The news that the BDC Venture Capital group had parted ways with six or seven professionals during the month of May didn’t cause much chatter at the annual CVCA bunfest in Montreal. Groups go through stages, and this one sounded no different than an end-of-fiscal-year squaring up. “People come and people go”, as the great Dan Mida once said (I was a green investment banker at Nesbitt Burns at the time and not accustomed to monthly departures of high quality people).
However, when you look at the recent track record, you have to ask yourself if the deal volumes are telling us something about the comfort BDC’s CEO Jean Rene Halde has with VC risk. Did the departures of so many professionals at one time (20% of the national team by one count) speak to something more meaningful? (editors note: we are big fans of the people in the BDC VC group, and the important role they play is helping to round out VC syndicates across Canada)
According to Thomson Financial, BDC’s Venture Capital team participated in just five transactions so far this year. On a marketshare basis, comparing 2008 to the same timeframe during the prior four years, BDC is in less than half of the transactions the team has historically booked (category: domestic venture capital provided by domestic VCs):
2008 First 6 Months: 5 of 80 transactions (6.3%)
2007 F6M: 21 of 124 transactions (16.9%)
2006 F6M: 16 of 123 transactions (13.0%)
2005 F6M: 28 of 210 transactions (13.3%)
2004 F6M: 25 of 173 transactions (14.4%)
Although we’ve been pleading that that the scoflaw execs at BDC need to stop competing with the private sector on the debt side of their business and stick to the BDC Act of 1995 (see prior post “BDC Fact #1” December 3-07), have they pulled back on the capital for VC deals instead?
If true, how ironic that would be. Starve the VC community of much needed capital, yet continue to crowd out the private sector debt universe (see prior post “‘Bruce’ the mindless eating machine” May 31-08).
MRM
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