Ontario innovation hubs join forces on new scale-up platform, despite provincial funding cuts

Mark Lowey
June 5, 2019

Three Ontario innovation centres are investing $52.4 million in new federal funding in hopes of creating 30 new $100+ million companies and 18,000 new jobs by 2024. The five-year funding commitment from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) helps offset the more than $4 million in annual support two of those innovation hubs are losing as a result of austerity measures in the recent Ontario budget.

Invest Ottawa will receive $16.9 million to assist companies in the eastern Ontario region; Kitchener-based Communitech and partners will get $18 million to scaleup firms in southwestern Ontario; and MaRS Discovery District and partners will receive $17.5 million to support companies in the Greater Toronto Area.

The Waterloo-Toronto-Ottawa innovation corridor is ranked as one of the top 20 technology clusters in the world with strengths in financial and government technology, artificial intelligence and big data, life sciences, and advanced manufacturing.

“I think that we are stronger together,” says Sonya Shorey, VP, strategy, marketing and communications at Invest Ottawa. “Certainly it creates so many opportunities for scaling firms to tap into the expertise and the strengths of all three regions, as opposed to being very focused on the skills and expertise within one region.”

The partnership will see the innovation hubs pool their resources to jointly offer new programs and services to help hundreds of scaleups, with the hope that at least 30 will grow into $100-million companies. The new Scale-Up Platform – the first of its kind in Canada – will help both “scale-ready” firms and those that are in the process of scaling.

“This is a pipeline strategy . . . The ultimate goal of the platform is to support hundreds of high-growth firms on their trajectory to $100 million in annual revenue – where they will become anchor firms for the Canadian economy,” Avvey Peters, chief strategy officer at Communitech, said in an email response to RE$EARCH MONEY.

New programs, services for scaling firms

Invest Ottawa, Communitech and MaRS are already helping to scale companies with revenue or customer growth of 15% or more per year, Shorey notes. (Although definitions vary, a scaleup is a company with an average annualized return of at least 20% in the past three years, according to the OECD).

The Scale-Up Platform will create a consistent funding framework across all three regions, while providing opportunities for companies requiring more intensive or specialized support, Shorey says.

Peters says new offerings will include:

  • customized coaching and advisory services focused on attracting capital, talent, customers and sales;
  • talent programs to help firms attract and retain top technical and business talent;
  • promotion of an integrated, collaborative angel and venture capital investment ecosystem, including sector-specific investors and a global investor network; and
  • market intelligence resources to support companies as they enter new export markets and find new customers.

The three innovation hubs are working with FedDev to finalize a framework for measuring performance. Companies supported by the Scale-Up Platform will be measured by outcomes such as revenue and job growth and levels of capital attracted, says Peters. The Platform’s activities will be measured by outcomes such as the number of firms engaged at each stage of growth, amount of matching investments attracted to the Platform, and number of enterprise-level partners engaged to support scaleups.

Regional partners of the three hubs include: Carleton University, University of Ottawa, Algonquin College, La Cité collégiale, L-SPARK accelerator, Bayview Yards business accelerator, Waterloo Accelerator Centre, University of Waterloo’s Velocity, Wilfred Laurier University’s Launchpad, Queen's University, St. Lawrence College, and Launch Lab innovation centre.

Two innovation hubs hit by provincial funding cuts

Prime Minister Justin Trudeau visited Communitech on April 16 to announce the new FedDev Ontario funding. About two weeks later, Communitech and MaRS were officially notified that their provincial funding would be cut.

Communitech received $7.5 million in annual funding from the Ontario government in 2018. Peters confirmed to R$ that the province reduced its overall contributins by 30% – or about $2.1 million – which amounts to about a 10% overall reduction in the hub’s budget. As a result, Communitech laid off 15 of its 105 employees at the beginning of May.

“Given the fiscal situation in Ontario, we were prepared for a reduction in the level of provincial support, and understand the rationale,” Peters says.

The Ontario government also trimmed its funding for MaRS by 30%, or more than $2 million in annual core funding – an unexpectedly high cut according to media reports. MaRS declined R$’s request for an interview or to respond to emailed questions.

Sarah Letersky, director of communications at Ontario’s Ministry of Economic Development, Job Creation and Trade, said in an email to R$ that the government has “a great working relationship” with Communitech and MaRS. “They want to be self-sustaining. We think that should be the goal and we will work with them to make it happen,” Letersky said.

Contrary to some media reports, provincial funding was not cut for Invest Ottawa. “At this time, we have received confirmation that the specific provincial programs and funding lines that Invest Ottawa receives alongside all Ontario Regional Innovation Centres will not be reduced,” Shorey says. R$

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