In 2018-19, the government of Canada continued its commitment to support entrepreneurship and the growth of small and medium-sized enterprises (SMEs).
The Business Development Bank of Canada (BDC), a crown corporation, has a mandate to support Canadian entrepreneurship, with a particular focus on SMEs. It offers direct lending, growth and transition capital, venture capital, securitization and advisory services. It offers financing products and advisory services that complement those available from private sector providers. As of fiscal 2018, BDC had CAD 31 billion committed to 56 000 clients operating in all industries and located across Canada.
Total venture capital (VC) investment levels in Canada has had over eight straight years of growth reaching CAD 3.8 billion in 2017 followed by a modest decline in 2018 to CAD 3.7 billion. These are the highest levels of VC investment recorded in Canada since 2001. This growth has in part been attributed to the successful Government Venture Capital Action Plan policy launched in 2012, the ongoing direct and indirect VC investments placed by the BDC with a VC portfolio of approximately CAD 1.3 billion, as well as to a maturing of the Canadian VC industry.
In addition of this, recent Government of Canada Budgets have made CAD 450 million available for the Venture Capital Catalyst Initiative (VCCI) to increase late-stage venture capital available to Canadian entrepreneurs. It will build a VC portfolio through three streams: large funds-of-funds, alternative models that strengthen and broaden the Canadian VC ecosystem, and VC funds investing primarily in the clean technology sector. VCCI will inject more than CAD 1.5 billion into the Canadian innovation capital market by leveraging funds from the public sector and private sector.
The Strategic Innovation Fund (SIF) was introduced in Budget 2017 to consolidate and simplify existing innovation programming. Total SIF funding from all sources is more than CAD 2 billion, with the funds spread out over several years. The Strategic Innovation Fund's objective is to spur innovation that produces economic and social benefits for Canadians. The program has five streams, each with its own precise objective:
Stream 1: Encourage R&D that will accelerate technology transfer and commercialization of innovative products, processes and services;
Stream 2: Facilitate the growth and expansion of firms in Canada;
Stream 3: Attract and retain large scale investments to Canada;
Stream 4: Advance industrial research, development and technology demonstration through collaboration between the private sector, researchers and non-profit organizations; and
Stream 5: Support large-scale, national innovation ecosystems through high impact collaborations across Canada.
To complement initiatives like SIF, the government strengthened the programming of its regional development agencies to place a greater emphasis on business scale-up and productivity and on regional innovation ecosystems with the Regional Growth through Innovation (REGI) initiative. REGI aligns with national objectives while ensuring that the regional development agencies’ funding programs are tailored to fit regional needs. Under REGI, investments will focus on two new program streams. The first will look to enhance business scale-up support for both domestic and global market growth. The second focuses on developing regional innovation ecosystems.
The Canada Small Business Financing Program continues to improve access to financing for small businesses. Over the past several years, there have been a number of changes to enhance the programme’s appeal to lenders and better meet the needs of small businesses. As a result, the programme has experienced an increase in loan values and volumes. In 2018-19, the programme registered over 6 000 loans valued at CAD 1.3 billion. In 2019-20, the programme will be conducting a 5-year comprehensive review, which will include recommendations to continue improving access to finance moving forward.
Futurpreneur Canada, a not-for-profit organisation, which provides financing, mentoring, and business support tools to young entrepreneurs, also received CAD 38 million in funding over five years, starting in 2019-20 to continue its support of Canada’s next generation of entrepreneurs. The organisation provides young entrepreneurs between the ages of 18 and 39 up to CAD 20 000 in start-up loans for flexible three-to-five-year terms with compulsory mentoring lasting a minimum of two years. Futurpreneur loan recipients can receive an additional CAD 40 000 in loans from BDC.
Supporting women entrepreneurs continues to be one of the key focus areas for the government of Canada. In Budget 2018, the government announced approximately CAD 2 billion investment in the first Women Entrepreneurship Strategy. It provides support by increasing access to financing, talent, networks, and expertise to encourage more women to start and grow their businesses, as well as to work with them to move into exporting. Canada’s target is to double the number of women majority-owned small and medium sized enterprises by 2025. As part of the Strategy, the BDC is providing CAD 1.4 billion in financing over three years to majority women-owned businesses, and the BDC’s Women in Technology Venture Fund is committing CAD 200 million over five years to women-led technology companies. This funding is complemented by other federal government initiatives, including CAD 105 million for nationally coordinated, regionally tailored investments to help women entrepreneurs and strengthen the regional innovation ecosystems that support them.
As well, the Government of Canada’s Fall Economic Statement, released in November 2018, announced the intention to launch Canada’s Export Diversification Strategy. In total, the Export Diversification Strategy will invest CAD 1.1 billion over six years, starting in 2018-2019, which will continue to ensure that the government’s programs and approaches support SMEs, to make the most of new opportunities after trade agreements are signed. It will focus on investing in infrastructure, providing businesses with resources to execute their export plans and enhancing trade services. As part of this Strategy, the Government will provide CAD 10 million over three years to help mobilize SMEs to export through awareness raising and export capacity building activities. In addition, the government will provide CAD 50 million over five years to help SMEs explore new export opportunities. The Strategy also includes CAD 100 million over six years towards CanExport and related programs to help SMEs looking to reach new markets overseas. This is in addition to CanExport’s initial CAD 50 million over five years, which was launched in 2016.
Also, in April 2018, Canada unveiled its new Intellectual Property Strategy. The government of Canada is committing CAD 85.3 million over five years to make sure that Canadian businesses, creators, entrepreneurs and innovators have access to the best possible IP resources through IP awareness, education and advice, strategic IP tools for growth, and IP legislation. The Strategy includes a patent collective pilot project, a new team of IP advisors to guide programme recipients, an IP marketplace, and changes to IP registration and enforcement.
