News Rundown 2/24/25: BDC Capital Goes Big On Growth, CVCA's VC Trends Show Problems, High Speed Rail Going Nowhere Fast, and Cohere vs The Media Giants

Matt Cohen and John Ruffolo talk about the BDC Capital $1B fund, the state of early-stage VC funding in Canada, and the rise of mega-deals dominated by U.S. investors. They also discuss the feasibility of the Quebec City-Toronto high-speed rail project, AI copyright lawsuits, potential Trump-era tariffs, and the future of open banking in Canada.

Key Topics

BDC Capital’s $1B Growth-Stage Investment Fund (00:42)

* BDC Capital announces a $1B investment fund, with:

* $500M Growth Venture Fund for direct investments and co-investments.

* $450M Growth Equity Partners Program for minority stake investments in mid-market companies.

* Concerns were raised by Mark McQueen about lack of early-stage funding

* John Ruffolo’s take:

* Canada’s early-stage VC ecosystem is underfunded.

* BDC was meant to focus on riskier, early-stage investments, while EDC (Export Development Canada) focused on growth-stage.

* Shift towards later-stage funding may leave early-stage startups without necessary capital.

Canadian Venture Capital Funding Trends (04:55)

* CVCA’s 2024 report:

* $7.86B invested across 592 deals, up 10% from 2023.

* Mega deals ($50M+ rounds) comprised 62% of total VC investments.

* Seed-stage funding fell 50% to $510M.

* Notable mega-deals:

* Clio – $1.24B Series F

* Cohere – $616M Series D

* Blockstream – $289M convertible note

* Waabi – $275M Series B

* U.S. investors dominate:

* 32% of Canadian VC deals had U.S. investor participation.

* Clio’s round was entirely U.S.-funded.

* John Ruffolo’s analysis:

* Canada needs stronger domestic venture capital.

* U.S. capital will always flow into late-stage companies, but early-stage funding is crucial for long-term ecosystem growth.

* Lack of Canadian IPOs in 2024 is a concerning sign.

Quebec City-Toronto High-Speed Rail: $90B Boondoggle? (09:17)

* Massive infrastructure proposal:

* $60B–$90B price tag, with $3.9B allocated to planning alone.

* Construction won’t begin for at least five years, taking 5–7 years per segment.

* Criticisms:

* Timing is political (announced right before an election).

* Where is the funding coming from? Canada’s finances are already stretched.

* Route selection is questionable – e.g., Laval getting a stop over Mississauga/Brampton.

* John Ruffolo’s take:

* Financial viability is unclear – pension funds won’t invest without guarantees of ridership.

* Other priorities (e.g., Arctic infrastructure, national security) are being ignored.

* The government should invest in digital infrastructure instead (e.g., full 5G coverage).

AI Copyright Lawsuits: Cohere vs. Media Giants (14:35)

* Major media coalition (The Atlantic, Forbes, The Guardian, Vox, etc.) sues AI startup Cohere for copyright infringement in New York.

* Allegations: Cohere scraped and displayed copyrighted content without permission.

* Seeking $150K per work infringed + an injunction against Cohere using their content.

* Growing legal pressure on AI companies:

* NY Times vs. OpenAI – potentially setting a massive precedent.

* Anthropic, Meta, and Thomson Reuters have faced similar lawsuits.

* John Ruffolo’s view:

* Copyright concerns were always an issue for AI models.

* AI startups may have to pay into a licensing pool (like the music industry).

* Investor risk increasing – legal uncertainties may impact funding for public LLMs.

Trump’s Potential Tariffs: What Canada Should Do (19:25)

* Trump’s trade policies likely to return if re-elected, impacting Canadian businesses.

* John Ruffolo’s recommendations:

* Canada must fix internal issues first (e.g., interprovincial trade barriers).

* Tariffs won’t disappear for at least four years, so businesses must adapt.

* Canadian businesses will have to shift profits & operations to the U.S. to remain competitive.

The Future of Open Banking in Canada (22:00)

* U.S. fintech sector gains a boost as Trump administration removes CFPB regulations.

* Chime & Klarna expected to benefit from deregulation.

* Canadian Conservatives promise major push for open banking if elected.

* Liberals have been slow to act on open banking despite six years of promises.

John Ruffolo’s perspective:

* Open banking will make Canadian banks stronger, not weaker.

* Canada must prepare for U.S. competition in financial services.

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