One of the new ministers responsible for innovation in Québec says that making provincial businesses competitive again in light of Canada’s lagging productivity is a matter of “existential” importance.
Christopher Skeete has taken over the innovation portion of Pierre Fitzgibbon’s portfolio after Premier François Legault’s “super minister” resigned as Minister of Economy, Innovation and Energy (MEIE) on Sept. 3. The delegate minister under Fitzgibbon, Skeete now owns economic and regional development and small and medium-sized enterprises in addition to innovation. Christine Fréchette, who holds the official minister title, is in charge of the economy and energy.
In an interview with BetaKit, Skeete said he has several priorities to push forward the innovation portion of his mandate. Chief among them is more private sector funding for Québec companies and closing the productivity gap with Ontario.
“Innovation is the key to everything Western society holds dear. Our ability to have social services that Quebecers care about…is directly related to our ability to innovate.”
Minister Christopher Skeete
“Innovation is the key to everything Western society holds dear,” Skeete said. “The challenges that we face in this changing world can only be faced by us succeeding and being better at innovation. Our ability to have social services that Quebecers care about … is directly related to our ability to innovate.”
The pressure to increase productivity is a direct continuation of the work of his predecessor. While Fitzgibbon was the subject of six ethics investigations during his tenure (eventually cleared of wrongdoing), he was well-respected for his entrepreneurial background, according to stakeholders in the Québec tech ecosystem interviewed for this article.
Some, like Québec Tech CEO Richard Chénier, have said that Skeete is already involved and “highly motivated.” He noted that Skeete put in a full day of meetings with organizations that support the tech ecosystem at an Oct. 11 event in Montréal marking the halfway point of the Stratégie québécoise de recherche et d’investissement en innovation 2022-2027 (SQRII).
The $7.5-billion CAD strategy, put forth under Fitzgibbon, lays out a five-year plan for how the Québec government will lessen the productivity gap between Québec and Ontario, better commercialize research innovation, and develop a “scientific and innovation culture.”
Skeete, a former entrepreneur in the healthcare space with six years of government experience, is now responsible for seeing this plan through.
Productivity gaps, capital crunch
Ontario’s productivity rate, or the economic output per hour worked, amounted to $56.70 per hour while Québec’s was at $55 per hour in 2023, according to Statistics Canada. Both provinces dragged down the national rate of $59.10 per hour by 1.8 percent from the year before, making it the worst drop in productivity among OECD countries in 2023.
Skeete drove home the point that underinvestment in innovation and research and development contributes to Canada’s flagging productivity rate. He attributed part of this gap to a lower appetite for risk in Québec compared to the United States.
“Businesses need to understand that this is existential for them,” Skeete said. “The competition is so strict now … that if you don’t get this right, you’re going to be left behind. And I think by the time some people wake up, they might actually miss the train.”
Skeete said he wants to see more private-sector involvement in early-stage companies. He sees the government’s role as a facilitator between the private sector and research. Amid a funding crunch and a flagging life-sciences sector in Québec, private investment was only at 52 percent of total startup fundraising in 2023, according to a recent Réseau Capital report.
Amid a funding crunch and a flagging life-sciences sector in Québec, private investment was only at 52 percent of total startup fundraising in 2023.
“What I’m hearing is that the research sector is very willing to work with the private sector, but sometimes for reasons of risk, the private sector is a little bit reticent,” said Skeete. “We need to do a better job of making those people sit down together and work together.”
The Québec government has historically played an outsized role in supporting the tech ecosystem. Some of the province’s biggest indirect and direct investors are public or quasi-public bodies, such as the Business Development Bank of Canada, Investissement Québec, and the Fonds de solidarité FTQ.
Olivier Quenneville, CEO of the investment industry association Réseau Capital, echoed Skeete’s perspective.
“We need to become better at commercializing products from our public research,” Quenneville wrote in an email to BetaKit. “We are excellent in R&D, but we lag behind when it comes to bringing these innovations to market.”
Another problem is the possible over-abundance of funding opportunities to choose from at the early stage, according to Louis-Félix Binette, executive director of Mouvement des accélérateurs d’innovation du Québec (MAIN). He said this leads to confusion for young startups, which could be remedied through a streamlined system.
“Don’t teach entrepreneurs the ins and outs of a complex system that you’ve created,” Binette said. “Listen to the entrepreneurs and simplify the system.”
Skeete said that he’s heard that critique as well. He pointed to the SQRII initiative as evidence that the government supports startups “at every step,” but that more private funding is needed.
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Despite the overall picture, some recent initiatives have seen promise from the private sector. In Montréal, the forthcoming Ax-C hub, billed as an innovation space, is supported by the MEIE in partnership with the École technologique supérieure. The hub, set to open in spring 2025, recently received an injection of private funding from Bell, Google Canada, Fonds de solidarité FTQ, and Desjardins.
“Private funding is essential to sustain our innovation and productivity. While the public sector plays a crucial role, greater private sector involvement is also needed to drive lasting impact,” an Ax-C spokesperson wrote in an email to BetaKit.
Skeete was confident that Ax-C would fulfill its mandate of connecting companies with opportunities to innovate from across the tech sector.
“When we put the real estate, coaching, mentoring, accelerator, [and] incubator ecosystems together under one roof, it just fast-tracks innovation,” he said.
Amid talk of the need for private funding, however, the Québec government’s public funding arm, Investissement Québec (IQ), announced yet another funding opportunity for businesses of all sizes, including startups: $4.5 billion to close the productivity gap, administered through debt and equity financing for sustainable innovation projects.
The initiative was put forth under Fréchette’s portion of the MEIE portfolio. Fréchette’s office referred BetaKit to Skeete’s office for comment on this article.
Robert Gagné, the director of the Centre sur la productivité et prosperité, told The Logic that Grand V echoes previous unsuccessful efforts to boost productivity through public funds and would follow the same fate.
IQ declined to comment directly on the comments to BetaKit but affirmed that Grand V is a “loan, not a subsidy program” and would allow participating companies to optimize operations and invest in R&D.
Binette wants Skeete to act as an advocate for the tech industry in Québec by pushing forward its interests on policies outside of business.
“I think it’s a big, big, gaping hole in the way we manage policy in Quebec,” Binette said. “We don’t have an advocate for entrepreneurs [with] the ear of the government at the highest levels, and I would like to see that happen.”