Ontario examining new commercialization fund for possible inclusion in next provincial budget

The Ontario's Ministry of Energy, Science and Technology (MEST) is working quickly to craft a new, two-pronged program designed to help bridge the gap between university-based discoveries and the marketplace. Now in the advanced planning stages, the initiative is expected to pump $100 million into the Ontario Centres of Excellence (OCE) program and the industrial liaison offices of provincial universities and colleges, providing assistance in the crucial areas of early stage investment and technology management and mentoring.

If approved, funds will be made available on a competitive basis to all disciplines including medicine, and governed by an independent management structure, with industry expected to provide substantial financial and in-kind contributions. The new program is being positioned for an announcement in the upcoming provincial Budget, although an apparent split between its academic and industrial backers has resulted in two separate proposals going forward, complicating the government's task of fashioning a program acceptable to both camps.

The need for such a program in Ontario and elsewhere is becoming increasingly evident as governments seek to fine tune their innovation policies, filling the gaps that remain between the various players. Several major reports in recent months have also weighed in with recommendations in this area, most notably an expert panel of the federal Advisory Council on Science and Technology examining the commercialization of university research, and a report by Dr Heather Monroe-Blum, the Univ of Toronto's VP research and international relations.

"There certainly has been a lot of discussion about different things that can be done," says Dr Bruce Archibald, MEST's science and technology ADM. "I think there's a recognition that something needs to be done, but I don't think at this point there's any real decision as to what the right vehicle or vehicles is."

Archibald says the options being considered by Queen's Park include consortia, networks and tax measures, but he rules out the possibility of creating a government-backed venture capital fund, explaining that the current government doesn't see a role in that area.

With less than 3% of discoveries generated within the university system finding their way into actual products or services, the potential for increasing the pipeline is huge. Federal and provincial programs providing funds for research infrastructure and increased faculty are also making the need for commercialization funds more acute. The speed with which the Ontario government moves to establish a new program is complicated by the numerous S&T initiatives it's now juggling. The current top priority is the creation of an overarching strategy to implement its innovation agenda - a task that will be charged to the recently created Ontario Science and Innovation Council once its membership is announced. Any proposals that lack clear, unified backing may have difficulty finding a place on the funding agenda.

The proposal for a commercialization fund by the OCE presidents and board chairs has gone through several permutations since it was first conceived two years ago. The program's lack of resources devoted to commercialization was the subject of a report by the Ontario Advanced Technology Commercialization Initiative (OATCI) Task Force, chaired by David McFadden, a lawyer with Toronto-based Smith Lyons. Released one year ago, the report calls for new resources and a new initiative to close the early-stage financing gap by assisting with management, marketing, and start-up activities. Also recommended are a commercialization outreach roundtable, more direct involvement by university business schools and an ongoing mechanism to facilitate provincial-federal cooperation.

But the OATCI task force did not include university industry liaison offices (ILO) in the scope of its study, resulting in a separate but parallel proposal engineered by the Ontario Council of University Research (OCUR). The report was drafted by Peter Munsche, assistant VP of the Univ of Toronto's technology transfer office, and Graham Strachan, former president of Allelix Biopharmaceuticals Inc, and delivered to the MEST in February.

Dr William Bridger, OCUR chair and VP research at the Univ of Western Ontario, says the reason for the separate proposal is due to the differing needs of the ILOs at provincial universities, as well as the fact that universities were not asked to participate in the OATCI consultations. He asserts that more financial resources are required by the ILOs to increase human expertise and delivery of services.

"The difficulty for government in providing programmatic support is that it doesn't attract them as much as a project-by-project approach as proposed by the OCE program," says Bridger. "Project-by-project funding won't give us the nimbleness required. We need to react to those that approach the universities and there's no time to apply to a fund. If we had funds to start the commercialization process, then perhaps we could go to a central fund."

Bridger acknowledges the differences of opinion between the OCE and the university community, but adds that in the area of commercialization of university research, the OCE is a relatively minor player, spending $32 million annually compared to more than $800 million by Ontario's universities. He says the OATCI report implicitly suggests the creation of a fifth centre of excellence for the commercialization of university research, which would replace the role of the ILOs. He contends that the universities need additional funding, and not a new program as the OCEs are backing.

For the OCEs, new funding is essential to help bridge a commercialization gap where most venture capitalists fear to tread. The OATCI report concludes that the lack of entrepreneurs within the centres makes it extremely difficult to move new technology out of the university setting and into the marketplace. A competitive program dispensing funds for this purpose would go a long way towards catching up with Quebec, where there is more willingness by venture capitalists and institutional investors to provide seed financing. Since the OATCI report was released, the OCUR proposal has been refined, , with assistance from the likes of Martin Walmsley and William Weingard, former federal Minister of State for Science.

"When an idea is generated, the key is to put together a competent team to manage the process. To go forward, you need a good plan and the confidence of the investor community," says Peter Leach, president of Communications and Information Technology Ontario (CITO), one of the province's funded OCEs. "Existing programs (at the federal and provincial level) have all added to the human and physical infrastructure of research and many are industrially co-funded. But just because industry co-invests doesn't mean they will provide resources to exploit. They're not planning to manage that process so we need to provide project funding for ideas."

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