalizing on opportunities both at home and around the world.
"Canada is good at starting up companies but it has a less-stellar record in scaling up firms" to commercial operations, said Celine Bak, president of Analytica Advisors and a consultant in the sector. The widespread adoption of energy-efficiency technology would not only drive down greenhouse gases, but increase the efficiency of Canada's industrial sector, she said.
However, Ms. Bak said governments have more work to do to encourage industry to invest in clean-tech solutions, and thereby provide a market for the firms that BDC Capital will be supporting.