Looking to scale your start-up into North America? Toronto is a prime location to access both European and American markets and has an incredible talent pool. In fact, we were ranked as the 6th best country in the world for business, with the US coming in at 17, and Mexico at 54. Part of that is because of the strong government investment in companies that are advancing our long-term economic interests.
Canada’s grant landscape can be overwhelming, as there are many places you may need to look to find available funding. TBDC has been helping innovative start-ups move their businesses to North America and scale globally since 1990.
To help you figure out all the financing options available for your start-up, we worked with our ecosystem partners, Easly, who specialize in accelerating tax credit & grant funding, to build a guide to government grants and credits available to Canadian start-ups. If your business qualifies for government grants or receives tax credit refunds, Easly can help you access them months in advance. This is important because although tax credit and grant programs are extremely valuable, their payment timelines can leave you starved for working capital.
But first, let’s see what programs your business may qualify for.
Sector Agnostic Government Grants
Canada is a globally competitive market to operate from, and our treaties and trade agreements give businesses access to more than 1.4 billion consumers in 50 countries around the world. No matter what kind of business you’re operating, you may be eligible for government support.
Easly already did a great post on two of the biggest programs, IRAP & SR&ED. But if you need the cliff notes; IRAP is for SMEs looking to bring technological concepts to market while the SR&ED program is a tax credit for companies spending on R&D and driving innovation. SR&ED isn’t a grant, but it’s an enormous funding program that Canadian businesses should know about.
Another sector agnostic program is run through our Trade Commissioner Service, CanExport. They provide a variety of funding options for companies looking to break into new international markets. They also provide funding for associations and community projects.
The Canadian Government also runs a program called Innovative Solutions Canada. They periodically run specific funding programs and contracts, but you can generally apply for funds to help test innovations.
Representing more than 10% of Canada’s GDP, manufacturing is a central contributor to global economies. This sector creates more than 1.7 million full-time jobs and generates 42% of all private-sector Research & Development activity. But like any industry, technological advancements, shifting consumer attitudes, and supply chain issues force players to adapt to remain globally competitive.
This industry is so important to the Canadian Economy that there is an Advanced Manufacturing Supercluster (NGen). Allocating up to $250 million, the expected economic impact of this program is expected to generate more than 13,500 jobs and generate more than $13.5 Billion in GDP over 10 years.
A brief note on the Innovation Superclusters Initiative – Funded by Innovation, Science and Economic Development Canada (ISED), the Innovation Superclusters Initiative is comprised of five unique superclusters for five unique industry streams. These superclusters offer support and collaboration opportunities along with up to $1 Billion in government funding opportunities each (matched dollar-for-dollar by industry partners). You’ll see these Superclusters come up throughout this post.
So how can start-ups get in on some of this funding? NGen offers a range of tailored business help for SMEs. More specifically, they provide financial support of $50k – $200k for eligible pilot projects, and $100k – $500k for eligible feasibility studies. NGen has also provided large grants for Supercluster projects, however, these funding opportunities are currently on hold until further notice (as of June 2022).
Canada is the 12th largest vehicle manufacturing country, producing 1.4 million vehicles in 2020, contributing $12.5 billion to our GDP. That same year, the industry directly employed more than 117,200 people, with an additional 371,400 people in aftermarket services and dealership networks.
Yes, most automotive manufacturing facilities are run by big multinationals, mainly because there are large capital costs to starting an automotive manufacturing facility. But that doesn’t mean there aren’t opportunities for start-ups in the industry.
Between 2015-2020, the Candian Government created incentives for automotive manufacturing suppliers to target and partner with Canadian Automotive manufacturers to fill production gaps. After deploying over $100 Million in 5 years, they have switched focus and are looking to encourage lean manufacturing, the adoption of industry 4.0 technologies, and pre-market R&D. Today, most Automotive Supplier Innovation grants focus on; AI, Deep Learning, Computer Vision, lean manufacturing, and technology adoption.
Earlier this year, Ontario launched the Advanced Manufacturing and Innovation Competitiveness program focusing on capital equipment, technology adoption, and skills development for manufacturers focusing on aerospace, automotive, chemical, information and communications technology, life sciences, and steel. The program offers support in the form of cost reimbursement, interest-free loans and non-refundable grants for specific circumstances.
Opportunities for businesses moving to Canada
SME automotive supply chain companies operating in Ontario have access to the Ontario Automotive Modernization Program. Through this program, eligible companies can get funding to cover up to 50% of their project’s cost. As part of the qualification, the company must have a manufacturing location in Ontario by the time their project starts and fewer than 500 people are employed in Ontario.
Machinery & Equipment
Canada has some big ambitions for its manufacturing sector. The country’s goal is to increase manufacturing exports to overseas markets by 50% come 2025. Not only do manufacturers need to invest in new manufacturing technologies and equipment, they also need a skilled workforce who knows how to operate said machinery.
The Industrial Machinery & Equipment wholesale market size is $27.1 Billion in revenue in 2022. The industry has a few main applications by product type that further segment the market and open up additional funding opportunities for start-ups moving to North America. The main industry applications include; Construction Machinery, Agricultural Equipment, Packaging Equipment, and Plastic Processing Equipment.
You can find grant funding in this sector from the Scale AI supercluster and Strategic Innovation Fund. Like many sectors, SR&ED tax credits may also be available to you if your R&D work is eligible. These credits can result in a large refund from the CRA.
If you’re looking to implement smart manufacturing or compare potential offerings, make sure you check out Easly’s comprehensive post on the NRC’s Next Generation Manufacturing program.
In the 2022 Advanced Manufacturing Outlook Report, 86% of Canadian manufacturers say that new service offerings are a critical or high priority. Quick changes in the market and the ever-condensing buyer’s cycle mean manufacturers need actionable data and smart factory integration to ensure future competitiveness.
The industry is looking for solutions to many problems, including:
- Funding Challenges
- Lack of Skilled Talent
- Integrations with legacy technology
- An overwhelming number of customer decisions and rapid changes in technology
Nine out of fifteen of the largest global chemical firms by sales have manufacturing operations in Ontario, with almost three-quarters of the production being exported to global markets. Our chemical sector is vast, producing everything from synthetic resins to fertilizers and petroleum refining. But our latest breakout sector is the bio-hybrid chemicals. With an abundant supply of agricultural and forestry biomass, there are many opportunities for midstream biorefineries and biofuel processors as well as downstream biomaterials manufacturers.
Many companies in the space are applying for patents that focus on performance characteristics, healthcare, and batteries. There are clear demands for solutions in all those spaces, and lots of government funding to be found.
Not only is there a wide range of government funding available for your chemical production start-up through some of the familiar programs we’ve spoken about, but there is also growth in venture capital investments. While some of this investment is being used to augment a corporation’s research pipeline, a big portion of the corporate venture capital investment is in technology, including AI, 3D printing, hydrogen/fuel cells and analytics.
Food & Beverage
In 2020, Canada’s Agrifood system employed 2.1 million people, providing 1 of every 9 jobs in Canada. Our country has over 193,492 farms, covering 6.9% of Canada’s Land, and the average farm size doubled over the last 50 years due to increased consolidation and technological advances.
Canada is currently the 5th largest agricultural commodities exporter in the world, and there is plenty of opportunity for new players. Years of urbanization have created infrastructure problems like food deserts. In addition, while the majority of Canadians live close to the border, there are many remote towns with harsh climates that make food growth and transportation difficult and costly. These issues need solutions from innovative companies, and the government has funding to support them. Easly outlined a few of these funding opportunities for the ag sector in a recent blog post.
Opportunities for Canadian Start-ups
A wide range of cities and geographies create a wide range of opportunities. Not only are there many issues to solve around transportation and storage, but farm life itself is changing rapidly, and what can be thought of as a farm is starting to shift.
There are advancements in everything from livestock to environmental controls. If you’re interested in starting your own farming venture, there is little more productive than a married hydroponic and aquaponic system.
There are some robust grant streams for Canadian Agricultural start-ups, including; the Canadian Agricultural Partnership, the Accelerated Investment Incentive, and the Protein Industries Supercluster.
Food & Beverage Processing
The second-largest manufacturing business in Canada by revenue, food and beverage processing generates 2% of our GDP and employs 290,000 people. In 2021, Canada had approximately 7,800 processing facilities, and 91% of them had under 100 employees.
In an industry hit hard by COVID disruptions, most companies recovered to pre-pandemic levels by the fall of 2020, and the sector is still expected to see a growth of 15.6% over the next few years.
Opportunities for Canadian Start-ups
As restaurants are still finding their post-pandemic stride and inflation is rising, customers are purchasing more produce, and are increasingly searching for value-added products. Convenience has become a focal point, with grocery e-commerce retail doubling from 2020 to 2021.
Circular economics are finally moving out of the sustainability classrooms and into the real world, and there are many opportunities in Canada’s food cycle to divert waste. One of our innovative clients is dehydrating fresh produce to create shelf-stable and nutritious products for customers to enjoy year-round.
Health & Life Sciences
Canada has long been an innovator in health and life sciences, and the country has lofty goals to remain a leader in the industry. Looking to double the size of our health and biosciences sector by 2025, the Canadian government wants the industry to become a top-three global hub for the sector. Many of the nationwide programs we’ve mentioned that provide funding for innovative endeavours include funding opportunities for the health and life sciences sector. NGen, the advanced manufacturing supercluster, and the Digital Technology Supercluster provide funding for the sector; IRAP funds certain projects in the space, and SR&ED encourages innovation across the industry.
We recently did an overview of the Canadian Medtech market with advice from one of our esteemed mentors. From 2015 to 2020, Canadian medical device exports increased from CAN$3.2 billion to $4.4 billion and imports increased from $8.6 billion to $9.9 billion.
Opportunities for Canadian Start-ups
Because of our close proximity to the American market, we make an ideal location for companies looking to get access to government support and funding in tandem with steady expansion.
Those considering a new start-up venture would rarely think of this space as full of opportunity. Research and Development pipelines are long, trials are expensive, and Canada has five of the world’s largest developers already present. But, there are a range of places innovative thinkers could put their skills to use:
- Data sharing to help providers learn more about conditions and disabilities
- Drug abuse mitigation
- Predictive diagnosis
- Personalized treatment options
Opportunities for businesses moving to Canada
Ontario is home to some 1,900 life sciences firms that employ some 60,000 people and generate over $38 billion in revenues annually. The pharmaceutical sector alone is responsible for $25 billion of those revenues and employs about 28,000 people. And, about 56% of Canadian pharmaceutical R&D spending happens in Ontario.
Accelerating Your Grant Funding
In part 1 of our Grant funding rundown, we highlighted funding opportunities in the Manufacturing, Agriculture, and Health and Life Sciences sectors, along with a few sector-agnostic opportunities for businesses. There’s a lot of funding available to the savvy entrepreneur. But, getting approved for these grants does not immediately make your business flush with capital. These grant programs can have long disbursement timelines. Although you’ll have money coming to you as outlined in your funding agreement, it can take months before you see any funds.
Easly Advances help companies bridge this capital gap. Through their streamlined Capital-as-a-Service platform, you can get access to your future grant disbursements today, and continue to advance them on-demand, as your company needs. Easly’s unique approach to financing makes them an attractive lender. They only require priority on the program they’re advancing, which your other creditors will like. Also, the process is designed to be cash-flow positive to your business – all fees are recouped from the grant disbursements and there are no other payments throughout the year.
Here’s an illustration to show you how Easly Advances work:
This example illustrates a grant program that disburses payments monthly. With Easly Advances, you can bring forward those grant payments and receive them in month one. As the granting body disburses the monthly payments, the advance gets paid back to Easly. Once paid back, you can advance another portion of your grant disbursements.
Grant programs vary in their funding agreements. Even within the same program, funding agreements can differ from company to company. Connect with one of the lending specialists at Easly to see how their advances can help your business grow in Canada.
Growing your Start-up in North America
Are you part of an international start-up looking to expand into the North American Market?
Toronto Business Development Centre (TBDC), is Toronto’s original business incubator, with an offering specifically designed to help established businesses reach their potential in the western hemisphere. Since our inception, we have helped over 9000 start-ups grow and scale.
Part of what makes our Start-up Visa Program and Soft Landing program so great are our innovative ecosystem partners, mentors, and capital networks that our founders get access to.
Want to see if your start-up is ready? Book a call today!