We understand that financing your venture is no easy task: there are an overwhelming number of grants, vouchers and tax credits… many of those with complicated acronyms or vague eligibility criteria. To help you save time, we’ve launched a new blog series that will simplify non-dilutive financing options for entrepreneurs.
In 2013, the federal budget announced its $121M investment in the National Research Council (NRC) over 2 years to help the growth of innovative businesses in Canada. The first financing option we are going to discuss is the NRC’s Industrial Research Assistance Program, commonly referred to as IRAP.
What is IRAP?
IRAP provides technical and business innovation advising, financial assistance, and industry connections to over 10,000 SMEs annually.
Known as one of Canada’s best funding programs, IRAP offers financial assistance under 4 subprograms:
Small Technology Innovation Projects, or the Accelerated Review Process (ARP)
Provides grants up to $50K to help firms fund research and development and/or commercialize technology projects.
Mid-sized Technology Innovation Projects
Provides larger grants (depends on the project) that are typically focused on creating original software, developing new products, or engaged in other various internal R&D projects.
Youth Employment Strategy Programs
Covers 50%, up to $15K towards the first 12 months of a hire between the ages of 15–30.
Digital Technology Adoption Pilot Program (DTAPP)
Offers grants up to $100K or 80% of direct labour and 75% of subcontractor costs, designed to speed up the rate at which SMEs adopt digital technology and build digital skills.
Why is it one of Canada’s best funding programs? The funding is non-repayable – meaning you don’t need to pay it back (as long as the terms of the Contribution Agreement are adhered to, of course).
Keep in mind, you still have to contribute a percentage of the overall project cost (typically 50%), and IRAP funding covers the remainder. What most people forget is that IRAP funding can still be claimed for SR&ED if that portion of the claim goes toward technical work. Bonus!
Who is eligible?
In order to be considered for IRAP funding, you must meet the basic eligibility criteria:
- Be a Canadian SME, incorporated and profit-oriented
- Have 500 or less full-time employees
- Have the objective to grow and generate profits through development and commercialization of innovative, technology-driven new or improved products, services, or processes in Canada.
Bonus: click here to download the Ultimate Guide to Innovation Funding for detailed information on IRAP and over 20 other government funding programs.
How do you apply?
Your first step is to contact a local Industry Technology Advisor to ensure you are indeed eligible for the basic criteria. They will determine your eligibility and help you submit your funding proposal.
Here are some questions that we highly recommend going through (and knowing the answers to!) before you meet with your Advisor:
1. Overview of the Management Team
- Why are you the right person to see this project to completion and through commercial success
- Current company overview (they don’t want to see deviation from current business or business talent).
2. Financial Capability
- They want to know that you can cover the 50% in labour and subcontractor expenditures as well as any other expenditure not covered by IRAP (such as 100% of capital expenditures).
3. Company Skillset
- Does your team (or proposed partnerships, etc.) have most of the skills required to develop and market the product?
4. Technology Overview
- High level overview of the technology or product that you are proposing to develop.
- Potential roadblocks and mitigating strategies.
5. Market and Business Opportunities
(This is very important and you should be able to describe the following)
- Potential customer
- Problem you are addressing (Potential financial gain (pricing, etc.); Market size and location; Market penetration)
- Cost to penetrate market (cost per user acquisition)
- Strategies to gain the proposed market share
- Potential roadblocks and mitigation strategies
6. High level project plan/timeline
- Detail phases, if more than one
- Timelines for each phase and proposed milestones
- Costs for each milestone
When’s the next deadline?
Many of IRAP’s financial assistance programs don’t have particular application deadlines. That being said, we recommend getting in touch with your local industry advisor before April 1 to learn more about their funding cycle and projects for the upcoming fiscal year.
One last thing, how is it different from SR&ED?
- IRAP requires a funding proposal before the project starts. The SR&ED program qualifies expenses after they have been incurred.
- You must work with an Industry Technical Advisor to submit your funding proposal. We highly recommend working with a SR&ED advisor to submit your claim, but it is not required by the program.
For more information, visit the NRC- IRAP website or call their toll-free number at 1-877-994-4727.
This blog is part of our ‘Non-Dilutive Financing for Entrepreneurs’ blog series.