By the Canadian Business Growth Fund (CBGF)

Canada’s economic future depends not only on the innovation of startups or the scale of multinational corporations, but on the steady rise of mid-sized businesses—the often overlooked “missing middle.” These companies, typically generating between $10 million and $100 million in revenue, are critical drivers of employment, productivity, and regional economic development. Yet, when it comes to accessing the capital they need to grow, they face a persistent gap.

This mid-market financing challenge is more than anecdotal. Canada’s capital landscape is polarized: early-stage ventures have access to a growing pool of venture capital, while mature businesses can tap into institutional private equity or public markets. But mid-sized firms—too big for venture capital and too small or early for traditional private equity—are frequently left in the lurch.

This is the “missing middle” of Canada’s capital markets. And in today’s economic climate, the consequences of this gap are even more pronounced.

A Challenging Climate for Growth

Canadian businesses are currently navigating a landscape marked by rapidly rising interest rates in 2023, slowing GDP growth, and increased geopolitical uncertainty. The economic aftershocks of global supply chain disruptions, paired with inflationary pressure, have added new layers of complexity for business owners.

Meanwhile, escalating trade tensions and proposed U.S. tariffs, particularly in key sectors such as aluminum, agriculture, and automotive, could restrict market access and squeeze margins for mid-sized exporters. These shifting sands create a greater need for strategic, patient capital that supports long-term growth without imposing short-term pressures.

At the same time, many Canadian businesses are increasingly looking to reduce overreliance on U.S. markets and build greater domestic resilience. But diversification—whether through innovation, international expansion, or vertical integration—requires capital, and for mid-market companies, that capital remains in short supply.

The Growth Capital Gap

Growth-stage businesses often seek capital to expand into new markets, make strategic acquisitions, invest in talent, or scale operations. Yet despite their solid fundamentals and proven business models, many struggle to find patient, minority growth equity.

Traditional private equity may demand majority control or push for aggressive timelines that don’t always align with a founder’s vision. Meanwhile, bank financing may be limited without sufficient collateral or cash flow history. As a result, many promising companies remain constrained by limited domestic options—unable to pursue opportunities that could meaningfully move the needle for the broader Canadian economy and, at times, turning to investors south of the border instead.

CBGF: A Purpose-Built Solution

Launched in 2018 as a collaborative initiative backed by Canada’s leading financial institutions, CBGF was created specifically to address this capital void. Our mission is simple but ambitious: to empower Canada’s high-potential mid-sized companies with the long-term, minority growth capital they need to scale.

CBGF invests between $5 million and $20 million in established, growing Canadian businesses in exchange for a minority equity stake. What sets us apart is our approach: we are long-term partners, not short-term profit seekers. We align with founders and management teams to support their growth aspirations, without requiring control or pushing for premature exits.

The Mid-Market Mandate

For the M&A deal-making community, the capital market inefficiencies in Canada’s mid-market are familiar territory. The middle-market growth community understands that efficient, accessible capital is a cornerstone of a vibrant M&A ecosystem—and that closing the mid-market gap unlocks not just individual business success, but a more resilient and diversified economy.

By bridging the gap between early-stage VC and large-scale PE, CBGF helps build the pipeline of future acquisition targets, strategic partners, and investment opportunities that fuel Canada’s economic engine.

Opportunity Ahead

The opportunity is clear. Canada’s mid-sized companies represent a vast, underutilized growth engine. With the right capital and strategic support, these businesses can scale nationally, compete globally, and create significant value for stakeholders across the board.

As economic uncertainty tests the resilience of businesses across the country, one thing remains constant: access to the right kind of capital can be a game changer. At CBGF, we’re proud to help build that bridge—to bring capital to the middle, and to champion the ambitions of Canadian entrepreneurs who are ready to take their next big leap.