The Federal Government’s Sustainable Development Technology Canada (SDTC) Tech Fund is designed to help technology developers get funding in the hard to finance pre-commercialization phase. This $550 million fund supports technology supporting “products and processes that contribute to clean air, clean water and clean land, that address climate change and improve the productivity and the global competitiveness of the Canadian industry.” The program doesn’t require repayment and the Government doesn’t take ownership of the intellectual property or an equity position in the company. In addition, they promote the companies they invest in. On the surface, this seems like an ideal program. However, it isn’t for everyone. Before you invest significant time and effort, here are a few things to consider.

The Tech Fund requires joint submissions between firms or with research or educational institutions. If you have developed your technology in-house, you have to balance the value of this funding with the requirement to join in a collaborative arrangement.
In their vetting process, the SDTC review panelists assess the business feasibility and the technical feasibility of proposed technology. They will ask specific questions of how your technology works. In addition, you are not allowed to know the identity of these panel members. SDTC gives assurances that all information is kept confidential, but you have no way of knowing that your information is secure.
This funding doesn’t require payback, but could build some cost into your startup. The biggest issue is the time required to qualify for and receive funding. It takes several months to get through the process and this can slow down your commercialization efforts.

The target area for the SDTC Tech Fund

If the funding potential outweighs these issues, you should proceed with the application. Here are some things to keep in mind as you work your way through the process.
Because this is “free money,” there is lots of interest and therefore lots of competition for this funding. The SDTC representatives advise that this funding application is like fundraising in the private sector. The first stage has a straightforward template to complete but the next rounds require significant business and technical expertise. Assemble your team or hire your resources before you start. Approach this fundraising just like as if you are contacting VC firms.
The SDTC Tech Fund managers are looking for the best bang for the buck they can get. Instead of return on investment, the return they are looking for includes cleaner air, soil and water as well as economic activity in Canada. They also earmark parts of the fund for different goals, like biofuels. Be sure to state all of the environmental benefits your technology can support. It will give you a greater chance of being funded.
For the right companies, the SDTC Tech Fund can provide funding to get them to the next level. If you think your company is a fit for this, you should apply. Keep in mind the caveats stated above. It can be good practice for your company when you raise funding for commercialization. Remember, this is a long process and can be grueling. Make sure you assign the time and resources to give yourself the best chance for success. The deadline for the next round of submissions is October 10. For more information contact SDTC.

We often get asked whether there are government grants available to start a small business. A recent story on the CBC National News profiled a B.C. entrepreneur who purchased a book sold by a private company that would supposedly contain all government grants available for his business. This $500 book contained inaccurate information and even descriptions of long discontinued programs. In short, the book was worthless.

The plain truth is that there are no “hidden” government grants. There is no need to pay anyone for a listing of grants available to business. A few hours of surfing government websites will give you all the information you need to know and best of all it’s free.

Generally, governments don’t provide grants for the typical small business. Grants are used by the government as a tool to encourage development in a particular industry or technology. This development has to be government supported because private companies consider the risk to be too high to undertake the investment themselves.

For example, Sustainable Development Technology Canada (SDTC) has the SD Tech fund that they use to fund pre-commercial green technologies. This is meant to fund a very specific niche of technology. The NRC Industrial Research Assistance Program has some funding available for companies that are engaged in science based research and development. While not a grant, Canada Revenue Agency has the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program which provides tax credits for research and development.

There may be no grants available to start the average small business but that does not mean that there is no help available. Canada Government Services For Entrepreneurs is the best place to start. It’s a government website with links to many resources for small business. You can personalize the site for your home province and this will give you the location of the closest Business Infosource Centre. These Centres have a wealth of resources and people who will help you get you started.

The bottom line is that you need to have cash to invest in your startup. It may be possible to get a bank loan (see our post on CSBFA) but any banker is going to want you to have “skin in the game”. This means that you have a considerable amount of your own personal money at risk. Bankers have found over time that people who have a lot of their own money at risk work much harder to make a business a success than those who make no investment. People hate to walk away from something they’ve invested so much in. Private investors will view the situation much the same way.

Investigate and validate your idea, start planning your business, but make sure you save up money along the way to help get it started.