Federal government commits additional $250 million in IRAP funding to support high growth startups

On Friday, the federal government revealed plans to make an additional $250 million available through the existing Industrial Research Assistance Program (IRAP) program, which provides advice, connections, and funding to Canadian small and medium-sized businesses.

Trudeau said the measures are meant to address gaps left by the federal emergency loan programs and the wage subsidies.

The additional capital is being committed after calls from the Canadian innovation sector lamenting that existing federal emergency programs have not been inclusive of startups. A spokesperson for the federal government, who spoke to BetaKit on background, confirmed the $250 million for IRAP is specifically meant to address this gap and help support early-stage and high growth Canadian startups.

Prime Minister Justin Trudeau publicly announced the $250 million during his daily briefing on Friday. He said the new capital is part of a collective $270 million that is also being provided to Futurpreneur Canada, the non-profit organization that supports aspiring business owners aged 18-39.

The government spokesperson emphasized that the IRAP funding will be able to offer support for pre-revenue startups, one area where other federal programs like the Canada Emergency Response Benefit (CERB) and the Canada Emergency Wage Subsidy (CEWS) have fallen short. The $250 million will be available for companies that are already receiving IRAP support as well as new applicants.

RELATED: Federal government commits $962 million to Regional Development Agencies, Community Futures Network

In mid-March, Minister of Innovation Navdeep Bains announced plans to refocus federal innovation programs to help in the fight against COVID-19. Those programs included the Strategic Innovation Fund, Innovation Superclusters, and National Research Council of Canada, which facilitates IRAP. The National Research Council of Canada has already been focused on expediting COVID-19 research and development with small and medium-sized enterprises.

The IRAP program is meant to help Canadian small and medium-sized businesses increase their innovation capacity and take ideas to market. Currently, the National Research Council of Canada is running ‘The COVID-19 Challenges Procurement Program’ with IRAP, offering funding opportunities for three challenges that are focused on low-cost sensor system for COVID-19 patient monitoring, point of care and home diagnostic kit, “made in Canada” filtration material for the manufacture of N95 respirators and surgical masks.

National innovation groups in Canada, including lobby group Council of Canadian Innovators (CCI) and the Canadian Digital Media Network, as well as open letters from hundreds of tech CEOs, have called for the federal government to take specific steps to expand innovation programs like IRAP.

“Accelerating direct support to companies using existing government programs, including the Strategic Innovation Fund and the IRAP program, is critical at this time,” Benjamin Bergen, executive director of CCI has stated previously. “In this hour of need, domestic innovators are more than ready to answer the call and are eager to help.”

RELATED: Minister Bains says retaining top tier tech talent critical to Canada’s economic recovery

In a minister’s briefing on Friday, Bains offered further details in the IRAP program, noting that applications will be open to companies next week. He encouraged businesses to go to the National Research Council’s website to sign up for notifications to ensure they are contacted when applications become available. He said funding is expected to be delivered within a matter of days.

Ian Stewart, president of the NRC, has confirmed that applications for the $250 million will open Wednesday, April 22. He noted that as of Friday evening 800 companies had already registered to receive more information and be notified once applications open up.

The innovation minister highlighted that the IRAP money is meant specifically for pre-revenue and highly-skilled, innovative companies. “We heard from the startup community that some of these early-stage firms don’t qualify for” the wage subsidy and liquidity measures, Bains said. “We heard the call for help.” He added that the IRAP funding its targeted towards companies that are identified as strategic to the Canadian economy.

During a webinar with CCI late on Friday, Bains clarified that companies receiving the 75 percent wage subsidy will not be eligible for IRAP. He noted, however, that companies could receive wage subsidy support for one employee and IRAP support for a different employee, but not ‘double-dip.’

A recent letter to Minister of Small Business Mary Ng and Minister of Economic Development Mélanie Joly, the Canadian Digital Media Network also called for increased funding to Regional Development Agencies.

On Friday, Trudeau also announced that $962 million is being committed to Regional Development Agencies and Community Futures Network, which provides small business services in rural communities. The prime minister noted that the money is specifically meant to support rural businesses and those which may not have existing relationships with financial institutions.

He emphasized that the newly announced measures are specifically meant to address the gaps left by the federal emergency loan programs and the wage subsidies.

“This announcement is very positive news and represents an important step in addressing the key concerns expressed by Communitech’s startup members,” said Iain Klugman, president and CEO of Communitech. “Additional funding through Futurpreneur Canada, the NRC-IRAP, and the Regional Development Agencies means that more Canadian tech firms will be able to keep their teams and businesses intact, giving us the strength we need to lean into a strong economic recovery in the months ahead.

UPDATE 18/04/2020: This story has been updated with more details from Minister Bains on the IRAP funding.

Image source University of Toronto via Flickr

Meagan Simpson

Meagan Simpson

Meagan is the Senior Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.

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