Canadian Business Growth Fund: Closing The Gap

June 14, 2019 | By: Canadian Business Growth Fund

Why don’t more Canadian companies grow to become global industry leaders?

How did we go from being home to 18 such companies in 1990, compared to just a handful today.

What has led to the “hollowing out” of the mid-tier market in Canada as smaller companies sell long before their plans are realized?

It’s not for lack of entrepreneurial spirit.  There are more than a million small and medium-sized businesses in Canada today, driving more than half of our GDP.  In fact, we’re ranked second in the world by the World Economic Forum when it comes to the ease of establishing a new firm.

It’s not a lack of vision.  Canadians have long proven their ability to innovate, differentiate, and dominate under the right conditions and with the right support.

And it’s certainly not for a lack of willingness to work hard.  The Canadian spirit of determined leadership has long been one of our defining characteristics.

With so many advantages, the issue is clearly not a societal one.  It’s structural.

There seems to be an increasing amount of angel and venture capital to start companies.

There is an increasing amount of buyout and strategic capital to acquire companies

But until recently, we didn’t see significant resources put forward to take our small companies and make them big.

There is a significant “growth gap” in the capital that could fund growth and expansion projects for our high-potential businesses that sit uncomfortably between their funding options.

But this gap is about more than simply money.  It’s about the patience to see investments pay off.  It’s about access to the advice, mentorship, and relationships that promising businesses need to reach the next levels of success.  It’s about having a partner whose options are built in Canada, exclusively for Canadians.

The inability to close this gap means businesses are unable to scale up.  They miss the opportunity to become large businesses, because they are forced to sell long before their bold plans are realized.

The Canadian Business Growth Fund was created to fill this gap … and graduate more small and medium enterprises to large companies that can dominate on the global stage.

Our vision is very simple:  To become Canada’s leading growth capital investor and partner of choice for ambitious mid-market entrepreneurs, supporting them to reach their full potential.

The CBGF was formed in June, 2018 through an innovative partnership between thirteen leading Canadian banks and insurance companies.  Our initial capital commitment of $545 million — and projected future contributions to reach $1 billion, all from the private sector – give us incredible stability and the ability to look to the long term for opportunities and growth.

This is a crucial point of differentiation between the CBGF and many other funds and funding sources.  They have a target return rate they are forced to hit, often forcing entrepreneurs to sell dilutive equity.  We do not.  CBGF offers patient minority capital.  We are evergreen, without an end.

That’s why the CBGF can encourage entrepreneurs to only raise the capital they need and not dilute unnecessarily.  As our partners grow, we can be there to support them every step of the way.

What makes the CBGF even more distinct is that we address not only capital, but every part of the growth gap.  Through our extensive Talent Network, we bring industry experts from across the country together and offers these resources to our partner companies, along with access to new networks and relationships.  Our goal is to provide growth capital with guidance, and with this in place, foster and encourage entrepreneurial ambition to reach higher … and think bigger.

We invest in dynamic Canadian-based mid-market companies with $5 million or-more in annual revenue and a demonstrated growth trajectory.  We’ve made six investments in our first year in companies that have already demonstrated the best of the Canadian entrepreneurial spirit.  Each of our partners has the ability to compete and win on the world stage, in industries that include software, automotive, retail, media, and fintech.

There are more exciting investments to come.  Inquiries are coming from across the country, demonstrating just how many ambitious entrepreneurs are looking for patient capital and a committed, long-term partner. At last, we’re giving them belief they can create it, build it, grow it, and continue to own it right here at home.

Strategic long-term growth capital is the missing catalyst for the Canadian economy, to reverse the “hollowing-out” of the mid tier market and drive economic activity, productivity, increased employment, exports and growth.

Canadian businesses that once would have fallen into the “growth gap” now have a greater opportunity to achieve scale and become leading global businesses, daring to be bold and even more ambitious.

By doing so, the CBGF hopes to embolden the entrepreneurial spirit, vision, and willingness to work hard that defines our country … and bring more of our best businesses to an even bigger stage.

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Canadian Business Growth Fund

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