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    4 views2 pages

    Financing Innovation

    Uploaded by

    api-35332010

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
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    of 2
    ane novation can meen differ ‘ent things to differant busi- nesses. It might Involve com mercializing a now product, researen and davelopment (R&O) (oF an in-house project such 25 Improving a process. In al cases, howaver, innovation requires naneing. Depending on your neads and the scale of your project, sev ‘eral aventies are available: pub- “tig funds oF grants, tax credits, vsonal investment, financial Insitutions, angel investors end business incubalors, GOVERNMENT FUNDING Formal R&D involves making an avarice in science or techno! ogy. Applying for an R&D grant of 2 tax crecit usually requires a fair erount of paperwork dem- ‘onstrating hovr you satisfy the funding conditions and require rents. A signifcant portion of RAD funding is directed to the academic milieu, where bus esses. and universities often vwotk tagether Canada Foundation for Innovation (GF): The Government of Canada created this. independent com oration to fund research intre- ‘structure, particularly in the ace- temic, health care end nonproft sectors, ‘Canada Business: This poral, set up by industy Canada, provides infermation on financing, human esources, procuct deyeiopment, rmavketing, pricing, intelectual property and research services. Also included are diagnostic tools and articles related to innovation. National Research Council Canada (NRG This governmental orga- nization provides non-repayable contributions and mentoring to Financing for innovation ‘small businesses In Canada thet ‘want to use technology to grow. NNRG administers the Industriel Research Assistance Program (NRC-IRAP) cesigned to. help Canadian small and medium- sized enterprises (SMEs) meet technological challenges. they face in delivering new products, processes or services. Natural: Selences and Enginesr ing Research Gouneit of Gana GISERC): This. federal goverr= sent body invests in researcit in science and enginearing at Canadian universities. NSERC is alveys seeking opportunities to work with other organizations with common goals to support re search and student training. BUSINESS INCUBATORS Business incubators (or “accel cerators") generally focus on the higitech sector by providing support for new small businesses al various stages of development. There are also Ieeal enonomic development incubators, whici, focus on areas such as job cre alion, revitalization, and hosting ‘and sharing services. Commonly, incubators wil ir vite young companies to share their premises, as well as their administrative, logistical and ‘technical resources, For exer le, zn incubator might allow you ‘te use its laboratories to develop anc test products for a reason- able price before beginning pro- duction, ‘The Canadian Association of Business incubealion fas a ecm- prehensive list of business in- Ccubaiors in Canada and links 19 ther resources, ‘ANGEL INVESTORS Most engels are wealthy indi- viduals cr retired corperste ex ecutives who invest direct in small companies. They are of- ten leaders in thelr own field, ‘and their invostment cans well beyond the fanctal, they Usually slzo contibule through thei experience and network of ceontects as well as their tochni- cal and management knowledge. According to Canada Business, angels in Cenada have inves in roughy twice as many cam- paries 2s institutional venture Capitalcts have. Angels tend 19 focus on young businesses and to make investmants of between $25,000 ani $100,000, white institutional venture. capitalists usually provide financing in the $1 milion or more raree. Jn tum for risking ther money, angels serve the right to oversee the company’s management oree- floes. In concrets terms, that of fen invokes getting a seat on the boere of directors and reveling an assurance of transparancy. ‘Angels tend to keep alow pro file, To meat them, you have to contact specaized associations. The Canadian Angel Investment Network can help. put you th fcuch with angels. Angel Imos- tors Canadas 2 notfr-proft ‘oiganization that promotes best practices in this field. ‘VENTURE CAPITAL Successful R&D-based _com- pparies can also attract venture capital. Venture capitalists are ahways. ooking for companies with high growth potential thet offer unique products and cer vices in adaressing promising global markois, Venture capitalists take an equity position in the company to help it carry out a promising buthigh~isk business pfan, They ‘also exnect a healthy retur on ‘heir invostmant, offen generated through @ merger end acquisition ‘cppeatunity or when the business slarls selling shares tb the pub- Tic, Be sure to Iook for investors ‘who bring relevant experience ‘and knowledge to your business ‘and share the seme objectives. BDC Venture Capital invesis in early-stage, technoiogy-criven companies strategically posi ‘toned in the following sectors: bioiechnology and medical de- vvices, communication and in- formation technology, eneey, environment, alecirenies and ‘materials, 25 well a8 indusiial technology. ‘TAX CREDITS Many provincial and federal tax credits ara availebie for SMES ‘conducting R&D of experimen- ‘al development. Information on these credits is avaiable through ‘the Canada Business portal For instance, the Canad Re enue Agency's (CRA) Scientific Research and Experimentel De- ‘velopment program, commonly known es SR&ED, provides tax Credits of up to 35% of qualify ing e«pencitures such as slries, capital costs, consulting fees anc materiale, For most SME¢, those ‘Investment tax credits (TCS) take the form of a cash refund. Some provinces have complimentary programs. To be eligible, your business hhas to show evidence of “ec ppetimenial development,” which ‘cauld ba an advance in a process fon your shop floor or generated by key pacpie on your taam. Bii- gible companies often show that they're taking technological leaps, into uncharted territory. ITes are cffered to businesses that de- velop or improve preducts and processes in industries such as ‘manufacturing, softwere, custom. ‘machinery and intemet access. Consultants whe have success. fully coordinaied other SR&ED ‘applications can help you got ‘access to those tax incentives. ‘A BDC consultant, for axamplo, ‘can help you identity eligible projects, prepare technical proj- ‘ect descriptions and accelerate ‘the prévess withthe CRA. Preparing an SR&ED appli tion can bo very time-consuming ‘and requires knowledge of tax aus and the ability to convey information about the project in lay torms. Working with external consultants lees you invest your time in other areas of the busi- ress and ensures that day-to-day ‘operations will not be disruptec. BANK FINANCING Your innovation projects cen ‘also be Financed through direct loans. BDC offers longterm finano~ ing to compenis thet went 1 innovate and can show that their investment will have & positive

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