The $50 million investment program aims to help women entrepreneurs buy businesses.
The Business Development Bank of Canada (BDC) has made its first investment through its new facility designed to help women entrepreneurs buy businesses.
“It has become my personal mission to help as many women as possible succeed.”
Patricia Riopelle, Magnum
BDC Capital's Thrive Entrepreneurship Through Acquisition (ETA) fund has invested $2 million in Montreal-based Magnum Capital Partners, a private equity (PE) fund that backs entrepreneurs looking to buy businesses. BDC $50 million ETA fundlaunched last month, aims to finance acquisitions of women-led businesses through search funds, management buyouts and other means.
Magnum claims to be Canada's first female-led private equity fund operating under a search fund model, where it supports entrepreneurs seeking to acquire established businesses and executives approaching retirement. Its first fund, launched this year, will help up to 40 entrepreneurs buy profitable businesses with annual revenues of $1 million to $4 million, according to managing partner Patricia Riopel. The fund's total goal is approximately $20 million, she added.
The firm invests between $500,000 and $1 million in each entrepreneur, helping fund their search before they select an acquisition target. Riopelle told BetaKit that her interest in the unique model stemmed from her own experience purchasing academic proofreading firm Scribendi.
“It has become my personal mission to ensure that as many women as possible succeed in this,” Riopelle said in an interview.
Riopelle served as Scribendi's president alongside CEO Enrico Magnani, who is now her partner at Magnum.
“We believe the search fund model provides a powerful path to entrepreneurship, and we are proud to make our first investment in this asset class with a firm led by a pioneering woman who knows first-hand the challenges and opportunities of being a search fund entrepreneur,” Sevrine Labelle, managing director of BDC Thrive Lab, said in a press release.
The BDC fund includes $10 million for indirect investments in private equity funds that fund search funds for acquisitions of women-led businesses like Magnum. It also proposes $40 million for direct equity investment in search funds, management buyouts and self-funded ETA hunts.
The Crown corporation launched the investment amid what the Canadian Federation of Independent Business calls a “succession tsunami” as three-quarters of Canada's small business owners plan to exit the business over the next decade. In Quebec, where Magnum is based, about 10,000 businesses plan to transfer ownership over the next year, according to Magnum. Quebec entrepreneurship.
CONNECTED: BDC pledges $50 million to help women entrepreneurs buy businesses from aging owners
Earlier this summer, BDC launched a separate $100 million co-financing initiative with First Nations Bank of Canada aimed at helping Indigenous groups finance ETA deals, which LaBelle sees as a major part of BDC's future strategy.
Thrive Lab BDC is designed to support women entrepreneurs both through funds and directly into businesses and startups. According to BDC's latest annual report, the development bank has directly supported 21,586 women entrepreneurs in Canada and plans to reach nearly 23,000 by fiscal year 2027.
Artistic image courtesy of Sevrine Labelle via LinkedIn.
