Canada’s Scientific Research and Experimental Development (SR&ED) program is a tax incentive designed to encourage small and medium-sized Canadian businesses to invest in R&D. Around 22,000 businesses have participated in the program to date, and the federal government is looking to make the initiative more attractive to a wider range of ventures with a host of recent updates; these include raising the ceiling of expenditures on which privately owned corporations (CCPCs) can claim SR&ED credits and allowing certain public corporations to qualify for the 35 per cent tax credit that had previously only been available to CCPCs. As well, the fall economic statement included a commitment to invest $1.9 billion in the SR&ED program over the next six years.
The overall goal of these policies, explains Pedro Antunes, chief economist at the Conference Board of Canada, is to help make Canada more competitive in the international market. “Capital is mobile and businesses are often global,” he says, “so they will invest where they feel they have the greatest return.”
By allowing participants to write off more investments under the expanded SR&ED program, Antunes notes, companies may be compelled to spend more on the kind of early-stage exploration that will drive innovation. Moreover, in the wake of recent reports detailing how Canada’s economic growth is lagging behind that of its OECD peers, the feds are implementing these reforms with the aim of boosting the country’s productivity. The goal is to “get more IP developed in Canada,” he says. “When we develop IP and we commercialize it and own it, it can help generate ongoing revenue.”
Canadian startups’ decade in review
In a recently released report, tech consulting group The Narwhal Project assessed how Canadian ventures have fared over the past decade by looking at the trajectory of startups that launched in 2014. In the context of comparable ventures around the world, author Charles Plant situated Canada in the middle of the pack when it came to founding tech companies. Other highlights: on average, Canadian companies raise $30 million (higher than peers in the U.K. and Germany); in fact, the U.S. was the only country where startups secured more funding overall. Now for the bad news: per the report, only 8.4 per cent of Canadian companies make it to a Series B round — in practical terms, that means for companies starting to scale, we’re at the bottom of the heap.
Launching pads
Aruna Revolution, a health tech company based in Nova Scotia, just struck a deal on “Dragons’ Den” and has announced plans to open its own fibre extraction facility in Dartmouth, N.S., marking a major milestone in its mission of tackling the environmental burden related to menstruation. Conventional menstrual products generate significant waste — in North America, we send as much as 20 billion pads, tampons and wrappers to the dump each year, according to Aruna’s calculations. The company’s novel alternatives are made with natural fibres and no plastic, which means they are entirely compostable. As Aruna’s CEO, Rashmi Prakash, explains, sourcing and extracting materials has been a significant challenge — thus far, her team has relied on shipping fibres from Europe — and this domestic plant will allow the company to further reduce its timelines and carbon footprint.
CO2-conversion collaboration
Toronto-based CERT Systems, which has developed tech that converts carbon into high-value chemicals using water and electricity, has partnered with Japanese materials company AGC. This collaboration will drive research on using CO2 in the production of ethylene, a hydrocarbon used in many sectors and found in everything from paint to detergent to toys.
Wheels in motion for EV-charging robots
When it comes to swapping gas-powered cars for EVs, the challenge of charging is a major roadblock for many Canadians: condo and apartment residents often lack easy access to chargers, and even homeowners may balk at the high cost of installing this technology. Toronto-based Kiwi Charge hopes to combat those frustrations with its fleet of autonomous EV-fuelling robots, which can map out parking structures, locate customer cars and juice them up. The company is currently in talks with several major prospective clients, including a Big Three U.S. carmaker, two Canadian cities and Tridel, one of the country’s biggest real-estate firms.
By the numbers
5: The number of months Promise Robotics estimates it will take to build a house with the help of its autonomous construction robotic arms. (That figure is about half the time it typically takes for a conventional new-build.)
$16 million: The amount of Series A funding raised by Oxford Cancer Analytics (OXcan), a medtech firm developing blood tests to catch cancer as soon as possible. OXcan’s initial focus is on early lung cancer detection: although early diagnoses greatly improve patients’ chances of survival, a whopping 70 per cent of cases are currently caught once the disease has progressed past the localized stage.
$9 million: The amount that the Quebec government is providing to help five local startups scale and export their tech internationally.
Rebecca Gao writes about technology for MaRS. Torstar, the parent company of the Toronto Star, has partnered with MaRS to highlight innovation in Canadian companies.
