When I hear people talking about Canada’s VC ecosystem, there’s one name that I feel always gets unfairly left out of the conversation: the Business Development Bank of Canada, otherwise known as the BDC.
For some reason I’ve not yet quite managed to figure out, people seem shy about acknowledging that it is basically our country’s biggest VC. And because it seldom gets mentioned, a lot of people aren’t really aware that there’s lots of amazing tech out there that would never have achieved commercial maturity without its support.
So, to do my own little bit to get people talking about these things, I’d like to tell you about a great BDC-backed startup deal that RiSC Capital is involved in. It speaks to the sorts of scenarios where the BDC helps to nurture highly promising deeptech that most private sector investors would have deemed too risky to touch.
The startup in question is Skygauge Robotics, based in Hamilton, Ontario. The firm's founders began by strategizing around the most innovative highly specialized jobs that drones could do if some of the key limitations of drone technology could be overcome. One of the biggest of these is that drones have generally been hopeless at dealing with proximity to hard surfaces such as metal because of the turbulence they encounter around them.
The team at Skygauge reckoned that, if that problem could be solved, drones could be equipped with specialized equipment to perform tasks like non-destructive testing (NDT) in hard-to-reach places. Pipelines, chemical process industries like refining, civil engineering/infrastructure testing and so on rely on NDT testing to keep infrastructure safe.
Skygauge had a really solid plan and talented workforce to develop its tech. The real problem the firm faced was that, as is often the case when you’re trying to push the limits of robotics and aerospace, that plan involved high capital expenditures and steep research costs. What was required here were deep pockets that belonged to an investor who was willing to be patient.
We at RiSC knew the Skygauge team was the real deal, and we recognized that this promising but immature tech would take time to develop. But back then, our young fund wasn’t in a position to back the project alone.
At this time, the BDC fund was just being set up. We introduced some of its people to Skygauge, and they turned out to be a great match. Now Skygauge’s largest shareholder, the fund has been the perfect collaboration partner. Aside from the capital it contributed, its representatives got all the nuances and implications of the tech, and they provided strategic expertise at just the right moments.
Skygauge has gone from strength to strength. Most of the credit for that should, of course, lie with Skygauge’s own team. But at the level of capital, I don’t think they or we at RiSC could have had a better deal partner than the BDC.
Alright, I’ve probably gushed enough for one post. But if you’re part of a deeptech startup and you’re reading this, I’d really encourage you to keep the BDC in mind when you’re raising.