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Supporting Canada’s Innovative SMEs Daegu Initiative First-Cycle Assessment Workshop June 7, 2010

Supporting Canada’s Innovative SMEs Daegu Initiative First-Cycle Assessment Workshop June 7, 2010 Hong Kong, China. Anne Pigeon Senior Policy Advisor Small Business & Tourism Branch. Canada’s Position in R&D.

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Supporting Canada’s Innovative SMEs Daegu Initiative First-Cycle Assessment Workshop June 7, 2010

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  1. Supporting Canada’s Innovative SMEs Daegu Initiative First-Cycle Assessment Workshop June 7, 2010 Hong Kong, China Anne Pigeon Senior Policy Advisor Small Business & Tourism Branch

  2. Canada’s Position in R&D • Overall Investment in R&D in Canada is low relative to the other comparison countries • Canadian business sector has a low propensity to innovate relative to other comparison countries. • Canada is the leader in public expenditures in R&D. Gross R&D expenditure (GERD) as a percentage of GDP, selected OECD countries, 2000 and 2006 BERD as a percentage of GDP, selected OECD countries, 2000 and 2006 Source: OECD, Main Science and Technology Indicators, 2008-2

  3. Resesarch & Development Small firms on average spend less on R&D than large firms… Average Expenditures on R&D by Firm Size, 2003 • Of total R&D spending in 2003, 23 percent came from 10,734 small firms (87 % of all reporting R&D firms), with an average of $0.27 million per firm. • 60 percent from 371 large firms with an average of $21.3 million per firm.

  4. Resesarch & Development …but have a higher R&D intensity than large firms R&D Expenditures as a Percent of Company Revenues, by Firm Size, 2003 • Small business that conducted R&D spent 5.9 percent of their revenues on R&D • • Large businesses spent 2.8 percent of their revenues on R&D • • The overall average for all businesses was 2.1 percent. • Innovative SMEs generated twice as much revenue and profits than non- • innovative firms from 2004 to 2007.

  5. Profile of Innovative SMEs (2004) • R&D intensive SMEs are those who invest 20% or more of their total expenditure in R&D • Between 4% and 5% of Canadian SMEs were R&D intensive in 2004. Source: SME Financing Data Initiative, Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2004.

  6. Overview of Canada’s Assessment Area A: Linkages A4 - Canadian Intellectual Property Office (CIPO) offers reduced fees to “small entities” (fewer than 50 employees) A8 – Canadian Youth Business Foundation provides loans and mentoring services to young entrepreneurs A9 – Industrial Research and Development Internship (IRDI) program places graduate students and post-doctoral fellows in businesses to undertake research A9 – Industrial Research Assistance Program (IRAP) provides funding to innovative SMEs to hire science and engineering students

  7. Overview of Canada’s Assessment Area B: Access to Specialists B4 – Small Business Internship Program (SBIP) provides a wage subsidy to small businesses to hire a post-secondary student to implement IT or e-commerce projects B7 – Business Development Bank of Canada (BDC) offers consulting services to its clients B10 – IRAP provides advisory services and technical services to SMEs through its Industry Technology Advisors

  8. Overview of Canada’s Assessment Area C: Access to Capital C1 – IRAP provides funding for R&D projects to help SMEs develop technologies C6 – Business Development Bank of Canada (BDC) is a government-owned bank whose mandate is to support Canadian SMEs C8 – Canadian Small Business Financing Program (CSBFP) is a loan-loss guarantee program which helps small businesses access loans of up to CAD$500,000

  9. Overview of Canada’s Assessment Area D: Networks and Clusters D1 – National Research Council has established a network of 11 clusters across Canada Area G: Measuring Progress G4 – Statistics Canada measures the innovation performance of manufacturers and measures R&D expenditures by firm size

  10. CLIENT CLIENT The Business Model Competitive Technology Intelligence Projects ($$$) Graduates ($) Technical and economic studies ($$) Strategic information Innovation strategy International partnership/readiness Strategic planning, Market assessment Intellectual Property Management Diagnostics ($) Networking Technical, engineering and business advice 9

  11. SMEs are most successful when focused on their marketplace and client Many people equate innovation with R&D. Their notion is that new ideas from research lead to new products and services. This belief is erroneous. Innovation occurs by identifying needs and finding a way to meet them. H. Douglas Barber and Jeffrey Crelinsten Ottawa Citizen, March 23, 2010 SME Innovation Bluedrop Performance Learning, St. John’s NFLD 10

  12. Who are IRAP’s clients? NRC-IRAP worked with 8,053 small and medium-sized enterprises (SMEs)* in 2008-2009, of which 1,604 received funding. NRC-IRAP’s Number of Clients by Provincefor FY 2008-2009 2526 2312 # of Clients 1045 836 278 293 216 158 175 116 Province 78% had less than 50 employees 60% have fewer than 20 employees *Firms with up to 500 employees 11

  13. What are the clients’ challenges? • Difficulty sourcing (investment) capital • Management capacity challenges • Limited national and international networks • Do not have enough R&D resources and technical expertise Expenditures by Industry Sector in FY 2008-2009 ($86.9M) 16.3 15.4 12.0 10.1 9.8 $ M 8.3 5.2 3.1 2.8 2.6 1.4 Other Agrifood Electrical S&T - Eng Resources Info/Software ICT/Commun Life Sciences Enviro/Waste Manufacturing Computer/Electronics 12

  14. What does IRAP provide? • Customized technical and business advisory services • Strategic and scientific information • Linkages to other organizations, potential partners, investors • Financial support 13 BTI Photonics, Ottawa, ON Medicago, Québec, QC

  15. What sort of financial supportdoes IRAP give? • Financial contributions to firms to develop technologies • Financial contributions to organizations providing services to SMEs • Financial assistance to hire new graduates (YEP) Pharmatrust, Toronto, ON 14

  16. IRAP Field Staff • Services • R&D project advice • Competitive Technical Intelligence • Networking and linkages • Funding opportunities & programs Experience • 240 ITAs • All have extensive R&D and management experience in industry • 75% have Masters or PhD • 45% have run their own R&D facility • 34% have been entrepreneurs Outreach • Field staff are located in 147 offices in 100 communities • Each work with 42 clients per year • 11 of their clients will receive funding from NRC-IRAP • Typically make 105 client site visits a year 15

  17. Where does IRAP support clients? LEGEND NRC-IRAP Industrial Technology Advisor (ITA) NRC-IRAP Regional Office NRC Institute NRC Cluster 16

  18. How NRC-IRAP works with organizations, universities, colleges and cegeps • NRC-IRAP staff co-located at organizations, universities and colleges • Expert services and information • Enhance linkages across provinces and countries • Participate in sectors, clusters and national programs 17

  19. How do we get to work together better? • Field staff to know each other locally and in their sector of interest • Ensure that local staff knows about what each other can do for the SMEs • Become a part of each other’s tool kit • Personal relationship is the key Kinek Technologies, Saint John, NB 18

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