TORONTO — The Business Development Bank of Canada (BDC) has ended its financing program for startups with intellectual property and laid off several people managing the fund, The Logic has learned. The federal Crown corporation has also cut several senior members of its deep-tech fund team. 

A source with direct knowledge of the cuts said the changes come as BDC faces a capital crunch, with few portfolio companies having exited and returned capital to the bank in recent years. Deep-tech startups in particular tend to require lots of money to grow and take longer than software companies, for example, to generate returns for investors. 

“Overall, this is a normal part of businesses reorganizing themselves to better serve their clients, which included some positions becoming redundant,” BDC spokesperson Phil Taylor said of the cuts to the intellectual property and deep-tech funds. “Like our clients, BDC is becoming more productive, thereby allowing us to serve more clients while reducing our costs.”

The intellectual property-financing program, launched in 2020, gave companies equity and various types of debt financing based on their patent portfolios. Companies with non-physical assets like intellectual property often struggle to access capital, which limits their growth, Jérôme Nycz, then executive vice-president at BDC Capital, said at the time. He said the fund would “lead by example” to fill financing gaps for these firms. 

The program was one of several federal government-backed initiatives to help startups secure and maintain intellectual property rights—often an untapped source of capital for Canadian firms. 

Geneviève Bouthillier, BDC Capital executive vice-president, said companies that would have accessed money through the intellectual property fund can instead seek financing through the bank’s Growth and Transition Capital (GTC) unit. She said the GTC team will still consider IP in their financing decisions. There were “too many overlaps between those two funds,” she said. 

Bouthillier would not say how many people have been laid off from either the IP or deep-tech funds. BDC’s site shows the deep-tech fund has lost half of its team since December 2024, leaving just four members. The bank hasn’t removed the IP financing page from its site, despite ending the fund. It shows four remaining members, down from eight in November 2024. 

The deep-tech fund was touted as the largest of its kind in Canada when it launched in 2021. The fund targets early-stage, research-intensive companies building technologies like quantum computing, semiconductors, robotics, artificial intelligence and cybersecurity. These firms have long had trouble accessing capital in Canada because of the high cost to develop their technologies and long timelines before generating returns. The deep-tech fund aimed to fill that gap. 

The fund has invested in 12 startups, according to BDC’s website and other public disclosures. It initially planned to back 15-to-20 firms over at least 12 years. Bouthillier said the fund is no longer actively seeking new investments and that remaining capital will go toward existing portfolio companies. She said BDC has not deprioritized deep tech and that it is “working on the thesis and mandate” for a second deep-tech fund. 

The cuts to the two teams follow steep losses in BDC’s venture business. It reported a $220-million loss in the value across its VC portfolios in fiscal 2024, which ended March 31, 2024, after losing nearly $805 million in value the year before. It also reported a return on equity of four per cent across all operations, which include lending and advisory services for entrepreneurs, below the 6.2 per cent it predicted for 2024. BDC hasn’t reported results for its latest fiscal year, which ended on March 31. 

Meanwhile, BDC is doubling down on later-stage financing. It announced in February that it is bolstering its Growth Venture Fund and Growth Equity Partners Fund with nearly $1 billion in combined capital. The funds target larger companies already generating strong revenues, which tend to be less risky than the research- and capital-intensive startups the deep-tech and IP funds sought to back. 

BDC—whose only shareholder is the federal government—has a mandate to fill lending and investing gaps for entrepreneurs whom traditional financiers may deem too risky.

Bouthillier told The Logic last month that shoring up the bank’s growth funds would help companies weather the trade war at a time when private investors were already shying away from later-stage deals.

However, according to a recent report from the Canadian Venture Capital & Private Equity Association, early-stage startups are struggling most to raise money, with the $7.86 billion invested in startups last year overly weighted towards later-stage rounds. That raises concerns about the flow of deals in the future, the report found, which could, it claimed, slow the growth of innovative Canadian companies.