Most of the Venture Capital (VC) firms in the US have been slowing down on their funding, however, CIBC Innovation Banking recently announced that they are investing $1.5 billion towards growth capital commitments. The funds will mostly be used for focusing on later-stage companies in the fields of software, life sciences, healthcare, and clean tech sectors.
For the past two years, there have been venture capital firms that have been raising funds and experts in the field of venture capital believed it to grow at an “unprecedented rate”, however, such moves have been lessening according to them.
On the brighter side, experts mention that CIBC now has been successfully filled this existing gap, by using its non-dilutive capital. The bank is now in a position to make several deals that will range from $50 million to $100 million in the capital.
The spokespersons of CIBC shared that their main job is to be able to come to the aid of the entrepreneur and the VCs, and also help in growing the business along with incremental capital. They further said that CIBC does not replace extend, but they instead indulge in extending the runway.
They are on the continuous lookout for opportunities during good times to allow VCs to relax, and then they can be using the capital of the bank to help in the rapid growth of the portfolio companies. It's quite hard to analyze valuations, but the spokespersons said that if it is within the capacity of CIBC, then it can extend the company's capital runway by 18 months or even two years.
Most companies and VCs have actually been pulling back in the early days when the novel pandemic hit two years back in 2020. Experts in the VC field said that this was a great chance for CIBC to be able to work with the top VC clients in the industry and also help their portfolio companies.
This would also explain why CIBC can now claim itself the second position in the market when it comes to bank loans to companies that operate in the Series A to Series C market. They have already allocated more than $6 billion in debt financing, and this has been over the last four years. The VC funds that have been included here are Crunchbase, Lightspeed, and TigerConnect.
As of now, there have been nine financed companies that have made initial public offerings (IPO) till date, with the most recent one being Expensify which had gone public last year in November 2021.
The experts also identified these as one of the reasons why their business was successful. One of the other reasons for their success was because there were others who were not putting out term sheets that time in spring, and CIBC was, and this is perhaps why their business has grown to 100% a year over the last three years.
Now that businesses have continued to operate normally with cases dipping, surely the startup space and the Venture Capital industry could be expected to see a huge change in the upcoming times.