Leveraging government funding to grow

Market gap

As startups mature from R&D to building and launching their products, CEOs will witness an acceleration in their cash burn. Ventures could find themselves at a critical point, where they require more capital inflows. At this stage, the only funding sources available are friends and family, angel investors and a handful of pre-seed-stage VCs.

Value of non-dilutive financing

Another financing option for startups is non-dilutive financing—a combination of government grants and short-term loans. Government funding provides the advantage of low-cost non-dilutive capital. With the minimum dilution, government grants help companies de-risk products, prove market traction and accelerate expansion, which can result in a higher company valuation. This puts CEOs in a better position to assess other sources of funding, such as venture debt, venture capital and commercial loans, that are available for later-stage companies.

Leverage government funding

It is important to also acknowledge that the time cost associated with grant applications can be significant. Most fast-growing startups cannot wait for the lengthy approval process and reporting time required to get the cash funding. To mitigate the time-delay problems of using grants, CEOs can consider leveraging tax credits and grant financing (short-term loans) to bridge the turnaround time between submission, approval and receipt of funds from the government. This solution can inject much-needed cash liquidity into the company and enable startups to deliver on projects in a timely manner.

Interactive infographic user guide

Use the interactive infographic below to discover the best funding source for your company. There are more than 2,500 programs available at different times of the year for companies in various industries and stages.

Explore the appendices and reach out to agencies and funding advisors in your local Ontario Regional Innovation Centre (RIC) to identify your non-dilutive funding strategy. Please refer to the agencies’ websites for detailed funding eligibility and restrictions.

Use the Solution Readiness Level (SRL) or the development stage of your company to find the funding available to you. By hovering your cursor over each development stage, you will be able to view the grants eligible during that phase.
 

• Research &
  development
  SRL 1–2
• Proof of concept /
  prototype
  SRL 3–5
• Pilot / demo /
  MVP
  SRL 6–7
• Commercialization /
  market development
  SRL 7–8
• Expansion /
  scaling
  SRL 8–9
•  
•  
•  
•  GST, HST, PST
•  GST, HST, PST
•  SR & ED
•  SR & ED
•  SR & ED
•  SR & ED
•  SR & ED
•  Hiring grants
•  Hiring grants
•  Hiring grants
•  Hiring grants
•  Hiring grants
•  NRC-IRAP
•  
•  
•  NRC-IRAP
•  NRC-IRAP
•  I2I
•  
•  
•  
•  IDEaS
•  IDEaS
•  IDEaS
•  IDEaS
•  IDEaS
•  
•  CMF
•  CMF
•  CMF
•  CMF
•  
•  
•  CIIP
•  CIIP
•  CIIP
•  
•  
•  
•  SIF
•  SIF
•  
•  
•  Superclusters
•  Superclusters
•  
•  
•  SDTC Seed Fund
•  
•  
•  
•  
•  
•  SDTC Cleantech Fund
•  SDTC Cleantech Fund
•  
•  
•  ISC
•  ISC
•  ISC
•  
•  L2M
•  L2M
•  
•  
•  
•  
•  
•  
•  CanExport
•  CanExport

cash flow

0

> time

•  Grant financing
•  Grant financing
•  Grant financing
•  Grant financing
•  Grant financing
•  Friends & family
•  Friends & family
•  Friends & family
•  
•  
•  Angel investors
•  Angel investors
•  Angel investors
•  
•  
•  Pre-seed stage VCs
•  Pre-seed stage VCs
•  Pre-seed stage VCs
•  
•  
•  
•  
•  
•  Venture debt
•  Venture debt
•  
•  
•  
•  Venture capital
•  Venture capital
•  
•  
•  
•  Private equity
•  Private equity

Appendices

1. The Business Benefits Finder is a comprehensive tool developed to help Canadian businesses quickly find and identify government programs and services available to them. These benefits can include COVID-19 support, funding, loans, tax credits, wage subsidies, advice and expertise, and partnering and collaboration.
2. The following table lists information on the funding sources in the infographic.
   

   Funding name	Agency	Industry
   GST, HST, PST: GST/HST credit	Canada Revenue Agency	All
   SR&ED: Scientific Research and Experimental Development tax credit	Canada Revenue Agency	All
   Hiring grants	Various agencies	All
   I2I: Idea to Innovation	Natural Sciences and Engineering Research Council of Canada	All
   NRC-IRAP: National Research Council Industrial Research Assistance Program	National Research Council	All
   SDTC Seed Fund: Sustainability Development Technology Canada Seed Fund	Innovation, Science, and Economic Development Canada (ISED)	Sustainability
   SDTC Cleantech Fund: Sustainability Development Technology Canada Cleantech Fund	ISED	Cleantech
   ISC: Innovative Solution Canada	ISED	All
   CIIP: Canadian International Innovation Program	ISED	All
   SIF: Strategic Innovation Fund	ISED	All
   Superclusters: ·       Next Generation Manufacturing Canada Advance Manufacturing Supercluster ·       Digital Technology Supercluster (BC) ·       Protein Industries Supercluster (AB) ·       ScaleAI Supercluster (QC) ·       Ocean Supercluster (Atlantic)	ISED	Various
   CanExport	Trade Commissioner	All
   L2M: Lab2Market	Mitacs Accelerate Program	Academia
   IDEaS: Innovation for Defence Excellence and Security	Government of Canada and Canada’s cable, satellite and Internet protocol TV distributors	Defence application

Produced in partnership with:

The author would like to thank Elias Bardouniotis (ISED), Laura Yu (Mitacs) and Rajev Pathmanathan (Ayming) for their assistance in preparing this article.