The Canadian Press/Sean Kilpatrick

Funding gap for smaller rounds crimping growth of Canada’s mid-sized firms, federal report says

Mid-sized Canadian companies face difficulties securing smaller sums of funding to expand, according to a report commissioned by the federal government. While firms looking to raise tens of millions are well served by U.S. and Canadian funds and banks, the pre-pandemic analysis found that businesses seeking between $2 million and $5 million—less likely to be the hyper-growth technology startups venture investors favour—have fewer options and face higher deal costs.    

“The Canadian market in general is more conservative and it’s a smaller pool of investors or lenders,” said Matt Johnston, CEO of Hamilton, Ont.-headquartered Collective Arts Brewing, which has taken on external capital to grow. “It has been more challenging than we’d like.” Capital providers and company executives say the pandemic has created new demand for financing, but also new government financing programs to meet it.

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