In a strategic move to bolster the Canadian tech sector amid economic uncertainty, the Business Development Bank of Canada (BDC) is allocating $950 million to support emerging domestic companies.

As part of this initiative, BDC Capital plans to invest $500 million into its growth venture fund and $450 million into its growth equity partners program over the next five years.

Since 2016, BDC's growth venture fund has already invested $390 million in 30 companies, while its growth equity partners program has contributed $440 million across 36 companies.

BDC Capital stands as the largest venture capital investor in Canada's tech sector, benefiting from federal funding initiatives like Export Development Canada and the Venture Capital Catalyst Initiative (VCCI).

As of September 30, BDC's venture capital portfolio, excluding the VCCI program, was valued at $2.98 billion, showcasing its significant presence in the market.

However, the VC portfolio has faced challenges, reporting a loss of $129.5 million in the first half of the fiscal year, following two years of total losses amounting to $849 million.

BDC Capital's executive vice-president, Geneviève Bouthillier, highlighted that entrepreneurs are grappling with issues such as depressed valuations, muted growth opportunities, and market instability due to high interest rates and potential tariffs from the U.S.

In light of these challenges, CVCA CEO Kim Furlong emphasized the importance of BDC's renewed investment commitment, noting the potential of Canadian tech companies generating over $100 million in annual revenue.

Despite a decline in VC financing for later-stage domestic startups over the past three years, funding levels for advanced companies rebounded in 2024 to near-record amounts.

BDC Capital authorized $403.6 million for VC investments in the fiscal year ending March 31, 2024, which represents a 23.4% decrease from the previous year, yet it saw a 65% increase in the first half of the current fiscal year.

Government support for Canada's VC and tech industry has notably increased since the late 2000s, particularly following the 2008-09 credit crisis.