CAIP selects 15 accelerators and incubators for more than $180 million in support

The government has selected 15 incubators and accelerators from across Canada to receive up to $180 million in cash and in-kind over the next five years. The support will flow through the Canada Accelerator and Incubator Program (CAIP) - a key component of the $400-million Venture Capital Action Plan (VCAP) unveiled in the 2012 Budget. Contribution agreements are being completed between the funding recipients and the Industrial Research Assistance Program (IRAP), which administers the program.

More than 90 organizations applied to CAIP, which were assessed and screened by IRAP to ensure eligibility compliance and financial capacity. Eligible proposals were forwarded to the five-member Canadian Venture Capital Expert Panel which in turn made recommendations that were sent to the minister of Finance for final approval.

Incubators and accelerators are not new to Canada but they have proliferated in recent years as policy makers and the VC industry seek methods for improving investment performance and success rates for growing tech-based companies.

"The idea is to strengthen and help the growth of early-stage companies through the venture capital community, to establish strong companies through deal flow," says IRAP VP Bogdan Ciobanu. "BDC (Business Development Bank of Canada) also has a program for incubators and accelerators and we're working closely with them so that the programs are complementary. It's very cohesive and what's needed in Canada at this stage to strengthen these firms."

Amounts per centre to be determined

CAIP provides for funding of up to $5 million annually over five years but Ciobanu says the amounts each incubator and accelerator will receive is going to be much less, given the number of successful candidates. Some recipients could be screened out during negotiation of contribution agreements but it's unlikely. Therefore, the average amount available will be $6.5 million over five years, which will be doubled when matching cash and in-kind support is included.

"This is a major investment in those organizations ... to make early-stage firms investment ready. The program addresses the two types of organizations (accelerators and incubators) although there is some blurring between the two," says Ciobanu. "These are all generally established organizations with some alliances and partnerships forged for this competition, adding capabilities and resources. We'll be looking for demonstrated achievement and success."

Moving new drugs to the marketplace

For the Centre for Drug Research and Development and its commercialization arm - CDRD Ventures Inc - the CAIP program comes as welcome news by targeting a specific gap in the innovation continuum from lab bench to the marketplace.

"CAIP validates the work we do at CDRD in trying to address the challenge we're having in commercialization - company creation and support of SMEs (small- and medium-sized enterprises)," says CDRD Ventures Inc president and CEO?Natalie Dakers. "There are many different ways that incubators and accelerators deal with commercialization issues and CAIP?doesn't lock you into a specific approach."

Accelerate wireless company growth

For Wavefront, a Centre of Excellence for Commercialization and Research, CAIP funding will enable it to nearly double its reach through the national network it's built over the past three years.

Wavefront president and CEO James Maynard says CAIP funding brings industry to the table with a dollar for dollar match. By working with both multinationals and SMEs to accelerate the growth of cutting-edge wireless companies, it enhances product and services development and speed-to-market for early-stage start-ups.

"For an accelerator like Wavefront, we need to be project-oriented and operate with a blend of public and private support. CAIP is project focused and a great incremental investment vehicle to drive the growth of companies," says Maynard. "The government has come up with a good maturation model with a focus on the job and GDP part of the equation and that results in wealth creation."

Maynard says the additional funding allows Wavefront to enrich existing company relationships and forge new ones across the country, broadening the reach of Wavefront's services and program delivery and thereby helping to derisk SMEs.

"We can deliver better companies and say to the venture community that the companies that go through our program are now investment ready," says Maynard. "That provides market traction and with the fundamentals in place we should see better returns for venture capital. That's really healthy."

R$