Innovation Canada: A Call to Action

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Innovation Canada: A Call to Actionand technology institutes mandated tocollaborate closely with business in key sectors.The appropriate individual institutes couldbecome focal points for the development ofR&D and innovation strategies for key sectors,for major enabling technologies and for regionalclusters of innovative firms and supportingservices.Recommendation 4Transform the institutes of the NationalResearch Council (NRC) into a constellationof large-scale, sectoral collaborative R&Dcentres involving business, the universitysector and the provinces, while transferringNRC public policy-related research activityto the appropriate federal agencies.4.1 Evolution of the NRC — Charge the NRCto develop a plan for each of its existinginstitutes and major business units thatwould require their evolution over the nextfive years into one of the following:(a) an industry-oriented non-profitresearch organization mandated toundertake collaborative R&D andcommercialization projects and services,funded by amounts drawn againstexisting NRC appropriations togetherwith revenue earned from collaborativeactivities(b) an institute engaged in basic research tobe affiliated with one or moreuniversities and funded by an amountdrawn against existing NRCappropriations together withcontributions from university and/orprovincial partners(c) a part of a non-profit organizationmandated to manage what are currentlyNRC major science initiatives andpotentially other such researchinfrastructure in Canada(d) an institute or unit providing services insupport of a public policy mandate andto be incorporated within the relevantfederal department or agency.4.2 IRAP — Transfer the Industrial ResearchAssistance Program to the proposedIndustrial Research and InnovationCouncil (IRIC).4.3 Structure and oversight — Institutescould be established as independent nonprofitcorporations, with the federalgovernment’s share of funding managedand overseen by the proposed IRIC forindustry-oriented institutes in category (a)above, and by the Natural Sciences andEngineering Research Council (NSERC) orCanadian Institutes of Health Research(CIHR) for categories (b) and (c) above.(Apart from functions in category (d), anyresidual activities of NRC, or institutes thatare unable to secure adequate funding,would be wound down according to anappropriate transition plan.)Financing Growth of Innovative BusinessesWe heard repeatedly that too many innovativefirms with high growth potential have difficultyattracting sufficient risk capital to finance thepath from an initially promising idea through tocommercial viability. Similar observations havebeen made by earlier panels that haveaddressed the issue. Data demonstrate that thesupply of risk capital for innovation-basedbusinesses is comparatively much smaller inCanada than in the US. Consequently, Canadianstart-ups are less likely to get the capital theyneed to achieve commercial viability. In addition,the preponderance of foreign (mostly US-based)investors in late-stage venture capital andbuyouts of Canadian firms means that theintellectual property is likely to be exploitedprimarily outside Canada.E-12
Executive SummaryRecommendation 5Help high-growth innovative firms accessthe risk capital they need through theestablishment of new funds wheregaps exist.5.1 Start-up stage — Direct the BusinessDevelopment Bank of Canada (BDC) toallocate a larger proportion of its portfolioto start-up stage financing, preferably inthe form of a “sidecar” fund with angelinvestor groups.5.2 Late stage — Provide the BDC with newcapital to support the development oflarger-scale, later-stage venture capitalfunds and growth equity funds in supportof the private venture capital and equityindustry. These funds would specialize indeal sizes of $10 million and above that aremanaged by the private sector and subjectto appropriate governance practices.Whole-of-Government LeadershipInnovation is the principal source of productivitygrowth in the long run, and thus lies at theheart of Canada’s future prosperity. Butinnovation far transcends just the applicationof science and technology and R&D. Aresponsibility to foster innovation cuts acrossmany functions of government and thereforerequires a system-wide perspective and wholeof-governmentpriority. This will requirerestructuring the governance of thegovernment’s business innovation agenda, whiledeveloping a shared and cooperative approachwith provincial and business leaders.Recommendation 6Establish a clear federal voice for innovation,and engage in a dialogue with the provincesto improve coordination and impact.6.1 Assign responsibility — Identify a leadminister responsible for innovation in theGovernment of Canada together with astated mandate to put business innovationat the centre of the government’s strategyfor improving Canada’s economicperformance.6.2 Whole-of-government advice —Transform the Science, Technology andInnovation Council (STIC) to become thegovernment’s external Innovation AdvisoryCommittee (IAC), with a mandate toprovide whole-of-government advice on keygoals, measurement and evaluation ofpolicy and program effectiveness, therequirement for new initiatives respondingto evolving needs and priorities goingforward, and all other matters requiring afocussed external perspective on thegovernment’s innovation agenda. The IACshould act though through two standingsubcommittees: a Business InnovationCommittee (BIC) and a Science andResearch Committee (SRC).6.3 National dialogue on innovation —Through the minister responsible forinnovation, engage provincial and businessleaders in an ongoing national dialogueto promote better business innovationoutcomes through more effectivecollaboration and coordination in respectof program delivery, talent deployment,sectoral initiatives, public sectorprocurement, appropriate tax credit levelsand the availability of risk capital.E-13
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Page 35 and 36: The Context of the ReviewChapterThe
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Program Effectivenessfull spectrum
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Program EffectivenessFigure 5.2 Rea
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Program EffectivenessFigure 5.4 Sat
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Program EffectivenessBox 5.1 Operat
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Program Effectivenessassessment of
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Program EffectivenessFigure 5.5 Dir
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Program EffectivenessFigure 5.6 Per
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Program Mix and DesignChapterProgra
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Program Mix and DesignBox 6.1 Direc
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Program Mix and Designthe needs of
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Program Mix and DesignFigure 6.3 Ta
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Program Mix and DesignBox 6.3 Stack
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Program Mix and Designcapital costs
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Program Mix and Designportion of th
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Filling the GapsChapterFilling the
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Filling the GapsBox 7.1 Use of Proc
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Filling the GapsBox 7.2 Canadian In
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Filling the Gapscompetitive levels,
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Filling the GapsBox 7.4 Institutes
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Filling the GapsThe budgetary impli
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Filling the GapsSuch concerns are i
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Filling the GapsAngel InvestmentAt
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Filling the GapsWith the foregoing
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Filling the GapsBearing this in min
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Leadership for InnovationChapterLea
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Leadership for InnovationThe approp
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Leadership for Innovationinnovation
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ConclusionChapterConclusion9We are
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Programs in the ReviewAnnexPrograms
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Programs in the ReviewDepartment or
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Innovation Canada: A Call to Action

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