Feds aiming for invest at least 3 per cent of Canada’s GDP in tech by 2025
The effects of COVID-19 have taken a strong toll on Canada’s economy, with the country’s GDP decreasing by 5.1 per cent in 2020.
Despite the pandemic’s overall economic impact, the ICT (information and communications technology) sector experienced an increase in GDP of 2.9 per cent during the same period, with the software publishing sub sector growing by 6.2 per cent.
In the last ten years, Canada’s technology sector has grown 100 per cent faster than the rest of the economy, with over 43 thousand Canadian companies being categorized as ICT in 2021. Overall, ICT companies are very willing to invest in their own development, as the sector has come out as the top performer when it comes to investing in its own R&D. In 2020 alone, technology companies invested more than $8 billion in R&D despite the pandemic, for an increase of 6.8 per cent over 2019.
However, when it comes to government investment in ICT, Canada falls below the average 3 per cent of GDP invested by top OECD countries. To mitigate this, the country’s Innovation and Skills Plan is targeting a minimum of 3 per cent invested by 2025, aiming to increase Canada’s competitiveness among world leaders. This has led to the launch of several public funding programs focused on helping the ICT sector grow, as well as the Venture Capital Catalyst Initiative which supports VC investment in innovative companies and entrepreneurs from underrepresented groups.
Private investment in the tech sector
According to the Canadian Venture Capital and Private Equity Association, in the first half of the year, Canada’s ICT sector was awarded 64 per cent of total Venture Capital (VC) investment. This resulted in 232 projects being funded for a total of $5.3 billion.
Venture capital investment in technology is at an all time high, which is great news for the ICT sector. In addition to providing technology companies with access to government funding, Fundingportal also tracks private funding programs such as:
Mantella Venture Partners
This fund was formed to invest in exceptional entrepreneurs, building market-altering mobile and Internet software businesses. MVP invests up to $ 500,000 at inception, with the ability to support subsequent rounds as required. They are looking for exceptional entrepreneurs with deep domain knowledge in the market they’re planning to alter, including software innovations that drive or exploit dramatic changes in the structure of a market.
Government funding for the tech sector
As the Canadian government continues to increase its investment in the ICT sector, the following programs can be leveraged by technology companies looking to grow:
Strategic Innovation Fund (SIF)
This program includes five streams that encourage R&D, help companies with expansion, attract investments in Canadian companies, advance research and collaboration between the private sector and non-profits, and support large-scale national innovation ecosystems.
Scientific Research and Experimental Development (SR&ED)
Canada’s largest R&D program is a tax credit that can be claimed by any Canadian company investing in R&D. Since the technology sector is the country’s largest investor in research and development, this program can have a significant impact on technology companies’ ability to innovate. The program’s tax incentives include basic research, applied research, and experimental development. Each year, more than 20 thousand applicants claim over $3 billion in SR&ED tax credits.
Canada Small Business Financing Program
Most of Canada’s tech companies consist of small and medium enterprises (SMEs). The Canada Small Business Financing Program helps those looking for funding by making it easier for tech companies of this size to get loans of up to $1 million from financial institutions.
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