National Post (Latest Edition)

Bank-backed growth fund shows faith in travel busi­ness

In­vest­ment in bus-ticket firm first in Que­bec

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• A “growth” fund bankrolled by Canada’s big­gest fi­nan­cial in­sti­tu­tions has made its first in­vest­ment in Que­bec by par­tic­i­pat­ing in a $15-mil­lion round of fund­ing for Mon­treal- based bus travel book­ing web­site Bus­bud Inc.

The Cana­dian Busi­ness Growth Fund ( CBGF), as well as Que­bec govern­ment- owned In­vestisse­ment Québec, led a Series C eq­uity fi­nanc­ing that was an­nounced on Tues­day for Bus­bud, which was founded in 2011 and al­lows peo­ple to find and book in­ter­city bus tick­ets in more than 80 coun­tries around the world.

“De­spite the ob­vi­ous ef­fect that the pan­demic has on Bus­bud’s travel- fo­cused in­dus­try, we believe the busi­ness has the op­por­tu­nity to come out of the pan­demic stronger than be­fore and will use this time to grow and con­tinue to build its team and im­prove their plat­form,” said Ge­orge Ros­so­latos, chief ex­ec­u­tive of­fi­cer of the Toronto-based CBGF, in an email.

Bus­bud says the funds from the Series C will go to­ward the com­pany’s tech­nol­ogy, ex­pand­ing its 50-per­son work­force and grow­ing the num­ber of mar­kets that it serves. Cur­rently, around 90 per cent of the com­pany’s busi­ness is spread across North Amer­ica, Latin Amer­ica and Europe, with its web­site and app al­low­ing cus­tomers to shop for bus tick­ets from more than 3,900 bus com­pa­nies in 16,000 ci­ties.

“It’s a fun­da­men­tal need to travel from Point A to Point B for a lot of peo­ple, whether that’s for work, school or even to take care of other peo­ple,” Bus­bud CEO and co- founder Louis-Philippe “LP” Mau­rice said in an in­ter­view. “So we want to make sure they’re still able to move around.”

Bus­bud is paid a com­mis­sion for its ser­vices by the bus op­er­a­tors, such as Grey­hound. The com­pany has also sprin­kled in some train travel and car-shar­ing to its op­tions, Mau­rice said, and added a can­cel­la­tion- in­sur­ance fea­ture that’s proven pop­u­lar dur­ing the pan­demic.

Although COVID-19 has taken a toll on the travel busi­ness — and a se­cond wave is wash­ing over some places — Bus­bud says its pre- pan­demic rev­enue was grow­ing at a 110- per- cent rate year- over- year. It also sees its ef­forts to di­ver­sify the coun­tries in which it op­er­ates and the ser­vices it of­fers as al­low­ing for fur­ther growth.

Mau­rice said Bus­bud has been see­ing a “pretty steady re­cov­ery” in most mar­kets over the past 12 weeks as well, and that bus op­er­a­tors have en­acted var­i­ous COVID- 19- re­lated health and safety pro­to­cols.

“We’re really, really con­fi­dent that we will be able to weather the storm,” Mau­rice said.

The Series C for Bus­bud also comes as the coro­n­avirus pan­demic con­tin­ues to put fi­nan­cial pres­sure on firms and make for an un­cer­tain global in­vest­ing en­vi­ron­ment. That en­vi­ron­ment is mak­ing it harder than nor­mal for small and medium- sized com­pa­nies to grow into big­ger firms, which was a pre- ex­ist­ing is­sue in Canada.

The CBGF was launched in 2018, fol­low­ing work done by the fed­eral govern­ment’s Ad­vi­sory Council on Eco­nomic Growth, which found many Cana­dian com­pa­nies weren’t grow­ing after they reached a cer­tain point. And Ros­so­latos says that, at the mo­ment, some in­vestors have had to fo­cus on their ex­ist­ing port­fo­lio or hold off on ad­di­tional deals.

“How­ever, the growth cap­i­tal gap in Canada has be­come much larger as a re­sult of the pan­demic,” he said. “At CBGF, we have cho­sen to ‘ lean in’ to sup­port en­trepreneur­s where we could.”

The Toronto-based CBGF, which is backed by 13 of Canada’s big­gest fi­nan­cial in­sti­tu­tions, started out with cap­i­tal com­mit­ments of $545 mil­lion from share­hold­ers such as Royal Bank of Canada and Man­ulife Fi­nan­cial Corp. The fund typ­i­cally shoots for in­vest­ments of be­tween $3 mil­lion to $20 mil­lion in es­tab­lished Cana­dian com­pa­nies, tak­ing minority own­er­ship stakes in them in re­turn.

CBGF has now in­vested $137.8 mil­lion in 15 com­pa­nies, in­clud­ing seven in­vest­ments made dur­ing the pan­demic, Ros­so­latos said.

“We believe there is scope to fur­ther grow our fund size amongst cur­rent and po­ten­tially new in­sti­tu­tional in­vestors,” he said. “The growth cap­i­tal gap in Canada con­tin­ues to ex­pand and CBGF has an op­por­tu­nity to make an even more mean­ing­ful im­pact in the com­ing years.”

CBGF was joined in the Bus­bud in­vest­ment by Crown cor­po­ra­tions Ex­port De­vel­op­ment Canada and BDC Cap­i­tal, as well as by Sin­ga­pore- based K3 Ven­tures. Pre­vi­ous Bus­bud in­vestors Inovia, Plaza Ven­tures, and Clar­idge also took part in the Series C, which in­creased the com­pany’s to­tal fundrais­ing to date to $40 mil­lion.

We believe there is scope to fur­ther grow our fund size.

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