BDC Venture Capital’s Convertible Note Program
The Business Development Bank of Canada’s Venture Capital division recently expanded its convertible note program to include Montreal’s Execution Labs. Introduced in 2011 as part of the BDC’s Accelerator Strategy to help support early-stage Canadian startups, the program, which offers select graduates a $150,000 convertible note, is now available to six Canadian Accelerators.
Although this was perceived as good news in the startup community, what it actually meant was somewhat unclear. In order to provide a better understanding of the program, TechVibes reached out to the BDC directly.
According to TechVibes, “The program provides seed funds to help fill the gap that many startups face between their first financing phase (funding by founders, family and friends) and their first full round of investor financing,” explained Dominique Bélanger, BDC Venture Capital’s vice president of strategic investments and initiatives. “Convertible notes are short-term loans designed to be converted into shares later in the company’s life – usually when it raises its first full round of investor financing. BDC VC issues notes of $150,000 each, which – if not converted into equity – are repayable at the end of a two-year term.”