The Importance of SMEs to the Canadian Economy

Presenter:Peter Cashmore

A/Executive Director, Ontario Region

What we don't do well enough is to bridge between the researcher and the marketplace. We don't do a good enough job in commercializing research. We haven't yet developed

what they call a 'receptor capacity' in business to take the new idea from the lab and bring it to the market place to the point of sale. And that involves a bundle of things from the availability of

venture capital, putting investors together with researchers to create a culture of commercialization in our universities, and

again, we're taking steps to address that.

Minister of Industry, Alan Rock, March 17, 2003

The Importance of SMEs to the Canadian Economy

• Introduction

• NRC-IRAP Overview

• SMEs in Canada

• The Importance of SMEs to Canada

• Challenges Facing SMEs in Canada

• Key Activities to Promote Success

• Commercialization

• Conclusion

• Questions?

NRC-IRAP Overview

• Federal Initiative for SMEs

• IRAP Services:

– Technical Expertise and Advisory Services

– Research Assistance Contributions for R&D Activities

• IRAP Non-Repayable Contributions

• IRAP Youth Employment Strategy (YES) programs

Types of NRC-IRAP Projects

Identification of business opportunity

Technical feasibility

IRAP funding

Proof of concept

Development

Network Member Support

Cluster Activities

IRAP Advice

ITA Advantage

• 232 ITAs

• More than 147 locations across Canada

• 11 funded clients per ITA

• 31 non-funded clients per ITA

• On average make about 100 client on-site visits

per year per ITA

• 75% have a Masters or Doctorate

• Experience in Private or Industrial Research & Development

• Actively engaged in 100 communities

SMEs in Canada

• Definition of SME

• Majority of companies in

Canada are classified as small-

sized enterprises

• Significant potential for

economic growth.

• Over 1.5M companies were

registered in Canada

The Importance of SMEs to Canada

• Job creation

• Revenue for Canada – boosts

wealth

• Aids in making Canada a player in

the world market

Key Activities to Promote Success

• Networking

• Partnering

• Extending global reach

• Establishing strong customer

relationships

• Commercialization

Commercialization

• Commercialization a priority for

Canada

• Dependent upon:

– Technological Innovation

– Business Development

• Time-to-market factor

– Ensuring fresh business concept

– Ensuring solid economic viability

Casebank Technologies

Commercialization

• Over 160 commercialization programs in Canada

• IRAP commercialization partners:

– Western economic Development (WD)

– Canada Economic Development (CED)

– Atlantic Canada Opportunities Agency (ACOA)

• Programs provide:

– Funding

– Consulting

– Networking Services

Example:SME-University-IRAP

Players:

• Company: Found Aircraft Development Inc. Parry Sound ON.

• University of Toronto

• IRAP – 2 ITAs

Opportunity:

• Re- introduction of popular bush plane (FBA-2C)

• One of original designers from the 60s came out of retirement to “take advantage of new material development and design techniques”.

• New plane called Bush Hawk-XP

ROLES:

IRAP:

• ITA make connections with U of T (UTIS) and client

• IRAP adds financial support for project

• Literature/patent searches.

U of T:

• Introduces firm to cutting-edge CAD technology

Results:

• Greater load capacity through new slotted wing flap.

• Landing gear streamlined.

• Size of rear doors increased and open 180 degrees.

Benefits:

• 75 production jobs

• New technology

• Sales!

• Innovation Leader Award (2002)

Sideline:

• IRAP ITA at U of T

• IRAP introduces lean Manufacturing

• Found’s Chief Engineer – U of T graduate.

Conditions for Successful National Innovation Systems

• A solid science base anchored in higher education and/or research

organizations that nurture cutting-edge research while developing human

resources with high level qualifications in science, technology and

engineering.

• A culture of entrepreneurship underpinned by market incentives and

conditions to undertake risky activities.

• A significant portion of firms actively engaged in cross-border trade and

investment, given that for most countries the bulk of genuinely new

products or processes will come from abroad.

• Strong industry-science linkages, allowing firms to better exploit the output

from public research and helping researchers to better respond to industry

needs.

Conclusion

• Questions?

Share of population aged 25-34 with at least tertiary education, 2002

0

10

20

30

40

50

60

Source: Education at a Glance, 2004

Venture capital investment flows as a percentage of GDP

Average over 1995-20021

0.0

0.1

0.2

0.3

0.4

0.5

0.6

JPN

SVKAUT

NZLGRC

HUNAUS

PRTIT

ACHE

DNKCZE

POLESP

DEUFRA

IRL

KORNOR

FINBEL

SWE

GBRNLD

CAN ISL

USA

Early stage Expansion Buy-outs and othersPer cent

1. 1995-2001 for Australia, Japan, Korea and New Zealand. Countries are ranked according to the sum of early stage and expansion.

Source: OECD Venture Capital Database, 2003

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

SVK

NOR

BEL

CAN

ISL

CHE

PRT

KOR

POL

JPN

GRC

IRL

SWE

FRA

ESP

HUN

NLD

DEU

DNK

ITA

USA

GBR

CZE

AUT

FIN

NZL

AUS

Banks and insurance companies Pension funds Corporate investors Other

Countries ranked according to sum of bank, insurance and pension funds

Source: OECD Venture Capital Database, 2003.

Business and Public spending on R&D as a percentage of GDP, 2003

0

1

2

3

4

5

Private R&D Public R&DPer cent

2003 or latest available year (from 2001 to 2003, except for Austria 1998 and Switzerland 2000).Source: Main Science and Technology Indicators Database.