IRAP Advisory Work Soared In ‘11-12
July 08th, 2013
Like many entrepreneurs, Robert Niven looks to the National Research Council’s Industrial Research Assistance Program, or IRAP, for more than just money. Niven is the CEO of Halifax-based CarbonCure Technologies, and since 2008 he has been an NRC–IRAP client. The funds he has received from the program have helped him develop the system of carbon-cured concrete blocks now being rolled out throughout North America.
But there’s an underappreciated side to IRAP: the advisory business. Its importance is highlighted by the fact that almost three times as many clients in Atlantic Canada sought IRAP advice as received money in 2011–12. Advice doesn’t often spring to mind when people think of IRAP, because it’s best known for the financial assistance it gives to companies undertaking R&D. In the four years leading to March of 2012 (the most recent figures available), the program contributed a total of $90.3 million to innovative projects in Atlantic Canada.
But Niven and others rely on its experts to help navigate the hazardous waters of commercialization. “They’re a government group that really understands business,” he says. “They help you work through the bureaucracy in various departments. Their people have been around a long time and have great industrial contacts.”
The reason advisory clients are topical now is that there were 559 advisory and 199 funded clients in 2011–12, the widest gap in four years. Part of that reason was that IRAP funding dropped in 2011–12 by 55%, largely because of the balloon in funding during the federal government’s Economic Action Plan. Over the two-year period ending March 2011, the funding in each year was more than double the 2008–09 level as the government sought to jump-start the economy by backing innovative companies. However, the Economic Action Plan ended and funding declined.
So was the Economic Action Plan funding a flash in the pan? Not at all. First, that money went into growing companies; many of them are still thriving and returning benefits to the economy. What’s more, the federal government has identified innovation as a key economic driver and has restored IRAP funding permanently to the levels enjoyed during the Economic Action Plan. So when the 2012–13 figures are released, experts expect the funding levels to be close to the $30 million seen two years before.
The provincial breakdown of IRAP funding in the past four years paints the most accurate picture of corporate R&D funding in the region, both by provinces and sectors. Information and communications technology is by far the most important segment, accounting for $34 million, or more than half of regional IRAP funding during that time period. Newfoundland and Labrador was the most active province in securing IRAP funding for ICT, drawing $11.71 million. It was followed by New Brunswick, then Nova Scotia, which is surprising given that Nova Scotia has the largest population.
It may be that Newfoundland and Labrador attracts so much ICT funding because its ocean-related companies are classified in the ICT segment and reaching their development stage when a lot of capital goes into deploying products. They’re more mature than the start-ups that are currently all the rage in the Maritimes.
What we’re seeing most recently, especially in the Maritime provinces, is more payments in smaller amounts—a sign that the blossoming start-ups are drawing on small business financing to launch their companies. For example, the average payment to a funded client in Nova Scotia in 2011–12 was $68,000, down from $78,000 three years earlier, before the Economic Action Plan financing kicked off. Experts say the main reason for the smaller payments is that more entrepreneurs are launching more tech start-ups, which generally need less funding than mature enterprises.
Nova Scotia is the undisputed leader in one segment known for intense R&D: life sciences. The province accounted for $7.11 million of the life sciences funding in Atlantic Canada in the past four years, which is 60% of the $11.78 million total. The reason for its dominance? The regional biotech sector is concentrated around Dalhousie University and the surrounding of hospitals on the Halifax peninsula.