The Business Development Bank of Canada (BDC) announced they will issue up to six million dollars in convertible notes over two years to graduates of FounderFuel, the Montreal-based startup accelerator program. The funds will be divided among the next batch of startups who will now be eligible for a $150 000 BDC convertible note upon their successful completion of FounderFuel’s 12-week, mentor-driven business “boot camp”. Convertible notes are short term loans that are usually converted into shares later on in the company’s life. This investment is part of BDC Venture Capital’s larger commitment towards accelerators across the country, a key element of its strategy to support tech enterprises in their early, most fragile, stage.
“Entrepreneurship and venture capital investments are on the rebound in Canada; but there will always remain this 6 to 12-month critical period for many new companies when the start-up capital from the partners themselves, their families and friends starts drying up and before financing from venture capitalists and angels can be secured. Too many promising companies have not made it to the next stage of financing for lack of operating capital,” explains Senia Rapisarda, Vice President, Strategic Investments and Initiatives at BDC Venture Capital. “Canadian tech entrepreneurs should be confident they can compete with the best in the world, but they need a strong, supportive “ecosystem” to get the edge. Our convertible notes program, which is one of the means we use to bolster the Canadian venture ecosystem, is bridging a financing gap that few institutional and private investors can assume”.
FounderFuel, which was created as an accelerator program with funds Real Ventures, is one of several accelerator programs that have emerged across Canada in the last year.