BDC Capital is set to launch nearly $1 billion in new funding aimed at late-stage tech companies in Canada, addressing a significant decline in investment activity.

This new funding initiative comes in response to a nearly halved late-stage investment landscape in 2023 compared to the previous year, alongside a 19% drop in deal counts.

The funding will be allocated with a $500 million commitment to the Growth Venture Fund (GVF) and $450 million directed towards the Growth Equity Partners (GEP) program.

The GEP program specifically focuses on minority-stake equity investments in mid-market growth businesses, with over $440 million already allocated across 36 companies.

BDC Capital aims to prevent Canadian companies from seeking foreign investment due to a lack of local funding, thereby ensuring their competitive edge in the market.

Geneviève Bouthillier, executive vice-president of BDC Capital, highlighted the importance of sharing risk with companies to foster continued growth amid ongoing economic challenges.

Despite reporting a $220 million write-down in its venture capital portfolio, BDC Capital has approved significant investments in both direct and indirect equity for fiscal 2024.

However, there are concerns that BDC's direct investment strategy may create competition with external venture capital funds, particularly in a challenging fundraising climate.

Critics, including Mark McQueen, argue that BDC should prioritize support for early-stage companies rather than focusing on late-stage investments.

In response to such criticisms, BDC Capital remains active in early-stage funding, having launched a $50 million Seed Venture Fund in 2023.

The Growth Venture Fund targets companies with revenue exceeding $10 million and has already made investments in notable startups like ApplyBoard, Borrowell, and Verafin.