Understanding our Investment Criteria: What the Canadian Business Growth Fund Looks for in Potential Partners

Finding an investment partner that believes in your business and can help you grow can be a huge asset for companies looking to take the next step – but finding the right business partner is essential, so you must have some vetting criteria.

At the Canadian Business Growth Fund (CBGF), it is also essential for us to choose the right partners to invest in. We need to know that it is the right fit so that a productive partnership can be formed.

At CBGF, we are committed to supporting the growth and success of dynamic mid-market companies across Canada. But what exactly do we look for in potential partners? In this blog post, we’ll break down our investment criteria to help you understand what makes a company an ideal candidate for CBGF.

1. Annual Revenue Between $5 Million to $100 Million

CBGF seeks out mid-market companies with annual revenues ranging from $5 million to $100 million. This range is crucial as it signifies that a level of maturity and sustainability has already been established, which aligns with our mission to fuel growth. Companies within this revenue range have often passed the initial start-up phase and have established themselves in their respective markets. This is when they are ready to scale and ramp up their operations.

2. Minority Equity Stake of 10% to 40%

We aim for a minority equity stake in the companies we invest in, ranging from 10% to 40%. This approach allows businesses to maintain their ownership while benefiting from our strategic support and resources. It’s a win-win situation, enabling companies to continue pursuing their growth strategies with our backing and guidance along the way.

3. Entrepreneurial Management Team

We look for entrepreneurial management teams that have a clear vision for growth and a track record of successfully executing their strategies. We value leadership that is forward-thinking, adaptable and committed to the company’s long-term success. In addition, we want our partner management teams to share similar values as CBGF: partnership, passion, excellence, accountability and integrity.

4. Investment Size Between $5 Million to $20 Million

CBGF typically invests between $5 million to $20 million in its partner companies. This investment size allows us to provide meaningful support without taking control or stifling the company’s operations. It’s a strategic range that aligns with the growth ambitions of our partner companies.

5. Based in Canada

We are proud to support Canadian businesses. Our focus is on companies headquartered in Canada, as we believe in the potential and resilience of our entrepreneurs and businesses. Investing in homegrown businesses is at the core of our mission.

6. Significant Expansion Opportunity

One of the most exciting aspects of our work is identifying and supporting companies with substantial expansion potential. We are drawn to partners who have a clear vision for accelerated growth and the strategies in place to achieve it. Together, we aim to unlock new opportunities and take businesses to the next level.

Areas where we do not invest:

While understanding what we look for in potential partners is essential, it’s equally important to know what we do not invest in:

  • Start-ups & Unproven Business Models: We focus on companies that have established themselves and demonstrated a growth trajectory. Start-ups and unproven business models are a stage early for us.
  • Controlling Equity Stakes: CBGF seeks minority equity stakes to preserve the autonomy and entrepreneurial spirit of the companies we invest in.
  • Excessive Leverage: We are cautious about excessive leverage as it can pose risks to a company’s financial stability.
  • Change of Control Buyouts: Our primary focus is on growth and expansion, so we do not engage in change of control buyout transactions.
  • Resource Extraction: We do not invest in resource extraction industries.
  • Real Estate: Real estate ventures are also outside the scope of our investments.

Contact CBGF today

Understanding CBGF’s investment criteria is key for companies seeking partnership from our firm. If your business aligns with our criteria and you believe we can help you achieve your growth goals, we encourage you to reach out. Together, we can drive innovation, create jobs, and contribute to the success of Canada’s business landscape. Contact us today to start a conversation!