How the Canadian Business Growth Fund Benefits Small Businesses
Small businesses have always been the backbone of the Canadian economy, but access to capital is often a hurdle for many of them. Fortunately, the Canadian Business Growth Fund (CBGF) is stepping up to help small businesses grow and prosper.
What is the Canadian Business Growth Fund?
The CBGF is a $545 million private-sector fund that was launched in 2018 to help small and medium-sized enterprises (SMEs) grow. It is a partnership between major Canadian banks and insurance companies, along with Quebec’s pension fund, that provides patient capital to companies with annual revenue between $5 million and $100 million.
Why does the CBGF matter?
Access to capital has always been a challenge for small businesses. Traditional lenders often have strict lending criteria and require collateral, making it difficult for small businesses to access the growth capital they need. The CBGF fills this gap by providing equity investment to SMEs that have significant growth potential but that may not meet the criteria of traditional lenders.
More importantly, the CBGF brings a patient capital approach that aligns with the long-term growth goals of the SMEs it supports. This is in contrast to traditional venture capital firms that often have a short-term focus and may pressure companies to prioritize quick returns over long-term growth. With the CBGF, SMEs have access to equity investment that is explicitly intended to support their growth goals over the long-term.
What are the benefits of the CBGF for small businesses?
The CBGF has several advantages for small businesses seeking to grow:
1. Access to patient capital: CBGF provides equity investment to SMEs that have the potential for significant growth but may not meet the criteria of traditional lenders. This helps SMEs access the growth capital they need to expand.
2. Long-term focus: CBGF has a patient capital approach that supports long-term growth goals. This provides SMEs with the stability they need to invest in their businesses in a way that aligns with their long-term goals.
3. Strategic partnerships: With CBGF’s strategic partners, SMEs have access to a network of industry experts and advisors who can provide valuable insights and advice to support their growth.
Real-life examples of the CBGF in action
One example of the CBGF’s impact is Clearbanc, a Toronto-based company that provides non-dilutive financing to e-commerce businesses. Clearbanc received a $60 million investment from the CBGF in 2019. The investment helped Clearbanc expand its operations and launch new products, ultimately leading to the creation of more than 2,500 jobs.
Another example is Xebec Adsorption, a Quebec-based company that designs and manufactures clean energy solutions. Xebec Adsorption received a $10 million investment from the CBGF in 2019, which helped the company pursue new growth opportunities and expand its product offerings.
Conclusion
The Canadian Business Growth Fund is a game-changer for small and medium-sized businesses in Canada. Its patient capital approach and focus on long-term growth goals provide SMEs with the funding they need to expand and create jobs. With the CBGF, small businesses have a powerful ally in their quest to grow and prosper.
