Top 5 sources of product development funding and support for Canadian innovators.
While it’s all well and good to say, “Be Innovative,” any company that has traveled down the long, often murky road of new product development knows innovation has a price tag attached. For Canadian SME’s in today’s economy, betting the business on a “maybe” can involve more risk than reward.
However, Canadian businesses don’t have to bear all the risk alone. In fact, it’s safe to say there have never been more resources available to Canadian companies to help them make their innovative ideas a reality. The following is an overview of five options available to help both start-up and established firms secure funding and support services, as well as how to best to access each type of assistance.
The mandate of the National Research Council of Canada Industrial Research Assistance Program (IRAP) is helping SMEs with the goal of generating profits through development and commercialization of innovative, technology-driven new or improved products, services, or processes. Based on the company’s profile and needs, IRAP can provide advisory services, technological expertise, as well as financial assistance. Instead of an application process, companies contact one of IRAP’s 240 Industrial Technology Advisors as a first step.
“These highly skilled individuals assist clients through every aspect of the innovation process, from concept to product, providing technical and business advice, referrals and other innovation services as needed,” says IRAP Director General Tony Rahilly. “They are experienced mentors.”
As the process proceeds, IRAP may invite a funding proposal from the company, followed by an assessment of business, financial and management capabilities; potential to achieve the expected results; and technical aspects of the project. Based on the findings, an agreement is reached, which details the project objectives and activities being funded, as well as the conditions of contribution, the expected results and conditions for payment. “Money is provided on a cost-incurred cash flow basis,” Rahilly says.
Financial support may also be provided by IRAP’s Youth Employment Program (run in collaboration with Human Resources and Skills and Development Canada).
“We also have small funds available for feasibility studies and investigation of markets where companies work in partnership with community agencies,” notes Rahilly.
2. Business Development Bank of Canada
BDC is a Crown corporation that helps SME’s grow through providing financing, venture capital and consulting services. Spokesperson Geoffrey King says there are several reasons why BDC is one of the best choices among lending institutions for companies seeking to develop innovative technologies or processes.
“We specialize in commercial financing with highly flexible solutions which are structured to protect cash flow,” he says. “BDC also has expertise in financing for intangible investments, such as innovation, R&D, mergers and acquisitions, and market expansion.” He adds that chartered banks will ask for tangible collateral before lending large sums of money for developing innovation, but they may lend a smaller amount in conjunction with BDC.
King notes that, through its venture capital division, BDC actively seeks opportunities to invest directly in technology companies, or indirectly in technology-related funds.
“We are open to examining start-ups and will go the extra kilometre to evaluate intangible assets. We do both seed deals and are present at later stages of development,” King says. “We can provide more lending flexibility than other banks, including variable payment structures, the possibility to defer capital payments and mixed or subordinate financing.”