A different way to look at government grants: are your customers eligible?

By Andrea McPhail

When most businesses think about government grants, they consider it in the context of how much government funding they can obtain to directly fund their development, commercialization, marketing, and human resources initiatives.

While it’s true that there are many Canadian government grants available to small- and medium-sized businesses (SMBs) – with broad criteria that assess the merits of projects and activities considered beneficial to the Canadian economy – there are also government grant programs that provide generous contributions toward very specific investments.

Despite public perception in the business community, the highly targeted funding programs available in 2018 are not geared specifically toward the ICT sector, but there may still be a way for digital businesses to benefit from them by way of their customers. IT solution providers offering leading-edge products to specific industry verticals should consider whether the technology they supply could be used by their customers in a project that would address the requirements of a government funding program.

One project category with a high potential to qualify for subsidies at both federal and provincial levels involve those that significantly reduce a company’s greenhouse gas emissions. The government is providing a number of incentives to industrial emitters (mainly manufacturers) to encourage them to invest in leading-edge technologies. Companies can receive as much as $5 million toward a project that will reduce GHG output.

Many technologies are interdependent

If you are a developer of technology that enables this type of outcome, your sales cycle could benefit significantly from having a working knowledge of the government programs that your customers can take advantage of to shorten the payback time on their investment in your technology.

In some cases, funding is available for up to 75 per cent of project cost toward investment in GHG-reducing technology that is considered innovative in Canada. IT-based investments that could fit the bill might include things like data-driven solutions for managing GHG targets and reporting, embedded software and Internet-of-Things solutions that facilitate tighter monitoring and control over high-consumption GHG-emitting processes, to name a few.

Another vertical receiving significant investment from the government is Canada’s agri-food sector. Food producers and processors are currently able to access incentives ranging from $2,000 to as much as $10 million for a range of investments, with the ultimate goal of substantially contributing to the competitiveness of the agri-sector. Funding is available for projects demonstrating or adopting innovative products, technologies or processes that address this objective; businesses that offer solutions that serve this sector should absolutely take the time to figure out whether adopting their products or services could make their customer eligible for government incentives.

Examples of eligible software/IT investments in this sector include innovative technology (typically defined as having an adoption of less than 20 per cent across the sector) that can enhance labour productivity, reduce waste, improve supply chain efficiency, or improve traceability for either farmers or food & beverage manufacturers. Moreover, an IT business that develops a technology specifically geared at addressing a challenge faced by Canada’s agricultural sector could be eligible for its own direct funding for pre-commercial development and commercialization of its innovative technology.

Selling to the government

There are also opportunities in government procurement. In addition to the new Innovative Solutions Canada program that funds proof-of-concept and prototype development projects that address specific calls for solutions by federal departments, there are also funding programs, that incentivize communities of all sizes to invest in state of the art infrastructure, an example of which would be the Smart Cities Challenge. If you currently offer products to serve government departments or municipalities, it is worth keeping tabs on the available funding programs in this area and discussing them with the department responsible for purchasing your solution.

Finally, if you offer accredited training courses (independently of a sale for a product or service relating to the subject of the training), customers in certain provinces could be eligible for a subsidy as much as $10,000 or 5/6 of the training cost.

In summary, government funding programs are intended to drive economic growth, particularly in priority sectors, they are not to be overlooked when it comes to planning your go-to-market strategy. It is a worthwhile investment to monitor federal and provincial budget announcements and news about government grants, either on your own or with help from a consultant. This helps you stay informed in this ever-shifting landscape.

If you happen to offer a solution that serves a sub-sector that is eligible for priority funding, finding the right program for your customers is a great way to drive demand or improve the business case for investing in your solution. While it’s tough to beat the value added by coming to the table with a chance for the government to cover part of your customers’ investment in your product, businesses could take it even further by incorporating a funding eligibility assessment right into their sales cycle and the business case that will form the groundwork for a funding application into their proposal. For these reasons and more, when it comes to deciding on your longer-term development strategy, it is worth taking some time to educate yourself about government funding commitments and program requirements and the market opportunities they can open up for your business.

Andrea McPhail is vice-president of operations at business consulting firm RDP Associates, where she oversees consulting operations related to tax credit and government grants. She works directly with both startups and established companies to ensure their eligibility for R&D tax credit and other government funding schemes.

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