Ottawa's Business Development Bank of Canada is allocating $106-million to a clean-tech venture fund that aims to invest in leading-edge Canadian firms that enhance energy efficiency and productivity among their customers.
BDC Venture Capital will announce Thursday that the board of the federal development bank has approved new funding for its Energy/Cleantech (ECT) Fund, bringing its total capital to $152-million and making it one of the largest venture investors in Canada's clean-tech sector.
"The rising cost of energy and resources, as well as the transition to a low-carbon economy, has caused a surge in clean-tech innovation in Canada," the fund's managing partner, Tony Van Bommel said. "This country has an opportunity to be a world leader in developing technologies that can help companies address global resource productivity and efficiency challenges."
The BDC fund has already invested in leading-edge companies such as D-Wave Systems, a Burnaby, B.C., firm that has pioneered commercialization of a super-efficient, ultra-powerful quantum computer. D-Wave is installing one of its computers at the Quantum Artificial Intelligence Lab, a collaboration involving Google Inc., the U.S. National Aeronautics and Space Administration (NASA), and the Universities Space Research Association.
It has also invested in Toronto-based Regen Energy, which provides energy-reduction applications for commercial, industrial and institutional customers, and Axine Water Technologies Inc., a Vancouver firm whose systems treat toxins in waste water.
In an interview, Mr. Van Bommel said the BDC Venture Fund differs from many venture capital investors who target large, capital-intensive projects such as biodiesel plants or wind farms, or alternatively, the social media space, where capital requirements are low and there can be quick and profitable exits through acquisitions.
"We are looking at scalable types of opportunities where you can achieve pricing power and traditional venture-capital metrics for success," he said.
BDC Venture Capital has more than $1-billion under management and has targeted three sectors: information technology and software, health care and energy/clean-tech.
It has more scope to invest than Ottawa's other funding agency, Sustainable Development Technology Canada, which has a series of mandated funds through which it disperses money.
Canadian policy makers and financial experts have long bemoaned the shortage of venture capital in this country – especially the earliest-stage angels investing when entrepreneurs need the most help in building business models and commercializing technology.
"This is a necessary fillip in a country where this really is our Achilles' heel," said Nicholas Parker, Toronto-based chairman of the CleanTech Group, a global consulting firm. "It is a necessary but not sufficient step forward and is to be applauded."
But Mr. Parker said the Canadian clean-tech sector needs a more robust national effort to succeed, including greater access to risk capital. He said it also needs a commitment from major corporations, especially in the oil and gas sector, to adopt new technology, and a greater effort to access foreign markets, especially China.
He also commended the BDC's focus on technology that aims to improve the energy efficiency of the overall economy, saying it provides both an economic and environmental benefits.
Editor's note: An earlier online version of this story and the original newspaper version of this story incorrectly gave the name of the Business Development Bank of Canada as the Business Development Corp. This online version has been corrected.