June 29, 2020

Canadian Government Hesitation To Significantly Support The Technology Sector Will Cost Us All

 

This OpEd is provided courtesy of the CATA Alliance.  For additional information please visit their website https://cata.ca/ and our prior piece on their work.

Canadian Government Hesitation To Significantly Support The Technology Sector Will Cost Us All

The impact of COVID-19 on economies around the world has been massive. How governments are dealing with it varies widely. In Canada, there continue to be questions about whether the multitude of programs are reaching those in need, especially across the many business sectors.

The Canadian Advanced Technology Alliance (CATA) wrote to the Prime Minister on April 7 proposing a solution to swiftly move emergency assistance to established Canadian science and technology-centric firms. The plan is to work with the nation’s largest innovation program, the Scientific Research & Experimental Development (SRED) tax credit platform. This provides accountability and a feasible and swift pipeline to distribute a  $3.6 billion Resilience and Rebound Emergency (RRE) fund.

An existing delivery system reduces complexity. Using verifiable SRED data as a pre-qualifier to emergency assistance boosts accountability and reduces red tape overhead for both applicants and bureaucrats. Assistance is tagged to trusted firms that already have a minimum two-year track record and have met the scrutiny of the Canadian Revenue Agency. The fund would provide zero-interest, partially forgivable loans to the nation’s most innovative tech firms.

A success story that could do so much more

SR&ED is a government success story. The $4 billion program provides tax credits encouraging businesses to grow through their own investments into science and research.

The tax credit powers innovative companies. These company investments into science and research enable job and economic growth in tech, which sharply outpaces the overall Canadian economy.

This was the status of Canadian SRED science and technology-centric companies, before COVID-19:

  • 13,000, mostly small to medium-sized firms
  • 760,000 direct jobs and millions downstream jobs
  • $34.5 Billion in direct salaries
  • $188 Billion in revenues
  • The average SRED claimant has 8 years of successful claims

Tech deserves improved assistance

Billions of taxpayer dollars over many years helped build this technology powerhouse. Leaving these Canadian innovators behind is a broken promise to taxpayers.

Is this not a sector worth protecting? China recently confirmed it will invest US $1.4 trillion over the next six years to leapfrog ahead of the US in all the major technologies. While China makes tech a priority, Canada has left our best innovators and talent to largely fend for themselves.

Moving out of the starting blocks into the international race for economic recovery, all sectors will have a heavy reliance on technology to compete.

Layoffs in tech continue, just like many other sectors, but once gone, getting that rare valuable tech talent back won’t be easy. The world is in a fiercely competitive battle for tech talent, the International Monetary Fund forecasts a global shortfall of 85 million tech workers in the next decade. In historic economic downturns, Canada’s tech sector has been abandoned

CATA was encouraged when the government used another funding program, doubling up the annual Industrial Research Assistance Program (IRAP) budget as an emergency pipeline to deliver funds to 1,000 firms. A similar approach was used for other business and innovation programs, but for some reason, Canada’s largest innovation program has been left behind and forgotten.

The super success story – the SRED program has not been mentioned by government leaders as part of the assistance strategy. The government’s well-intended assistance programs are helping some, but many of the programs announced have a low uptake from technology and small businesses. A more comprehensive and inclusive emergency liquidity and capital emergency assistance approach is needed. A CATA survey of business leaders in late April and early May revealed key facts:

  • Only 18% feel current government programs are adequate to keep critical teams together for 12-18 months
  • 88% say they would apply for the RRE fund and 89% believe such funding would carry them through the next 12 months
  • 69% say funding would prevent layoffs
  • 97% of companies have been negatively impacted by COVID-19

Government is not listening

From our discussions with government officials, the government is communicating they have adequately looked after the tech sector. They are not listening to what business owners are saying.

Tech is not like the auto industry.

Tech is not like the oil & gas industry.

Tech is not like forestry or fishing.

Dan Breznitz, co-director of the Innovation Policy lab at the University of Toronto, spoke to theCanadian Press on May 20 and forecast global trade in raw commodities will decline as COVID-19 makes it more difficult to move people and goods. He said Canada’s vaunted resource-based industries, “Will have a problem just selling wood and unprocessed oil.” He added, Canada must rebuild its capacity to produce sophisticated goods through innovation.

Who then will lead the rebound? Technology.

Ontario’s Minister of Economic Development, Vic Fedeli knows what is at stake. In an interview on May 7 with Communitech, he stated, “We’ll need the tech sector to guide us through how we can [manufacture] in a way more efficient manner.”

CATA’s call for a simple, fast, accountable funding program has received positive feedback from some federal officials. Plus economists, like Sherry Cooper, Chief Economist, Dominion Lending Centres;  accountants like Danny Ladouceur who as a partner at RSM Canada handles the largest SRED portfolio in the country; entrepreneurs like Bruce Croxon and over 2,800 signatures on a CATA petition.

The ability of the tech sector to be strong when the economy rebounds will be compromised if companies are closed, staff gone and great ideas sold off at bargain-basement prices all because of insufficient support. Make no mistake the buying up of tech firms is underway. The Financial Post reports that takeovers are now happening at the fastest pace in years.  Yet the gravity and urgency are being missed by the government.

If taxpayers are worried about the loans, a portion will have to be paid back by the companies, the remaining money would be repaid in otherwise lost payroll tax alone within four years.

The problem is not going away, nor is CATA.  We ask that after two months, the government makes a decision. Lack of meaningful assistance equals no new jobs and a questionable future.

A pretty easy equation everyone can understand. Will the government figure it out in time?

We hope so.

If you would like to get involved with the CATA campaign contact CATA’s CEO directly suzanne.grant@cata.ca

——————

About the Author of “Canadian Government Hesitation To Significantly Support The Technology Sector Will Cost Us All”:

Suzanne Grant is CEO of the Canadian Advanced Technology Alliance, representing small to medium sized technology based firms.  She is a military veteran with a communications engineering and intelligence background. She has 30 years of entrepreneurial experience include founding firms and doing business in 17 nations.

 

 

June 9, 2020

CATA Memo – Save Canada’s Way of Life. Funding for science and technology centric businesses. #economy

Original Article

ASK –  Don’t abandon Canada’s future. Protect one of Canada’s best opportunities for financial recovery. Implement the Canadian Advanced Technology Alliance Resilience and Rebound Emergency Fund to save 13,000 science and research based small and medium businesses and millions of jobs. 

Technology – Canada’s post COVID19 economy catalyst. Advanced technologies and ICT sectors were outpacing the economy and jobs growth at almost twice the national average. Demand for future economy products and services, science, research and technology talent and their innovations will continue.

We could lose our financial catalysts in tech, the drivers of the economy without immediate action.  Only 18% of technology company owners surveyed were confident the existing funding is accessible and enough for business survival. Large US firms are targeting Canadian talent and companies to fund their own prosperity. #HistoryDoesntHaveToRepeat #LostForever

############# End of petition – background follows#########

Be part of the next big thing 

The world is moving into a digital transformation, in part boosted by COVID19.  Artificial intelligence and smart cities will lead the way. We are already seeing education, cloud, remote, medical and health technologies and financial technologies thriving in the pandemic.

Canada has the technology and talent to continue as world class tech leaders in the future, if we can keep our technology entrepreneurs and innovators connected with their businesses now. The good news is most of this work can be done from home during social distancing. We can work on Canada’s comeback and future balance sheet recovery today. 

ABOUT the CATA RR Fund & Alternative Eligibility Formula

The Canadian Advanced Technology Alliance proposed Resilience and Rebound (RR) Fund addresses tech companies left behind under current programs.  These vital Canadian companies are the future, invest their own money in research and science, and can lead Canada out of this economic crisis. They have passed rigorous scrutiny of Canadian Revenue Agency Auditors as successful participants of the Research, Science and Experimental Development tax credit program. The companies are known by the Federal Government,  trusted and strong.

One possible fund delivery mechanism could be as a partially forgivable loan, right sized as a multiple of a SR&ED claim,  delivered through Canada Revenue Agency, like the efficient CERB program. The same eligibility data could prequalify applicants for other existing programs as well. This is a fast, accountable, and simple data driven, digital solution with low administrative overheads for all parties.

The Hill Times – We’ll need the capability to restart the economy once pandemic fades

We’ll need the capability to restart the economy once pandemic fades

This means ensuring that we have the companies ready to drive future growth—ensuring they survive the pandemic world to help lead growth and job creation in the post-pandemic world.

TORONTO—The first priority is to do everything we can to protect the health of Canadians. The second is to ensure Canadians have enough income to meet basic needs so long as the pandemic prevents them from working.

But there is a critical third priority, which is to make sure that we have the capability to restart the economy as the pandemic fades.

This means ensuring that we have the companies ready to drive future growth—ensuring they survive the pandemic world to help lead growth and job creation in the post-pandemic world. It is through companies that we innovate, produce tradeable goods and services for sales at home and for export, and create jobs as well as the tax revenues governments need to provide the public goods we value.

This is why there is so much concern over the precarious state of many of our most promising tech companies that were on the scale-up path before the pandemic hit. They now find themselves with slumping revenues and a lack of capital to continue innovative investments and are at risk of losing their teams of talent, one of their most important investments. Without talent, there is no innovation.

The innovative tech world is not just the world of information and communication technologies. It includes, for example, clean technologies, new forms of energy, safe and sustainable water systems, new housing technologies, genomics to improve agricultural yields and sustainability, medical technologies, pharmaceuticals, new materials, production processes and technologies, and the circular economy of waste elimination.

It has taken time for governments to pay attention. The unique position of innovative tech companies meant they did not benefit from many of the early federal initiatives to help businesses. For example, many tech companies found they did not qualify for the Canadian Emergency Wage Subsidy, which was designed to help companies keep employees on the payroll or rehire them.

To some extent, government has responded. But more remains to be done. For tech companies that could not retain employees under the emergency wage subsidy, a new initiative under the Industrial Research Assistance Program, or IRAP, has been provided with $250-million to provide a similar benefit. As National Research Council president Iain Stewart told the Council of Canadian Innovators (CCI), the goal is to help tech companies that are R&D-intensive, technology-focused and innovative, or part of supply chains, to retain highly qualified personnel.

This should help technology entrepreneurs “stay afloat,” says Ben Bergen, executive director of the CCI. But more is needed. Moreover, it remains to be seen how well the government’s Business Credit Availability Program meets the needs of tech companies.

Likewise, it remains to be seen how well the promised $962-million in funding through regional development agencies will help the tech world.

The government has responded to concerns that some Canadian companies might be subject to foreign takeovers because of their weakened position. The government says that “certain foreign investments” will be subject to “enhanced scrutiny” by Investment Canada. “Direct investments of any value, controlling or non-controlling, in Canadian businesses that are related to public health or involved in the critical supply of goods and services to Canadians or to the government, will be subject to review,” with even greater scrutiny where the foreign investor may be a state-owned enterprise.

But it is not clear what the government means by “critical goods and services.” In particular, will this apply to the large number of tech companies that are at risk because of the economic lockdown? That is essential. Moreover, simply blocking foreign takeovers, while important, is not enough.

Our promising growth companies also need capital as they scale up. One reason that so many Canadian tech companies have been sold off in the past is that this was the only way to obtain the equity or patient capital needed to take the next step for growth.

Some of this need can be supplied through improved access to capital. The Canadian Advanced Technology Alliance has called for a $3.6-billion fund to provide zero-interest loans, with a forgivable portion, for tech firms with a proven track record. This could help.

But scaling up tech firms need equity as well as loans. One way to provide equity, if financial markets are on hold, would be to set up an arm of an existing federal corporation, the Canada Development Investment Corp., to make investments in tech companies with growth potential, selling these shares into the market or back to the invested company at a future date.

Another way to get more money into the hands of small and midsize innovative companies is to accelerate the payment of refundable tax credits under the federal R&D tax incentive. At the end of March, there were 1,755 companies across Canada that had applied for $231.6-million in refundable credits. This is money that in effect belongs to the companies themselves and, says CATA, payouts could be accelerated because the Canada Revenue Agency already has records of most companies that use the program. That should make it easier to fast-track payments now.

What else? We have to keep thinking. For example, how well can the federal and provincial governments use procurement to help tech companies prove up technologies and create markets by being an early customer?

The post-pandemic world will be difficult and there will be no overnight recovery—it won’t be V-shaped. But one thing we can do now is to make sure that our future drivers for growth—our innovative tech companies—are well-positioned to play their key role in our post-pandemic world.

David Crane can be reached at crane@interlog.com.

The Hill Times

May 13, 2020

RESEARCH MONEY – New portal aims to accelerate procurement opportunities for Canadian firms

Original Article

Canada’s national ICT business association has launched a new portal in an effort to streamline the procurement process for both tech companies and the government.

The Tech2Gov Innovation Exchange, launched in response to the COVID-19 crisis, allows users to search by area of specialization (such as personal protective equipment), name, location or services to find companies that solve specific problems. The portal aims to speed up tech procurement and overcome current challenges that may inhibit tech companies from applying for government contracts.

“The government of Canada has billions of dollars earmarked for technology,” said Angela Mondou, CEO of Technation (formerly ITAC – the Information Technology Association of Canada). “To allow Canadian tech innovators, or to enable tech innovators and small and medium enterprises access to those kinds of opportunities to grow their business is huge.”

Modernizing procurement has been an ongoing challenge for the federal government. COVID-19 is providing an unprecedented impetus to move quickly to address longstanding problems as international supply chains struggle to meet an immediate global demand for ventilators and healthcare equipment.

Normally, government officials post requests for proposals through the government’s buy and sell website, which Canadian companies search through for potential opportunities. For small- and medium-sized businesses, the application process can be cumbersome and costly.

“They [small businesses] don’t have bid teams or proposal teams. They don’t have tens of thousands of dollars to apply to those,” said Mondou.

The system is also time-consuming for bureaucrats who have to sift through potentially thousands of applications, she adds.

The federal government is now seeking help from any companies that can quickly re-tool their businesses to fight the current pandemic. Canadian companies have answered the call, with many — from 3D printing to artificial intelligence — shifting operations to meet this new demand.

The shift to challenge-based procurement

Under the old process, government officials called for specific solutions to specific problems. That is now shifting, said Mondou, with procurement becoming more broad and challenge-based, allowing more companies from different backgrounds to respond.

“Procurement is a powerful tool for any sector,” said Mondou. “It’s all about buying in. If you can buy as a government from companies in your country, you’re helping your country’s health and your country’s economy.”

The current list of companies on the site includes homegrown tech names like Element AI and MindBridge, as well as multinationals like IBM and Microsoft. While not headquartered in Canada, Mondou said these large corporations are key contributors to the Canadian tech ecosystem.

“They’re the experts in being able to provide cloud-based, highly secure solutions for governments,” said Mondou. “The Googles, the Microsofts, the HPs, all of these large companies have different kinds of infrastructure that really support large and small enterprises.”

Portals like the one launched by Technation are “excellent” for highlighting Canadian technology, said Suzanne Grant, CEO of the Canadian Advanced Technology Alliance.

However, there’s also the ongoing cultural challenge of getting the Canadian government to buy from Canadian companies.

“Let’s take a look at the business and culture of innovation, and what it is going to take for us to have that pride in Canadian tech as a nation,” adds Grant.

The hope among innovators is that the new normal of expedited government processes will continue after COVID-19, and that attitudes towards quickly adopting technology will quickly change with it.

R$

May 6, 2020

The Hutchinson Group – Fast track Canadian small business tech funding to save the economy.

President of the first Canadian owned computer systems manufacturer and a Founder of CATA in 1978, supports CATA’s proposal to fast track Canadian small business tech funding to save the economy.

To read Bill Hutchinson’s full letter to the Prime Minister click this link.

 

May 5, 2020

RSM Canada – Government urged to fast track small tech businesses funding to save economy

SUBJECT: Government urged to fast track small tech businesses funding to save economy

Earlier this month, the Canadian Advanced Technology Alliance (CATA) wrote to you proposing ways to immediately help Canadian owned small business tech companies affected by COVID-19.  My name is Danny Ladouceur and I am writing to you today in full support of CATA’s proposal, including their $3.6 Billion Resilience and Rebound (R & R) fund – in addition to all the current emergency funding programs… Letter of support to the  Prime Minister 

Click to open and read the full letter

May 2, 2020

mondaq – Canada: COVID-19: Frequently Asked Questions For Technology And Emerging Companies

Original Article

Last updated: Friday April 23, 2020

If you’d like to receive further updates, sign up for our Technology and Emerging Companies Group Bulletin

General Business

How do I apply for the Canada Emergency Wage Subsidy?

On April 21, 2020, Prime Minister Trudeau announced that the CRA would begin receiving applications from employers for the Canada Emergency Wage Subsidy on Monday, April 27, 2020.  Applications are to be received through the CRA’s My Business Account portal or by separate application to be made available on April 27.

No details were released about when businesses can expect payments after making their applications.

What government resources are available to assist me during the pandemic?

The Governments of Canada and BC have announced a variety of measures and programs aimed at assisting businesses, including those operating in the technology industry, through the economic turbulence caused by COVID-19.

The various programs, subsidies and other assistance that are available to businesses are each described in the following article: COVID-19: Financial Assistance for Businesses. As the details about these programs are evolving almost daily, you and your employees can keep up-to-date about their status and eligibility criteria via official government websites such as www.canada.ca and www.bc.gc.ca.

Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank have also all made a commitment to work with individuals and small business clients to ease the financial pressures they may be facing due to COVID-19. This includes offering flexible solutions such as up to a six-month payment deferral for mortgages or relief on other credit products. Situations will be handled on a case by case basis and individuals are encouraged to contact their banking institution directly.

What if my technology company doesn’t qualify for the Canada Emergency Response Benefit or the Canada Emergency Wage Subsidy?

On April 17, 2020, the federal government announced over $1 billion in new support for small businesses in Canada to help mitigate the effects of the COVID-19 pandemic, some of which has been dedicated to the technology sector. The funding includes $270 million for Futurpreneur and the Industrial Research Assistance Program (IRAP). This funding was provided in recognition that many startup and pre-revenue technology companies may not eligible for other federal assistance such as the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy. Futurpreneur is a non-profit organization that provides financing, mentoring and support tools to aspiring business owners aged 18-39. IRAP is a program developed by the National Research Council of Canada to provide advice, connections, and funding to help Canadian small and medium-sized businesses increase their innovation capacity and take ideas to market.

More information: Funding Applications Open for $250 Million Innovation Assistance Program

How do I determine whether my business is deemed an essential service and therefore permitted to remain open?

B.C.’s list of essential services, which can be found here, includes a variety of service-oriented businesses, such as food services, transportation, health services and so on. Many construction and manufacturing activities are also permitted to stay open, as will banks, accounting firms, insurance providers and other financial services.

For non-essential businesses, British Columbia has so far ordered the closure of “personal service establishments” (e.g.: salons, spas, et).  Businesses that have not been ordered closed, but are not considered essential, are permitted to stay open (at least for the time being), but only if they can adapt their services and workplace to the orders and recommendations of the Provincial Health Officer.

For businesses operating in the technology sector, the essential services list includes a section titled “Communications, information Sharing and information technology (IT)”.  However, as that section mainly relates to IT businesses that maintain IT and communications infrastructure for other essential services, such as medical facilities, government facilities and employees working from home, it will not likely apply to all businesses in the technology sector if further closure orders are issued.

More information: Questions Answered – Is Your Business “Essential”?

Will my business interruption insurance apply if I am required to close my business during the pandemic?

Government mandated closures, when not coupled with the actual presence of COVID-19, are preventative measures intended to slow the spread of COVID-19 generally and encourage physical distancing. For such closures to constitute “physical loss” or “property damage”, which are the typical losses that a business must show to make a claim under business interruption insurance, the meaning of those phrases would likely need to be stretched beyond their reasonable  legal meanings.

Of course, your exact policy wording and the particular facts of your business closure are the key factors in an insurance claim. It is possible that where the actual presence of COVID-19 causes a business to close, there may be coverage under commercial insurance policies. However, as always, coverage is subject to the operation of exclusions, which should be reviewed and carefully considered.

More information: COVID-19 And Business Interruption: Is It Covered By Your Commercial Property Policy?

If I have been required to close my business due to COVID-19, am I required to continue to perform under existing contracts?

Most technology companies will be familiar with how contracts in the sector are structured, which may include service level agreements and processes for excusing a party from performing its obligations (such as earthquakes and fiber cuts).  However, the impact on business caused by a pandemic or public health emergency may not have been front of mind when you signed those agreements.

The article below discusses excused performance contract provisions (often called force majeure clauses) and the common law doctrine of frustration, each of which could provide relief if your business is unable to perform under an existing contract. Regarding force majeure clauses, it is important that the specific language in any relevant contract be examined by a lawyer to determine if it applies in the context of the COVID-19 pandemic. Even if so, it should also be noted that the party claiming relief will likely be under a continued obligation to take commercially reasonable steps to mitigate any damages.

More information: COVID-19: Impact on Contractual Obligations

More information: Contracts in the Age of COVID-19

What if I am unable to make certain loan payments due to a COVID-19 related business closure?

In our view, open, early and frequent communication is key. Lenders and borrowers should be transparent and proactive at this time with a view to hopefully identifying workable arrangements and to avoid worsening circumstances.

More information: COVID 19 – Considerations for Lenders and Borrowers

Transparency Registry Deadline Extension

On October 24, 2019, the BC Government approved new regulations which would require private companies incorporated under the Business Corporations Act (British Columbia) to establish and maintain a transparency register of significant individuals who had significant ownership positions in or control of the company. The regulations were originally set to come into effect on May 1, 2020 however, in light of the COVID-19 pandemic, the BC Government announced that it was extending the coming into force date of these regulations to October 1, 2020.

See our detailed post explaining the transparency register here: New B.C. Transparency Register: Who Needs to Disclose?

Canadian Emergency Business Account Update

On April 16, 2020, the federal government announced an expansion of the Canada Emergency Business Account (CEBA), which provides interest-free loans of up to $40,000 to small businesses. CEBA will now be available to Canadian employers with $20,000 to $1.5 million in total payroll during 2019 (the minimum payroll was previously $50,000). If the loan is repaid by December 31, 2022, 25% of the loan (up to $10,000) will be forgiven. After December 31, 2022, the remaining balance will be converted to a three-year term loan at 5% interest.

Prime Minister Justin Trudeau announced that approximately $7.5 billion in loans have been approved under CEBA since the program was announced.

See our detailed post explaining CEBA and various other government resources available here: COVID-19: Financial Assistance for Businesses

Commercial Lease / Rent

Can a landlord under a commercial lease evict a business during the COVID-19 pandemic?

The moratorium announced on evictions by the British Columbia Government on March 25, 2020 only applies to residential leases.

Does my company need to pay rent during the pandemic?

Generally speaking, tenants will be required to pay rent under their lease in the normal course.  Most commercial leases provide that rent must be paid without abatement or set-off.  It is worth noting, however, that leases can vary widely in their terms and it is important for both landlords and tenants to review their particular contract to see whether a situation like the current pandemic is addressed.  For example, a given lease may have a force majeure clause which might address the highly unusual situation now faced by most small business tenants.

A word of caution, however, the wording of these types of clauses will not usually assist a tenant facing COVID-19 like business interruptions.  The specific wording of such a clause should be checked and, in all likelihood, run past a lawyer for his/her opinion.

More information: COVID-19: Response Options Under a Commercial Lease

Employment

Am I permitted to temporarily lay-off my employees?

The Employment Standards Act (British Columbia) (the “ESA”) allows employers to temporarily lay off employees for up to 13 weeks in a 20 week period. If employees are recalled before the expiration of the 13 week period, no notice or pay in lieu of notice is owing under the ESA. This includes group termination notice, if applicable.

While employees can waive the right of recall and demand to be paid out immediately (as well as contractual severance or common law pay in lieu of notice), given the uncertainty of the future job market, we anticipate most employees will accept the layoff.

More information: COVID-19 – Update for Employers

What must I consider from a health and safety perspective as it relates to my employees?

Both employers and employees have an obligation to ensure the health and safety of their workplace under the Workers Compensation Act (British Columbia) and the Occupational Health and Safety Regulation. These obligations include taking reasonable steps to protect employees from a contagion such as COVID-19.

Any employee who believes that a condition in the workplace is likely to endanger their health or safety, can refuse to work under applicable occupation health and safety legislation. If an employee refuses to work, employers should handle the situation on a case-by-case basis and consider the situation on its merits.

Employees may be entitled to paid sick leave, if provided for in their employment contract or in a workplace policy. Employees who have symptoms of COVID-19  should be treated the same as any other sick employee. If paid sick leave is not provided for in an employment contract or policy, the employer is not obligated to provide paid sick leave. The employee may, however, be eligible for employment insurance sick leave benefits while on their unpaid leave of absence.

More information: COVID-19: Employer and Employee Rights and Obligations

What subsidies and programs are available to my employees if I am required to close my business?

Wage Subsidy Program: This program, which is available for three months, provides a subsidy to certain employers so that wages can be paid to employees who are not working due to COVID-19.  Businesses will have to apply monthly and in order to qualify, demonstrate that their revenues dropped at least 30% in the relevant month this year over the same month in 2019.  For example, to be eligible for the subsidy for April wages, a business’s revenues in April 2020 must be at least 30% lower than they were in April 2019.

More information: COVID-19: Federal Government Announces Further Details on Wage Subsidy Program

Canadian Emergency Response Benefit (CERB): The CERB is available to employees and self-employed individuals whose income has been lost as a result of COVID-19 and is available to individuals employed in all sectors, including those employed or operating in the technology sector, that meet the eligibility requirements.  The CERB provides eligible applicants with $500 per week for a period of 16 weeks.

More information: COVID-19: Federal “Canada Emergency Response Benefit” Announced

Supplemental Unemployment Benefit (SUB) Program: The SUB program, delivered by Service Canada, allows for an increase in employees’ weekly benefits when they are unemployed due to a temporary stoppage of work, illness, injury or quarantine. Registered SUB plans can benefit both employees and employers during time of economic uncertainty: it enables employers to continue supporting their employees, while the burden of the majority of the employees’ income is carried by employment insurance.

More information: The Supplemental Unemployment Benefit (SUB) Program

BC COVID-19 Action Plan: BC workers who are eligible for employment insurance benefits (as a result of lay-off; sickness; or eligibility through the new Emergency Care Benefits and Emergency Support Benefits programs) will receive a one-time $1,000 payment from the province. A second payment of $564 will be made to eligible workers in July 2020 as a climate action credit.

More information: Relief for Workers – BC COVID-19 Action Plan

What are my obligations as an employer if an employee is required to self-isolate?

The British Columbia Government has passed legislation for job-protected leave for workers required to self-isolate during the COVID-19 pandemic.  This leave extends to workers who are unable to work as a result of having to care for a child or dependent adult. Once able to return to work, the worker must be returned to the same position, or an equivalent position.

More information: BC Passes Job-Protection Legislation Related to COVID-19

What must I consider from a privacy law perspective if I am requiring my employees to work from home?

Employers should remind employees working from home to password protect devices and USBs, ensuring software is up-to-date, and being diligent about using work email accounts rather than personal ones for work-related emails, in order to maintain control over personal data. More details about setting up remote workspaces can be found in a guidance document released by the BC Office of the Information Privacy Commissioner on March 17, 2020.

More information: Remote work and Information Privacy

Investment / M&A Transactions

What recourse do I have if I have signed a purchase or investment agreement, but COVID-19 has changed the nature of the investment.

A purchaser may have the option to withdraw from a transaction without liability if it is clear that the pandemic will have a materially negative impact on the target company’s business.  Assuming a binding acquisition agreement has been signed by the parties with an interim period (the period between signing and closing), there are a number of potential avenues that may permit a purchase to terminate, including material change provisions, representations and warranties, and interim covenants. A lawyer should be contacted to review the relevant agreement to determine which rights the purchaser is entitled to thereunder.

More Information: M&A in the midst of a Black Swan Event

Am I still able to access funding through Canada’s Scientific Research and Experimental Development (SR&ED) program?

The Canada Revenue Agency (CRA) has noted that payouts from the SR&ED program have slowed due to the coronavirus pandemic as resources have been allocated to issuing funds under the various government emergency subsidy programs. According to the CRA, those emergency subsidy programs, such as the Canada Emergency Response Benefit, must take precedence over “non-critical services”, which includes processing SR&ED applications.

It is well established that the SR&ED program provides a lifeline to a number of startup technology companies throughout Canada. To that end, the Canadian Advanced Technology Alliance has submitted a request to Prime Minister Trudeau to resume processing SR&ED applications. Further, Etienne Biram, a spokesperson for CRA, has stated that CRA is able to respond to requests from SR&ED claimants who may urgently require their refund. Mr. Biram also advised that as operations begin to resume to normal, CRA will make releasing SR&ED funds a priority, and will take “responsible risks to minimize pre-payment reviews”. As a result, businesses are encouraged to continue to submit SR&ED applications notwithstanding the pandemic, and should contact CRA directly if there in an imminent need for funds.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

May 1, 2020

betakit – MINISTER JOLY SAYS DETAILS ON RDA FUNDING EXPECTED SOON, DISCUSSES FEDERAL SUPPORT OF TECH SECTOR

Original Article

Almost two weeks ago, the Government of Canada introduced new emergency measures specifically meant to support the tech and innovation sector amid COVID-19. This included funding of $250 million to Industrial Research Assistance Program (IRAP), $20 million to Futurpreneur Canada, and $962 million in new capital to Regional Development Agencies (RDAs).

RDAs “are the front line for economic development in Canada and help to address key economic challenges.”

Prime Minister Justin Trudeau highlighted at the time that the funding is meant to address gaps left by the federal emergency loan programs and the wage subsidies.

Following a recent conversation with Minister of Innovation Navdeep Bains about IRAP, BetaKit also sat down (virtually) with Minister of Economic Development Mélanie Joly, who is responsible for the RDAs.

The minister shared details on the latest commitment to RDAs and her thoughts on the steps the federal government has taken to support Canada’s tech and innovation sector.

Joly told BetaKit that details on how the $962 million will be disbursed by the RDAs is expected “very soon.” Though she was not able to provide exact timing, the minister noted, “I’ll be coming up very quickly with the details.”

“Basically, if you don’t have access to the wage subsidy, if you can’t get access to the Canadian Emergency Bank Account (CEBA) $40,000 [loans], and basically you’re falling through the cracks, come to see us at FedDev,” Joly stated.

It should be noted that during the interview Minister Joly often referenced FedDev, the RDA for southern Ontario, when asked generally about the agencies. BetaKit has confirmed, however, that the $962 million will be distributed amongst all the RDAs and Community Futures Development Corporations nationwide, not just FedDev.

RDAs are federal agencies under Innovation, Science and Economic Development Canada (ISED). The six RDAs across Canada span Atlantic Canada, Ontario, Western Canada, and the northern regions as well.

RELATED: Minister Bains says retaining top tier tech talent critical to Canada’s economic recovery

Of the new capital commitment to RDAs, $675 million is being allocated to the agencies with $287 million for Community Futures Network. Community Futures Network is a group of federal agencies placed across Canada that provide small business services in rural communities. The network’s funding is distributed through RDAs.

When the $962 million was announced on April 17, Joly said the investment is essentially doubling the budget of the RDAs. The federal 2018 budget allocated around $911 million to RDAs: $400 million over five years on an accrual basis, and $511 million over five years on a cash basis.

Joly noted that prior to the pandemic the development agency program had an annual budget of $1.3 billion, including support to the community futures organizations across the country.

While she would not provide exact details on how the funding will be disbursed, the minister said the $962 million will “provide measures such as loans” to small and medium-sized enterprises (SMEs) that aren’t able to access the existing federal emergency liquidity measures as well as traditional funding from financial institutions.

“Sometimes certain institutions are not willing to take the risk, but we will because this is what we need to do.”

“Sometimes certain institutions are not willing to take the risk, but we will because this is what we need to do to support our most innovative companies,” Joly stated to BetaKit. “[These companies] were already thriving before this pandemic, we had like the best year since the internet bubble last year, and we definitely know that we need to invest in them because they’ll be part of our economic recovery.”

ISED’s website notes RDAs “are the front line for economic development in Canada and help to address key economic challenges by providing regionally tailored programs, services, knowledge and expertise.”

It adds that the agencies are closely monitoring challenges presented by COVID-19, encouraging SMBs to reach out if they have been affected. At time of publication, no further details on the new funding are provided on either the federal RDA site or individual agency websites.

Joly told BetaKit the federal government worked to get more funding for the RDAs following conversations with a number of organizations including tech CEOs, chambers of commerce, the National Angel Capital Organization (NACO), and MaRS CEO Yung Wu.

RELATED: MaRS’ Yung Wu: “we have days, not weeks and months” to preserve innovation sector

Groups including the Canadian Digital Media Network wrote open letters to Joly and other ministers calling for increased funding, calling RDAs essential in helping Canada’s startup ecosystem with recovery.

“It is the first time that the RDAs will be playing a role in stabilizing the economy. Usually, RDAs are there in times of stimulus, and in times of to stimulate demand by making direct investments in communities across the country,” said Joly. “RDAs will be playing a role, eventually, I’m convinced, in the context of the recovery.”

Recognizing the recent closure of Toronto incubator OneEleven, Joly pointed to the role RDAs play in supporting incubators. Without providing details on how incubators might be able to access the additional funding she noted, “getting more funding through our incubators was key to make sure we keep that ecosystem very strong.”

Joly added the government will also be looking to partner with other organizations that can help support areas where RDAs are less present. When pressed, the minister said this will include working with “third parties” such as economic development agencies “to make sure that we’re much more present in the Toronto area, and the Montreal area, and big cities.”

Notably, FedDev covers southern Ontario including Toronto, with FedNor covering northern Ontario. Canada Economic Development for Quebec Regions’s (CED’s) mandate is province-wide.

The economic development minister also highlighted other programs the federal government has introduced for the innovation sector, including IRAP and the recently announced rent relief program.

Some tech CEOs have already expressed to BetaKit hopes that the rent program will be beneficial for their startups. However, one survey found only one in five Canadian small businesses expect their landlord to sign on to the Canadian Emergency Commercial Rent Assistance program.

“We’ve heard some gaps and for the wage subsidy or for the CEBA account, and we moved quickly to try to mend them,” said Joly, noting that the change in the wage subsidy criteria was particularly for startups and companies in a high growth phase.

RELATED: SR&ED payments beginning to flow to Canadian tech following delay caused by COVID-19

When asked whether the Government of Canada has plans to make changes to programs like SR&ED or introduce additional emergency measures for the sector, Joly told BetaKit “we will see how this new support lands.”

“We will continue to engage with leaders and startup communities all across the country,” she added. “Because that’s how we’ve been dealing with stakeholders and people since the beginning of the pandemic; getting out funding, seeing how it’s landing, tweaking, coming back, seeing how things are happening, and then making sure that it is always and always better.”

“There was no playbook for this pandemic,” she said. “We started from scratch and we went as quick as possible, knowing that we would be … basically building the plane as we fly it.”

April 29, 2020

Ottawa Business Journal – Op-ed: Preventing COVID-19 from hollowing out Ottawa’s tech sector

OBJ Original Article

The coming few months will be critical for Canada’s economy. A nation’s most innovative and high-flying firms are often at the edge of financial success or failure and an event like the COVID-19 crunch is going to put the future of many firms at real risk.

Here in Ottawa, we’ve seen similar cycles before. The city helped to build world-class success stories such as Nortel, Newbridge and Cognos. We were making a splash. But the crash of 2001 and the financial crisis of 2008 hit the industry hard. In many cases, the final result was selling to foreign owners – an all-too-familiar exit strategy.

 In recent years, we’ve once again built a talent pool that’s the envy of the world. And then, along came COVID-19. We are once again going to see death by acquisition and attrition. History has shown the spoils in business go to those with deep pockets.

What’s happening?

COVID-19’s impact is already being felt. The scientists and engineers trained and educated in Canada and working in tech are already being offered jobs.

The Canadian Advanced Technology Alliance (CATA) has received an inquiry from a foreign company that is looking for a deal on a tech firm. It’s also received information that some firms have already been sold.

It’s harder and harder to replace lost companies and skilled workers because of the rising global demand for talent. Consulting firm Korn Ferry recently predicted a worldwide shortage of 1.1 skilled ICT workers – a figure it expects to rise to a staggering 4.3 million by 2030. Our schools cannot produce enough skilled grads for all the jobs out there. COVID-19 won’t permanently change that competition – it will only pause it.

There are currently 12,000 smallish knowledge-based companies in Canada that are prime takeover targets for foreign-owned companies. Canada’s tech startups employ some 85,000 people and have the talent, agility and energy to lead us out of this downturn (not to mention finding COVID-19 cures, treatments and testing solutions).

Unless we move decisively, Canadians will lose years of innovation and billions of our tax dollars that were invested in these firms.

A global survey by Startup Genome found that 42 per cent of global startups will shut down within three months if nothing changes; some 58 per cent have already let staff go. This is a pretty clear indication of where we are headed.

What can be done?

The federal government is trying to help. We applaud its measures, which include the wage subsidy program, business loans, money for IRAP, changes to SR&ED and a new policy to more closely review any foreign takeovers of our top innovative firms.

But this does not reach all those 12,000 innovative firms. The Canadian Advanced Technology Alliance believes there is a huge need for speed to get assistance out. To prevent the corporate losses that would threaten our collective future, please sign CATA’s petition on change.org.

The world is entering its fourth industrial revolution, often called Industry 4.0. The future is up for grabs. Will Canada be a high flyer again and grab a spot at the forefront of the new economy?

David Perry is managing partner of tech recruiting company Perry-Martel International as well as a board member at the Canadian Advanced Technology Alliance.

April 28, 2020

betakit – SR&ED CLAIMS REDUCED DUE TO FEDERAL COVID-19 ASSISTANCE

Original Article

Aweek ago, CEO of Venbridge Garron Helman wrote an article on how the recent government incentive programs could affect SR&ED claims. For weeks now we have both listened to many companies that were concerned all these emergency subsidies may be eating up their future claims.

Companies cannot ‘double-dip.’ Assistance received under either subsidy program reduces the eligible expenses for tax credits.

We sought clarity from the Canada Revenue Agency (CRA), which has been extremely supportive of companies during this time, including accelerating SR&ED processing times. They have cleared it up for us and we wanted to share that with the Canadian tech community.

If you file for SR&ED and are eligible for the Canada Emergency Wage Subsidy (CEWS) and/or the 10 percent Temporary Wage Subsidy for Employers, you need to plan for a smaller SR&ED claim for the period you are filing that includes the period of these subsidies.

CEWS and the 10 percent subsidy programs are considered government assistance, which is defined in the Income Tax Act as assistance from a government, municipality, or other public authority whether as a grant, subsidy, forgivable loan, deduction from tax, investment allowance, or any other form of assistance other than the federal investment tax credit (ITC).

So, under the tax act companies cannot ‘double-dip.’ The Department of Finance has highlighted that assistance received under either of these wage subsidy programs reduces the eligible expense base (which is primarily made up of salaries for SR&ED claims) for federal tax credits calculated on the same remuneration. Said plainly, the SR&ED salary and wages expenditures and the associated investment tax credits (ITC) are impacted by these programs.

RELATED: SR&ED payments beginning to flow to Canadian tech following delay caused by COVID-19

In terms of its impact on SR&ED benefits, the assistance under either wage subsidy will only reduce SR&ED claims to the extent that a specific employee’s salary or wages are claimed as SR&ED expenditures.

For example, looking only at the federal portion of SR&ED for simplicity, if an employee who was 100 percent SR&ED-eligible had a salary of $1,500 a week during the subsidy period, one would add the proxy of 55 percent for a total $2,325 less $847 of CEWS government assistance. In this case, the company could only claim $1,478 towards their SR&ED compared to the normal $2,325.

It is also important to note…the NRC IRAP Innovation Assistance Program will have similar implications.

The maximum amount the eligible expense base can be reduced by per employee is $10,164 if, for example, the CEWS was claimed for all 12 weeks at its maximum. This, multiplied by a number of employees, could have a material impact on a SR&ED claim. As you don’t want to miss out on any incentives, it is important to have professional assistance from your SR&ED consultant or accountant.

The reduction to the qualified SR&ED expenditures is based on the relative percentage of time spent on SR&ED-related activities versus non-SR&ED-related activities. Let’s look at how this works in practice:

For CEWS the SR&ED claim will be reduced by approximately 8 percent and for the temporary wage subsidy 3 percent. This assumes the employee works for the full year, qualifies for the full three months for the CEWS or wage subsidy and their SR&ED eligible activities are the same month over month. This is a relatively small reduction compared to the significant benefit the CEWS and/or the 10 percent wage subsidy brings to Canadian companies.

RELATED: Federal government commits additional $250 million in IRAP funding to support high growth startups

The approach taken by the CRA is the most reasonable and fair to taxpayers, in our opinion. It will be a challenge for the CRA to determine if the claim is being prepared properly unless the T661 (tax form with the SR&ED claim) is altered to detail the number of employees who qualify for the government assistance. Alternatively, it is possible that there will be a mechanism for the CRA to approximate the appropriate effect on SR&ED claims if the portal for applying for CEWS delineates between employees that are claimed on the T661 vs. other employees. These are things for us to watch for as the year progresses.

It is also important to note that, while we have focused on the wage subsidies administered by CRA, the NRC IRAP Innovation Assistance Program will have similar implications as it is also a form of government assistance.

We believe we are very fortunate to have the leadership of the CRA working with knowledge-based industries in this challenging time. The actions taken by the CRA demonstrate that they can act quickly and efficiently to help to inject capital into the ecosystem.

The CRA is also being fair and reasonable and relies on each one of us to do the same. It is clear that by working together we can get to the other side of this trying time and continue to build the flourishing innovation economy we have come to enjoy, and the great Canadian technology companies within it.

START UP Canada: David Lowe – Canada Needs To Invest In Its Small And Medium Technology Firms Right Now

Start Up Canada original article

 Opinion: Canada Needs To Invest In Its Small And Medium Technology Firms Right Now

 ENTREPRENEUR VOICES: DAVID LOWE

 Three weeks ago, the CEO of a to-date low profile, but large impact organization, called the Canadian Advanced Technology Alliance (CATA) wrote to the Prime Minister recommending that the COVID-19 pandemic demands the government to urgently invest in the technology sector.

The initiatives announced so far are good but do not go far enough to save important companies.

This proposal offered the government a fast, simple, and accountable way to move money quickly to 12,000 of Canada’s most innovative business. In the process, likely saving many of the 85,000 jobs in this group.

Of course, the COVID-19 crisis has radically changed our day-to-day behaviour in almost every way. Old challenges such as traffic jams are suddenly forgotten. New challenges emerge. New alliances emerge.

Up until COVID-19 Canada has carefully built a thriving technology sector and its most innovative part is driven by small and medium businesses.

Some of the needs have been addressed in recent days with the loosening of the revenue restrictions on the 75% wage subsidy (which will not be available for another 6 weeks and, significantly, will be far too late for many firms).

Also, the funding for 1000 companies in the Industrial Research Assistance Program (IRAP) was a good step but a much bigger group needs direct help and needs it fast.

Data flowing in from an ongoing CATA survey is reflecting that over 85% of owners and executives of small business tech companies say the programs announced to date, from the government, are not enough.

We are hearing of layoffs, companies already closing and, I am told that at least one out-of-country firm asked CATA about buying up Canadian firms and hiring Canadian talent.

The jobs at stake are skewed to Science, Technology, Engineering, and Mathematics—collectively known as the STEM industries. STEM careers are often considered the most recommended and sought after ‘good’ jobs among young graduates. The government announced $9 Billion in assistance for students.

Will there be companies and jobs for them upon graduation?

Once these teams of workers disperse, unlike many small businesses, finding new workers for a technology team is very difficult. There is a global demand for this kind of tech talent and one study predicts a shortfall this year of more than a million workers.

Programs that treat this as a short-term emergency simply stimulate the movement of these teams and their technologies offshore.

Canada has a highly regarded program called the Scientific Research and Experimental Development (SR&ED) that encourages businesses to conduct research and development (R&D) that will lead to new, improved products, devices, and materials.

Our company, for example, has a 12-year record of successful SR&ED projects.  At Southpaw we can safely say that our world-class technology would not be what it is without the SR&ED program and we are deeply grateful for that.

This tax incentive is the government’s largest single support program for R&D and is one of the most generous programs among OECD countries.

In fact, it is one of the key reasons Canada has such a large R&D sector. The government’s own studies reveal that for each dollar spent through SR&ED it generates another 30% in private investment plus a net spillover of another 11%. So basically, each dollar invested by our government is a moneymaking machine for the government and taxpayers!

The small- and medium-sized businesses in this program:

  • Number 12,000
  • Keep 85,000 people employed
  • Generate $6.5 billion per year – just in salaries.

CATA has proposed a simple and accountable program that delivers funds fast and directly to these companies through a mechanism similar to the one used for Canadian Emergency Response Benefit (CERB).

It is called the Resilience and Rebound Emergency Fund (R&R) of $3.6 Billion for zero interest, partially forgivable loans to those firms that maintain payroll targets.

Each one of these companies has a proven record with the Canadian Revenue Agency (CRA) through a good history of SR&ED participation. All of the data and infrastructure exists to move the funds and fast.

With COVID-19, otherwise stable contracts are disappearing or wobbling. Investor funding is drying up. Canada’s next Shopify or Research in Motion may well vanish.

Yet, payroll continues, rent continues. Plus large, deep-pocketed, US and global “vulture-capitalists” circle above looking for carcasses—they buy up and then break up a company so they can feast on precious technology, human talent, and tangible Intellectual Property. These predators are often in disguise and promise help. However, as a country, Canada has much to lose if we let these firms slip away.

Companies such as Southpaw Technology strongly support CATA’s call to the Prime Minister and Finance Minister to urgently fund and protect this most innovative sector of the economy.

We urge anyone, especially those who work for a small or medium-size technology company, to contact their MPs and to sign the CATA e-petition: https://bit.ly/34YmloN

It is my belief that these companies, as a group, are the country’s future and if we decide to support them they will be there to lead our economy from the COVID-19 crash to a post-COVID-19 boom.

We have days not weeks.

David Lowe is the CEO of Southpaw Technology Inc. in Toronto. He has over 25 years of experience in business development, sales, strategy, operations, and management in the media and technology sectors.

David is a graduate of the University of Toronto and the UCLA, Anderson School of Management Executive Management Program.

Micah Rakoff Bellman
MICAH RAKOFF BELLMAN

micah.rakoff.bellman@startupcan.ca

April 27, 2020

The Hill Times – We’ll need the capability to restart economy once pandemic fades

This means ensuring that we have the companies ready to drive future growth—ensuring they survive the pandemic world to help lead growth and job creation in the post-pandemic world.
The post-pandemic world will be difficult and there will be no overnight recovery—it won’t be V-shaped. But one thing we can do now is to make sure that our future drivers for growth—our innovative tech companies—are well-positioned to play their key role in our post-pandemic world, writes David Crane. The Hill Times photograph by Andrew Meade

TORONTO—The first priority is to do everything we can to protect the health of Canadians. The second is to ensure Canadians have enough income to meet basic needs so long as the pandemic prevents them from working.

April 22, 2020

Automotive News CANADA – Auto start-ups pivot to join COVID-19 fight amid fears of lost momentum

Original Article

Only weeks ago Polish entrepreneur Slawek Potasz was preparing to relocate his vehicle-scanning company to Toronto in April, where a berth awaited in a prestigious business-accelerator program.

Then the full impact of Covid-19 hit worldwide, grounding indefinitely Potasz’s flight to Toronto and his plans to join Canada’s burgeoning transportation-technology sector.

How long can he hold out? “Right now, we have a runway until say September,” said the InMotion Labs founder.

Among people, the elderly are the most susceptible to the novel coronavirus. In business it’s the young – small start-ups like Potasz’s, often with limited access to credit and government financial help.

“What we see is that daily, companies are dropping. And once they drop they’re gone,” warned Suzanne Grant, of the Ottawa-based Canadian Advanced Technology Alliance (CATA).

In a bid to help the innovation sector through the pandemic, Ottawa announced April 17 it was adding $250 million to the Industrial Research Assistance Program. The funding was designed to help high-tech start-ups, which were not eligible for other financial aid, such as the 75-per-cent wage subsidy program.

Yet, even with the future uncertain, some tech companies are pivoting to address the urgent need for medical supplies. Colin Dhillon, chief technology officer the Automotive Parts Manufacturers’ Association, said SMEs – or small to mid-size enterprises – are among firms answering the APMA’s call on the industry to supply crucial medical gear.

Among them are Toronto’s Forcen Inc., producing pressure sensors for ventilators being built by Canada’s auto suppliers and others, and Alchemy Nano of Kitchener, Ont., which has created a removable film to extend the life of face shields, Dhillon said.

Resourcefulness and adaptability are hallmarks of a successful startup.

INNOVATE TO SURVIVE

Dhillon believes firms putting those qualities to work in the crisis have the best chance to survive.

“Some SMEs are definitely going to struggle and to be honest, some major corporations and large companies will struggle. The difference is, those that are stepping up probably will find an innovative way out of this.”

Among the innovators is InMotion’s Potasz, who with his move to Canada postponed joined an international effort to produce “cleanbots,” or robotic platforms that can spray disinfectant and perform other tasks to protect health workers from contact with the virus. Potasz won approval from the Polish government to build prototypes that could be in hospitals by April 30.

InMotion’s robots normally follow a magnetic path around a lease or rental return and carry cameras and scanners to check for dents and scratches. An upcoming version aimed at used vehicle appraisals will measure paint depth to reveal hidden body repairs.

The company has also developed a multi-scanner system for parking enforcement that Potasz hopes could also be adapted for pandemic use: Checking the temperature of pedestrians, for example, or measuring crowd separation.

SMALL MEANS NIMBLE

The 26-year-old entrepreneur remains intent on opening in Canada, where a lower dollar and the ability to do business in the same time zone as eastern U.S. cities are major lures.

“You can actually make short trips to the U.S. while staying in Canada and growing your business from Canada,” he said.

InMotion was one of 10 start-ups selected from hundreds of applicants for the 2020 Techstars Toronto program, now set for a delayed launch in June. The business accelerator network provides mentoring and access to investors in exchange for a six-per-cent stake in the company.

Sunil Sharma, director of Techstars Toronto, said small companies aren’t always at a disadvantage in a crisis.

“They can be much more nimble, even if at the same time they are in a more precarious financial situation,” he said. Suzanne Grant of CATA agrees, but can’t help worrying about a loss of momentum in a Canadian tech sector starting to show the fruits of $36 billion in annual investment spread between universities, research institutes and programs to commercialize intellectual property.

After the alliance voiced concerns that tech startups were being shut out from federal business relief, the government resumed processing stalled claims for research credits and announced $1.2 billion in new support for entrepreneurs.

Still, multinational giants better able to withstand a COVID-19 shutdown are already scooping up engineers and developers laid off by startups.

“Those recruiters don’t stop,” said Grant. “They’re coming from companies that a little blip for three or four months isn’t going to hurt. They’ve got a lot of cash, and they’re in recruiting mode.”

April 21, 2020

NEWS CHASTIN – Réaction mitigée des milieux technologiques à l’examen plus minutieux des investissements étrangers, les acheteurs étrangers ayant manifesté leur intérêt

Les réactions des membres de la communauté technologique canadienne ont été mitigées en ce qui concerne la décision du gouvernement fédéral, la semaine dernière, de renforcer la surveillance des investissements étrangers dans les entreprises canadiennes pendant la pandémie.

« CELA POURRAIT ÊTRE DANGEREUX SI CE N’EST PAS GÉRÉ EFFICACEMENT … MAIS CELA POURRAIT AUSSI SAUVER DES ENTREPRISES CANADIENNES. »
– ELAINE KUNDA, DISRUPTION VENTURES

Cette décision intervient alors que BetaKit a appris qu’un acheteur étranger avait exprimé son intérêt à la Canadian Advanced Technology Alliance pour l’achat d’une entreprise canadienne « à bas prix » dans le contexte du ralentissement de la COVID-19.

La nouvelle politique du gouvernement s’inscrit dans un effort pour freiner les « comportements d’investissement opportunistes », car de nombreuses entreprises canadiennes s’inquiètent des liquidités et de la chute des valorisations dans le contexte de la crise mondiale.

Dans son point de presse de dimanche, le Premier ministre Justin Trudeau a souligné que cette politique est un moyen de soutenir les startups canadiennes.

« Nous reconnaissons également qu’il y a peut-être quelques startups aux idées brillantes qui sont confrontées à un manque de liquidités en ce moment et que nous voudrions beaucoup rester canadiens pour les années à venir, qui pourraient être exposées à des investisseurs étrangers prédateurs », a déclaré le premier ministre.

« Nous sommes vraiment heureux que ce soit sur le [government’s] radar », a déclaré Suzanne Grant, PDG de la Canadian Advanced Technology Alliance (CATA).

Grant a déclaré à BetaKit que l’organisation avait déjà reçu des courriels d’une société étrangère non divulguée qui avait exprimé son intérêt pour l’achat d’une société technologique canadienne « à bas prix ». M. Grant a déclaré que les courriels avaient été reçus après le début de la pandémie, mais qu’il ne fournirait pas de détails supplémentaires à ce sujet. Elle a toutefois précisé que la CATA a identifié d’autres petites entreprises rachetées par de grandes sociétés et des puissances étrangères.

« Si nous pouvions faire financer les entreprises et qu’il n’y avait pas de risque, ce serait encore mieux », a déclaré M. Grant.

RELATIVES : Le gouvernement fédéral engage 250 millions de dollars supplémentaires dans le cadre du PARI pour soutenir les entreprises en démarrage à forte croissance

La nouvelle politique s’applique à toutes les entreprises canadiennes, mais elle met particulièrement l’accent sur les entreprises du secteur de la santé publique et celles qui fournissent des biens et services essentiels, a déclaré la division de l’examen des investissements d’Innovation, Science et Développement économique Canada (ISED) dans un communiqué du 19 avril.

Au Canada, les investisseurs étrangers sont tenus de déposer une demande auprès du ministre de l’Innovation, de la Science et de l’Industrie (actuellement Navdeep Bains) et d’obtenir une approbation préalable. En vertu des dispositions relatives à l’examen de la sécurité nationale de la loi sur Investissement Canada, qui s’applique aux investissements étrangers, le gouvernement peut bloquer un investissement, autoriser un investissement sous certaines conditions ou ordonner le désinvestissement d’une opération déjà réalisée.

La période de surveillance renforcée s’appliquera jusqu’à ce que l’économie se remette des effets de la pandémie de COVID-19. Le gouvernement a déclaré qu’il sera encore plus vigilant dans l’examen des investissements étrangers réalisés par des investisseurs publics ou privés qui sont étroitement liés à des gouvernements étrangers ou soumis à leurs directives.

« LE GOUVERNEMENT « DOIT VEILLER À CE QUE CES MESURES SOIENT TEMPORAIRES ».
– BRIAN KINGSTON, CONSEIL CANADIEN DES ENTREPRISES

« Certains investissements au Canada par des entreprises d’État peuvent être motivés par des impératifs non commerciaux qui pourraient nuire aux intérêts économiques ou de sécurité nationale du Canada, un risque qui est amplifié dans le contexte actuel », indique la déclaration de l’ISED.

Kim Furlong, PDG de l’Association canadienne du capital-risque et des capitaux privés (CVCA), a qualifié de « noble » l’intention de cette politique d’atténuer les comportements prédateurs pendant la crise.

« Cependant, pour vraiment comprendre l’impact, nous devrons mieux comprendre comment il est appliqué dans la pratique », a déclaré M. Furlong à BetaKit. « À cet égard, la CVCA est tout à fait disposée à travailler avec le gouvernement pour garantir que les activités commerciales compétitives et innovantes ne soient pas entravées ».

La décision du Canada de resserrer le contrôle des investissements étrangers survient moins d’un an après que la CVCA ait rédigé une lettre exhortant les agences américaines à exempter les investisseurs canadiens d’une loi visant à accroître la surveillance des investissements étrangers dans les entreprises américaines. Le Canada a par la suite été exempté de cette réglementation, qui visait à répondre aux préoccupations croissantes de sécurité nationale concernant l’exploitation de certains investissements par des étrangers.

Elaine Kunda, associée directrice de Disruption Ventures, a déclaré à BetaKit qu’elle ne soutiendrait pas à long terme la récente mesure du gouvernement canadien. Elle a fait valoir qu’une telle décision devrait s’accompagner d’un soutien financier supplémentaire pour les start-ups qui sont à court d’argent.

RELATIVES : Le ministre Bains déclare que la rétention des talents technologiques de haut niveau est essentielle à la reprise économique du Canada

« Cela pourrait être dangereux si ce n’est pas géré efficacement », a-t-elle déclaré. « Mais cela pourrait aussi sauver des entreprises canadiennes. Il faut espérer que cela s’accompagne de nouveaux investissements du gouvernement afin que ces entreprises n’aient pas à dépendre d’investissements étrangers ou d’une prise de contrôle ».

Jim Balsillie, président du Conseil des innovateurs canadiens (CCI), a déclaré dimanche au Globe and Mail que le changement de politique confondait les investissements directs étrangers et les investissements de portefeuille étrangers. Il a noté qu’il ignore l’éventail des actifs nécessaires pour protéger les intérêts des Canadiens.

Grant a fait écho au point de vue de Balsillie selon lequel la politique ne définit pas clairement les investissements étrangers.

Lundi, la CCI a déclaré à BetaKit qu’elle était actuellement en pourparlers avec le gouvernement fédéral pour tenter d’actualiser la déclaration de politique afin de « mieux refléter les besoins de l’écosystème et des entreprises canadiennes ».

Le Canada n’est pas la première nation à adopter une réglementation plus stricte sur les prises de contrôle étrangères pendant la COVID-19. L’Australie a temporairement renforcé ses règles sur les prises de contrôle étrangères à la fin du mois de mars, craignant que des actifs stratégiques ne soient vendus de manière défavorable en raison de la pandémie. L’Union européenne a également averti que la crise pourrait « amplifier le penchant des acteurs économiques étatiques à investir stratégiquement dans des secteurs critiques et futurs » dans les nations européennes.

Il semble que le gouvernement canadien ne fasse que suivre l’exemple des autres nations, a déclaré Matt Roberts, associé de ScaleUP Ventures.

RELATIVES : L’ACCV demande au gouvernement d’étendre les programmes de la BDC et de prendre des mesures supplémentaires pour soutenir les jeunes entreprises canadiennes

« Je ne vois pas cela comme un point négatif ou positif », a déclaré Roberts à BetaKit.

M. Roberts a également spéculé sur le fait que le Canada pourrait cibler des pays qui ne sont pas inclus dans les accords de libre-échange existants, comme la Chine. Il a cependant observé que le gouvernement chinois ralentit sa capacité à déplacer des capitaux hors de sa propre juridiction.

Brian Kingston, vice-président du Conseil canadien des entreprises, appelé la décision une « réponse prudente », dans un tweet, mais a souligné que le gouvernement « doit s’assurer que ces mesures sont temporaires ».

betakit – TECH REACTION MIXED TO INCREASED SCRUTINY ON FOREIGN INVESTMENTS AS OVERSEAS BUYERS EXPRESS INTEREST

Original Article 

Reactions from members of the Canadian tech community have been mixed in regards to the federal government decision, last week, to tighten oversight of foreign investments into Canadian companies during the pandemic.

“It could be dangerous if not managed effectively … but it could also save Canadian companies.”
– Elaine Kunda, Disruption Ventures

The move comes as BetaKit has learned of a foreign buyer expressing interest to the Canadian Advanced Technology Alliance in purchasing a Canadian company “inexpensively” amid the COVID-19 downturn.

The government’s new policy is part of an effort to curb “opportunistic investment behaviour,” as many Canadian businesses are worried about cash and seeing valuations fall amid the global crisis.
In his Sunday press briefing, Prime Minister Justin Trudeau noted the policy is a way to support Canadian startups.

“We also recognize that there are perhaps some startups with brilliant ideas that are facing a cash crunch right now that we would very much want to remain Canadian for the coming years who could be exposed to predatory foreign investors,” the prime minister said.

“We’re really happy that it’s on the [government’s] radar,” said Suzanne Grant, CEO of the Canadian Advanced Technology Alliance (CATA).

Grant told BetaKit the organization has already received emails from an undisclosed foreign company that expressed interest in buying a Canadian technology company “inexpensively.” Grant said the emails were received after the onset of the pandemic, but would not provide additional details on the matter. She did note that CATA has identified other small companies being bought out by large companies and foreign powers.

“If we could get companies funded and there wasn’t a risk that would be even better,” said Grant.

RELATED: Federal government commits additional $250 million in IRAP funding to support high growth startups

The new policy applies to all Canadian businesses but there is a particular focus on companies in the public health sector and those involved in the supply of critical goods and services, the Investment Review Division of Innovation, Science and Economic Development Canada (ISED) said in an April 19 statement.

In Canada, foreign investors are required to file an application with the Minister of Innovation, Science and Industry (currently Navdeep Bains) and to obtain approval in advance. Under the national security review provisions of the Investment Canada Act, which applies to foreign investments, the government can block an investment, allow an investment with conditions, or order the divestment of an already-completed deal.

The period of enhanced scrutiny is set to apply until the economy recovers from the effects of the COVID-19 pandemic. The government said it will be even more vigilant in looking at foreign investments by state-owned investors or private investors that are closely tied to or subject to direction from foreign governments.

“The government “must ensure such measures are temporary.”
– Brian Kingston, Business Council of Canada

“Some investments into Canada by state-owned enterprises may be motivated by non-commercial imperatives that could harm Canada’s economic or national security interests, a risk that is amplified in the current context,” the ISED statement noted.

Kim Furlong, CEO of Canada’s Venture Capital & Private Equity Association (CVCA), called the policy’s intent to mitigate predatory behaviour during the crisis “noble.”

“However, to truly comprehend the impact we will need to better understand how it is applied in practice,” Furlong told BetaKit. “In this respect, the CVCA is very much willing to work with the government to ensure competitive and innovative business activities are not impeded.”

Canada’s decision to tighten down on foreign investment scrutiny comes less than a year after the CVCA penned a letter urging United States agencies to exempt Canadian investors from a law aimed at increasing oversight of foreign investments in US businesses. Canada was later exempted from the regulations, which were meant to address growing national security concerns over foreign exploitation of certain investments.

Elaine Kunda, managing partner at Disruption Ventures, told BetaKit she would not be supportive of the Canadian government’s recent measure long term. She argued that such a decision should come with additional financial support to startups who are cash-strapped.

RELATED: Minister Bains says retaining top tier tech talent critical to Canada’s economic recovery

“It could be dangerous if not managed effectively,” she said. “But it could also save Canadian companies. Hopefully, it comes with further government investment so that these companies don’t have to rely on foreign investment or take-over.”

Jim Balsillie, chairman of the Council of Canadian Innovators (CCI), told The Globe and Mail on Sunday the policy change confuses foreign direct investment with foreign portfolio investment. He noted that it ignores the range of assets needed to protect the interests of Canadians.

Grant echoed Balsillie’s point that the policy does not clearly define foreign investment.

On Monday, the CCI told BetaKit it is currently in talks with the federal government in an attempt to get the policy statement updated to “better reflect the needs of the ecosystem and Canadian companies.”

Canada is not the first nation to enact tighter regulations over foreign takeovers during COVID-19. Australia temporarily tightened its rules on foreign takeovers at the end of March over concerns that strategic assets could be sold off unfavourably due to the pandemic. The European Union also warned that the crisis could “amplify state-owned economic actors’ penchant for strategically investing in critical and future sectors” in European nations.

It appears the Canadian government is simply following the lead of other nations, said Matt Roberts partner at ScaleUP Ventures.

RELATED: CVCA urges government to expand BDC programs, take additional measures to support Canadian startups

“I don’t see it as a negative or positive,” Roberts told BetaKit.

Roberts also speculated that Canada may be targeting countries that are not included in existing free trade agreements, such as China. He observed, however, that the Chinese government is slowing down its ability to move capital out of its own jurisdiction.

Brian Kingston, vice president of the Business Council of Canada, called the decision a “prudent response,” in a tweet, but stressed that the government “must ensure such measures are temporary.”

itBusiness.ca – Canada’s economic relief efforts are a good start, but tech scale-ups demand clarity around eligibility

Original Article

Canada’s economic relief efforts are a good start, but tech scale-ups demand clarity around eligibility

Some parts of Canada’s economic relief efforts are receiving a lukewarm response from technology scale-ups, according to a new report that also says cash flow remains a top concern during COVID-19.

Published by the Innovation Policy Lab at the Munk School of Global Affairs and Public Policy, in collaboration with Methodify by Delvinia, the report includes responses to a poll seeking feedback from technology scale-ups about the government response overall. The final report is based on a poll of 42 chief executive officers or firm executives of Canadian technology scale-ups taken between March 27 and March 30, 2020.

The government of Canada unveiled its COVID-19 Economic Response Plan,  a set of measures meant to support Canadians and businesses and help bring economic stability.

Most respondents are positive about the government’s response, when given an open-ended question, but are unclear how technology scale-ups, in particular, will be supported. The poll results indicate that among government support available, interest-free loans are most supported, and when asked what more government should do, 25 per cent of respondents think the government should consider procurement options.

Also:

CATA asks PM to assist tech firms with rapid emergency aid 

 

Of the interventions already unveiled by the federal government, provision of interest-free loans, loan guarantees (for financial institutions), wage subsidies, and monetary policy decisions by the Bank of Canada received the clearest endorsement from the respondents. Despite payrolls not being the top concern for businesses, wage subsidies still appear as a policy that garnered high support from businesses, the report noted.

“Gratefully, we are in a position of recurring revenues and can ‘weather the storm’ for now. Our challenge is business development and new revenue generation with most potential client organizations at a complete stand-still. It’s encouraging that the government is listening to and addressing concerns of tech and small businesses that serve as the backbone of the Canadian economy. Tax deferral and interest-free loans are most helpful to us at the moment,” wrote Cynthia Hastings-James, co-founder and owner of BestLifeRewarded Innovations, a firm providing science-based and technology-enabled wellness programs, commenting about the government response.

Several respondents noted they were waiting on more information on supports like the wage subsidy, for which additional information has since been released.

“The world is very chaotic right now and the initiatives that the government is putting through are applauded. At the same time, we don’t want to lose some of our critical strategic assets, the investment in innovation,” Suzanne Grant, the chief executive officer of CATA, told in an interview with IT World Canada. “Tech companies really need to be supported because they can lead us out and get our economy going at the end of COVID. But they need to be supported for the next 12 months at least.”

Room for improvement

The federal government is making continuous efforts to provide optimum support to businesses and the Canadian Advanced Technology Alliance (CATA) has already flagged this issue to the federal government. CATA also confirmed with the publication late last week that the government has restarted the Scientific Research and Experimental Development (SR&ED) funding program in order to mitigate some of the economic strain facing Canadian businesses during COVID-19.

The report also says that tax deferrals and work sharing, two support programs for which there are existing infrastructure to support, received a lukewarm reception from technology scale-ups, potentially related to structural issues with the design of the program prior to COVID-19.

Some respondents were more direct. One chief executive officer of a large technology scaleup put it bluntly, noting the program provided “no support whatsoever.” Ian Paterson, the chief executive officer of Plurilock, a digital security firm, agreed and with reason, writing “Tech companies focus on growth, not profitability. The $10B to BDC + EDC (for direct lending and other financing) is not available to us”, Peterson emphasized in his response.

Kevin Edwards, chief executive officer of SkipTheDishes, a food delivery app, also commented on the government’s ability to understand what scale-ups need.

“I remain concerned that this government does not understand the liquidity/cash-flow needs of businesses. It’s important to provide support to Canadians in dire straits as a result of the crisis – but in the end what is critical is ensuring we have strong stable companies in all sectors able to hire back laid off workers because they have been able to sustain themselves when the dust finally settles.”

Canadian Science Policy Centre – Government Assistance – Let’s Not Play Games as We Seek Assistance

Original Article

By:Russ Roberts, PhD
Senior Vice President, CATAAlliance

Some 11,000 plus Canadian Controlled Private Corporations (CCPCs) claim Scientific Research and Experimental Development (SR&ED) tax incentives. They include small- and medium-sized private firms that use Canada’s Refundable SR&ED tax credits each year. Canada puts over $1 billion a year into helping these firms develop their technologies through the SR&ED program.

These firms and their talent are extremely vulnerable to the COVID-19 driven recession, as is Canada’s investment in their talent and technologies. The CATAAlliance has called on the Federal Government for targeted funding to provide bridge support for these firms during this crisis. Canada cannot afford to lose these firms; they are critical to Canada’s recovery and future growth. Link: https://cata.ca/2020/proposing-fast-funds-to-small-business-tech/

However, there’s an albatross out there as governments ramp up urgently needed support for Canadian businesses. The Prime Minister has warned against scamming government efforts to save our businesses and their employees.

Unfortunately, I believe the Prime Minister has a very legitimate concern. I’ve repeatedly seen the major problems that can be created by government efforts to help business throughout my career, in both the public and private sectors, as the Senior Science Advisor for the SR&ED program during its inception, as Acting Director of Innovation Policy with a predecessor of ISTC, and as a senior consultant to companies on their SR&ED claims.

I find that, eventually, government catches onto aggressive behaviour and that the damage caused by the corrective actions they take can be hugely damaging to the very firms and their owners that the government was trying to help.

Frankly, there is nothing more frustrating than to sit with a well intentioned business owner who pushed the envelope and have to tell them that this is going to happen, knowing that the outcome is likely the shutting-down of the business.

I urge that all of us who are searching for assistance for the business community at this time of crisis be equally focused on getting the business community to do it right and recognize the consequences of failing to do so. Our businesses cannot afford the alternative.

In my experience, the SR&ED program is an example of what can happen.

The program has gone through a number of challenging periods over its 35 years where files piled up and CRA struggled to sort out the good from the bad. Many of these problematic periods were caused by the governments of the time trying to assist businesses and things getting out of control. The ultimate question for both parties at times like this is: Is it worth keeping this kind of support? In the case of the SR&ED program, we’ve just got back to the point where we are hearing of more positive experiences than negative.

Let’s listen to the Prime Minister’s call for restraint as we work with governments to assist our businesses.

I encourage the leaders of our business communities to promote this message as they work to obtain assistance.

April 17, 2020

NEWS CHASTIN – La Canadian Advanced Technology Alliance exhorte le gouvernement fédéral à débloquer les fonds de RS&DE en souffrance

Original Article

La Canadian Advanced Technology Alliance (CATA) soumet une proposition de financement « d’urgence » au gouvernement fédéral pour aider à préserver les emplois et les entreprises technologiques pendant la pandémie COVID-19.

L’organisation exhorte le gouvernement fédéral à débloquer immédiatement 200 millions de dollars de demandes de recherche scientifique et de développement expérimental (RS&DE) en attente pour soutenir le secteur technologique canadien et créer un nouveau fonds pour accélérer le versement du capital.

« NOUS RECOMMANDONS CE MÉCANISME COMME UNE MÉTHODE SIMPLE, RAPIDE ET VÉRIFIABLE POUR DISTRIBUER LES FONDS DÈS MAINTENANT. »

Dans une lettre ouverte au premier ministre Justin Trudeau, Suzanne Grant, PDG de l’ACTS, a recommandé des mesures qui, selon elle, aideraient 12 000 petites entreprises technologiques canadiennes et permettraient de sauver 85 000 emplois pendant la crise. Selon The Logic, la pandémie a retardé l’octroi de près de 200 millions de dollars en crédits d’impôt aux entreprises technologiques.

La RS&DE fournit un soutien sous forme de crédits d’impôt ou de remboursements aux sociétés, aux partenariats ou aux particuliers qui mènent des activités de recherche scientifique ou de développement expérimental au Canada.

Le 18 mars, l’Agence du revenu du Canada a annoncé qu’elle suspendait la plupart de ses vérifications d’entreprises pendant quatre semaines afin d’alléger le fardeau des entreprises canadiennes pendant le ralentissement économique. Cependant, cela signifie que toute entreprise devant être auditée n’est pas éligible pour recevoir de l’argent du programme d’incitation à la RS&DE, ce qui signifie que les entreprises devant recevoir un financement très nécessaire devront attendre.

Dans le cadre de la proposition de l’ACTS, M. Grant a recommandé au gouvernement de créer un fonds unique de 3,6 milliards de dollars, le « Canada Emergency Resilience and Rebound Fund », afin de fournir des prêts sans intérêt aux entreprises préqualifiées qui bénéficient actuellement de crédits d’impôt pour la science et la recherche.

RELATIVES : Le gouvernement prépare une loi sur les subventions salariales avant de rappeler le Parlement, selon M. Trudeau

« En utilisant les données du programme de crédit d’impôt, nous recommandons ce mécanisme comme une méthode simple, rapide et vérifiable pour distribuer les fonds maintenant », a écrit M. Grant. « Les fonds pourraient être administrés par le ministère du ministre Bains [of] Innovation, science et développement économique Canada, et ses agences dans tout le pays ».

Grant estime que le nouveau fonds rembourserait tous les versements en deux ans et demi et profiterait à des secteurs critiques comme l’agroalimentaire, les technologies propres, les industries numériques, la santé et la fabrication avancée.

« NOUS AVONS BESOIN QUE NOS ENTREPRISES TECHNOLOGIQUES LES PLUS INNOVANTES SOIENT À LA TÊTE D’UN REBOND LORSQUE NOUS EN SORTIRONS. »

« Le plus important, c’est que les dividendes économiques commenceraient immédiatement par le maintien de l’emploi », a-t-elle déclaré. « Nous avons besoin que nos entreprises technologiques les plus innovantes soient à la tête d’un rebond lorsque nous sortirons de cette urgence COVID-19 ».

L’ACTS est l’une des nombreuses organisations canadiennes qui demandent au gouvernement de faire plus pour soutenir les entreprises en démarrage pendant la pandémie. Le Conseil canadien des innovateurs a recommandé au gouvernement d’élargir les critères d’éligibilité pour sa subvention salariale de 75 %, qui exige actuellement que les entreprises aient connu une baisse de 30 % de leur revenu brut d’une année sur l’autre, directement liée à COVID-19.

Le vice-président de la CCI et fondateur d’OMERS, John Ruffolo, a récemment déclaré à BetaKit que le programme de subventions salariales tel qu’il est actuellement décrit rend difficile pour les start-ups de faire une demande, de répondre aux critères et de recevoir un soutien gouvernemental en temps voulu.

Les PDG d’entreprises d’innovation et de technologie comme Waterloo et dans tout le pays ont également signé des lettres ouvertes à divers ministères du gouvernement du Canada pour demander un soutien plus important au secteur dans le cadre de COVID-19.

RELATIVES : Une enquête révèle que 82 % des PDG du secteur technologique prévoient de licencier après avoir été exclus des subventions salariales fédérales

D’autres ont également demandé spécifiquement au gouvernement de s’attaquer aux problèmes actuels en matière de RS&DE.

Matt Roberts, partenaire de ScaleUP Ventures, a déclaré lors du premier podcast Black Swan de BetaKit que l’une des premières priorités du gouvernement devrait être de relancer la RS&DE.

 

« La RS&DE n’a pas envoyé de chèque depuis la mi-mars au moins aux entreprises financées par le capital-risque que j’ai pu contacter, ce qui a fait que de nombreuses entreprises ont manqué de liquidités qu’elles pensaient recevoir et que le gouvernement leur a dit qu’elles recevraient », a déclaré M. Roberts.

« Ces chèques ne devraient pas prendre autant de temps, c’est du jamais vu », a-t-il ajouté.

L’ACTS a consulté un certain nombre d’organisations lors de la rédaction de la proposition, notamment la Chambre de commerce du Canada, Ingénieurs Canada et l’Association canadienne du capital de risque et d’investissement (ACCR).

La CVCA a rédigé sa propre lettre ouverte à la ministre des petites entreprises, Mary Ng, la semaine dernière, demandant plusieurs nouvelles mesures fédérales, notamment le paiement des demandes d’impôt RS&DE sur une base accélérée « sans examen ». La CVCA a également demandé à la BDC de créer un programme d’appariement des fonds et d’aider les fonds d’investissement à conclure des tours de table actifs.

RELATIVES : Borrowell licencie 20 % de son personnel, citant les institutions financières qui « se retirent » dans le cadre de COVID-19

Dans la lettre ouverte, le PDG de la CVCA, Kim Furlong, a exhorté le gouvernement fédéral à accepter de payer toutes les demandes de RS&DE sur une base accélérée. « Maintenant plus que jamais, les entreprises canadiennes axées sur l’innovation ont besoin d’une réponse rapide, en libérant les capitaux disponibles dans le cadre des programmes existants ainsi que l’ajout de nouveaux financements d’urgence », a-t-elle déclaré.

L’ACTS a également entendu parler de jeunes entreprises canadiennes, comme la société de biotechnologie Cyclica, basée à Toronto. Naheed Kurji, PDG de Cyclica, a déclaré que la société soutient la nécessité du « Programme canadien d’urgence pour la résilience et le rebond » proposé afin d’injecter immédiatement des capitaux dans sa lutte contre le virus. Le mois dernier, Cyclica a conclu un partenariat avec un institut de recherche médicale chinois à Pékin pour découvrir des candidats médicaments antiviraux pour COVID-19 et explorer les possibilités de concevoir des composés antiviraux à cibles multiples.

« La RS&DE est impérative pour les petites et moyennes entreprises », a déclaré M. Kurji. « Le traitement des crédits auxquels les entreprises ont droit doit être accéléré, sinon les résultats seront catastrophiques ».

BNN Bloomberg – Small tech firms urge Ottawa for aid amid pandemic

Suzanne Grant, CEO of the Canadian Advanced Technology Alliance (CATA), discusses why the group is urging the federal government to create a $3.6-billion emergency fund that would provide zero-interest loans to “innovative companies.”

 

 

April 14, 2020

Automotive News Canada – Auto tech sector wants financial aid from feds during COVID-19 pandemic

Greg Layson

A fast-growing part of Canada’s auto industry is at risk unless the federal government broadens financial aid in the Covid-19 pandemic, a trade group has warned.

“What we see is that daily, companies are dropping. And once they drop they’re gone,” Suzanne Grant, CEO of the Ottawa-based Canadian Advanced Technology Alliance (CATA) told Automotive News Canada.

Of some 12,000 small tech companies that collectively employ 85,000 in Canada, a significant if uncharted number, focus on transportation, from autonomous driving to hydrogen fuel cells and electric-car batteries.

On April 5 CATA urged Prime Minister Justin Trudeau to establish a $3.6-billion emergency fund for the tech sector and release $200 million in backlogged claims for scientific research and experimental development incentives.

The aid could mean survival for start-ups that have yet to show a profit and thus don’t qualify for government wage subsidies announced in March, or whose founders are unable to meet bank demands to personally guarantee up to 20 per cent of loans otherwise backed by government in the new Business Credit Availability Program.

Automotive News Canada
ROB BOSTELAAR

CANADIAN STARTUP NEWS – SR&ED Payments Beginning to Flow to Canadian Tech Following Delay Caused by COVID-19

Image source Wikimedia Commons

Funds from the federal government’s Scientific Research and Experimental Development (SR&ED) tax incentive program that have not been released due to the COVID-19 pandemic are now starting to flow.

“It might just buy them enough time for the federal government to get the 75 percent wage subsidy right.”

The COVID-19 crisis reportedly delayed nearly $200 million in tax credits for tech companies after the Canada Revenue Agency (CRA) paused business auditing as it moved to remote work. This meant companies not yet audited were ineligible to receive the funds.

In a LinkedIn post late last week, Bryan Watson, partner at Flow Ventures and former council member of the Canadian Advanced Technology Alliance (CATA), confirmed that some of the backlogged SR&ED credits are starting to reach companies. In the post, he noted that Russ Roberts, senior vice president of tax, finance, and advocacy at CATA, recently spoke with leaders at the CRA who told Roberts the agency is looking to expedite the processing of claims.

Last week, The Logic reported that Kitchener-Waterloo company Encircle received confirmation that its SR&ED money was coming. Watson also confirmed to BetaKit in a recent interview that several Quebec companies have received SR&ED funding, although SR&ED is handled internally by the province of Quebec, rather than by the federal government.

SR&ED provides financial support in the form of tax credits or refunds to corporations, partnerships, or individuals who conduct scientific research or experimental development in Canada. Watson noted this is one of the few federal programs that most tech companies in Canada are eligible for in the age of COVID-19.

BY ISABELLE KIRKWOOD
CANADIAN STARTUP NEWS

Bloomberg News – Business leaders urge Ottawa to make changes to 75% wage subsidy

A group of business leaders, including prominent figures from Canada’s tech sector are calling on Ottawa to revise the rules around Ottawa’s new 75 per cent wage subsidy for Canadian business to ensure more companies are able to receive funds for their employees. John Ruffolo, vice-chair of the Council of Canadian Innovators and former CEO of OMERS Ventures is one of them. He joins BNN Bloomberg to discuss more.
Video Link: https://www.itbusiness.ca/news/cata-asks-pm-to-assist-tech-firms-with-rapid-emergency-aid/114802

itBusiness – CATA asks PM to assist tech firms with rapid emergency aid: Pragya Sehgal, ITBusiness.ca

Source: TexBr | Getty Images


The Canadian Advanced Technology Alliance (CATA) says the federal government confirmed late last week that it has restarted the Scientific Research and Experimental Development (SR&ED) funding program in order to mitigate some of the economic strain facing Canadian businesses during COVID-19.

In an open letter to Justin Trudeau last week, CATA proposed a solution to rapidly assist some 12,000 Canadian businesses that conduct research and development through the federal Scientific Research and Experimental Development (SR&ED) funding program. The solution proposed is two-fold: First, accelerate the release of the backlog of $200 million in current SR&ED applications. Second, allocate a *Resilience and Rebound* fund of CA$3.6 billion to provide zero-interest loans (with forgivable portions) for companies that have proven track records. Using tax data from the SR&ED program means firms are pre-qualified and the fund would be administered through Innovation, Science and Economic Development Canada.

If no action is taken action now, the Canadian technology sector infrastructure built up over decades risks being crippled as creative small and medium-sized enterprises (SMEs) of the country disappear, said Paul LaBarge, chairman of CATA and a founding partner of LaBarge Weinstein LLP, in the open letter from April 7.

“We need our most innovative tech companies to lead a rebound when we emerge from this COVID-19 emergency,” LaBarge said in a statement last week.

Pragya Sehgal @itbusinessca
Published: April 13th, 2020

April 13, 2020

itBusiness.ca – CATA asks PM to assist tech firms with rapid emergency aid

Original Article

*This story has been updated to include comments from the Canada Revenue Agency (CRA)

The Canadian Advanced Technology Alliance (CATA) says the federal government confirmed late last week that it has restarted the Scientific Research and Experimental Development (SR&ED) funding program in order to mitigate some of the economic strain facing Canadian businesses during COVID-19.

In an open letter to Justin Trudeau last week, CATA proposed a solution to rapidly assist some 12,000 Canadian businesses that conduct research and development through the federal Scientific Research and Experimental Development (SR&ED) funding program. The solution proposed is two-fold: First, accelerate the release of the backlog of $200 million in current SR&ED applications. Second, allocate a *Resilience and Rebound* fund of CA$3.6 billion to provide zero-interest loans (with forgivable portions) for companies that have proven track records. Using tax data from the SR&ED program means firms are pre-qualified and the fund would be administered through Innovation, Science and Economic Development Canada.

If no action is taken action now, the Canadian technology sector infrastructure built up over decades risks being crippled as creative small and medium-sized enterprises (SMEs) of the country disappear,

said Paul LaBarge, chairman of CATA and a founding partner of LaBarge Weinstein LLP, in the open letter from April 7.

“We need our most innovative tech companies to lead a rebound when we emerge from this COVID-19 emergency,” LaBarge said in a statement last week.

In an email statement sent to the publication April 15, the Canada Revenue Agency (CRA) confirmed that the SR&ED program has resumed.

“The resumption of the service provided by the SR&ED Program has been addressed within the CRA’s Business Continuity Plan, and will proceed accordingly in order to ensure that Canadian businesses receive the support that they need during this challenging time and that innovation is fully supported when it is most needed,” CRA noted. “As a result of this, the value of claims for refundable credits assigned to the SR&ED Program’s Review teams, which was $195.2 million on March 30, had decreased to $181.8 million by April 7 and should continue to decrease as the implementation of the CRA’s Business Continuity Plan proceeds.”

The agency also told the publication that each claim received by the SR&ED Program will be examined for a series of risk factors, but it expects far fewer audits and reviews will be performed than during any typical year. It said that the program is currently analyzing options to address more complex claims on an expedited basis and it will be in a position to implement measures in order to do so once operations have fully resumed.

“This is very good news. We understand CRA is remaining accountable to taxpayers and demonstrating flexibility in extraordinary times. They indicated to us they were very concerned about their SR&ED clients. We remain in close contact with them to help monitor the situation forward,” Suzanne Grant, the chief executive officer of CATA, wrote in an email.

In an emailed statement on April 13, CATA said the federal government confirmed late last week that it has restarted the (SR&ED) funding program. It continues to work on its second goal with federal ministries, noted CATA. IT Business Canada reached out to the Ministry of Innovation, Science and Economic Development to confirm the announcement. The ministry was not immediately available for comment.

One of the biggest concerns, according to Grant, is that these tech firms are not going to be able to access the relief that’s being handed out.

“On the part of technology, they’re particularly concerned because historically they haven’t been supported by banks because of the issue of intellectual property not being valued the same way bricks and mortar would be okay,” said Grant.

CATA says it wants to make sure that the country doesn’t lose hundreds of billions in past investments for research that developed intellectual property, as well as protect 85,000 jobs.

“Some companies are pivoting and doing okay in this economy if they’re in health or they’re in some parts of IT, if they’re helping companies’ remote cybersecurity needs…these things are doing okay, and then there are others where the clients have to stop payments, and then we also hear incidences where the company is well funded, but the funding from the venture capitalists have frozen as well,” Grant explained. “The payments have frozen even though there’s an agreement. So there is an abrupt halt to cash. I think the government’s initiatives are welcome and at the same time, they’re not timely enough for some companies. So I’m speaking with the Prime Minister’s Office and they said they were surprised to find that out.

“I want to say that everybody’s helpful, I think what’s important is to be able to articulate how a technology company has very unique criteria in the way that it operates. It’s very important that that’s understood so that the requirements can be absorbed.”

Grant said that she has been hearing some concerns on the topic of loans. When it comes to wage subsidies, everybody’s clear, but firms are worried that if the relief doesn’t come fast enough, the companies will still be forced to close.

“The world is very chaotic right now and the initiatives that the government is putting through are applauded. At the same time, we don’t want to lose some of our critical strategic assets, the investment in innovation,” she said. “Tech companies really need to be supported because they can lead us out and get our economy going at the end of COVID. But they need to be supported for the next 12 months at least.”