Some Ground-breaking insights & learnings from Canada – a country which not only loves, but also knows how to embrace Innovation!
Satish Kataria from DARE recently got an opportunity to visit Ontario, Canada – on invitation of Ministry of Economic Development and Innovation, Ontario – to get an on-ground view on how the country is attracting and retaining perhaps the world’s best minds in research, innovation and the start-up community. Our visit there proved to be lot more than mere PR Plug – as we were amazed to see how Government’s multi-billion grants to push and encourage gen-next scientific innovations – were actually delivering results, which could soon make Canada the best magnet for tomorrow’s defining new technologies, if it is not already an one!
Here we bring to you – in series of articles – insights into these innovative programs and what lessons and inspirations it hold for Indian regulatory and policy-making agencies, start-up ecosystem players, educational institutes and literally anyone – who believe that Innovation is the only currency which will help retain any economy to retain its leadership and future growth.
It was one of those rare summer days at Canada, when we were driving down to Waterloo – the so-called Tech Hub of Ontario, Canada – perceptually so, because of presence of Research in Motion – the global headquarters of Blackberry – which was founded here. But we couldn’t be more wrong – because its when you actually reach here – you realize that RIM perhaps is just the tip of the iceberg of Canada’s burgeoning global technology and research leadership. You might have not heard about OpenText: an enterprise software company – which actually clocked revenues of USD 1 Billion+ in FY 2011 and has almost 100 million users worldwide across 114 countries; or Communitech – the gen-next technology commercialization and start-up accelerator center, spread over 44,000 square feet and housing names such as Google in its ambit. The list is long – this one area houses more than 800 Technology companies, 300 tech start-ups, witnessed USD 0.5 Billion of acquisitions in last one year and reports an annual angel and PE investment activity of almost USD 300 Million!
This cannot be possible without a design to it. And design there is – Waterloo perhaps is amongst one area spread across Canada, which has leveraged years of support and well-coordinated blending of research with business – backed by both strong public and private initiatives in this direction.
The one strongest reason propelling this innovation-lead growth in this country is understanding the value which scientific and technical research holds – and then creating a right infrastructure for effective commercialization of this research and routing it to create businesses and jobs.
Needless to say, core of upcoming research comes through universities. What has worked in Canada’s favor is government’s proactive approach to take this research beyond just the universities and build close bridges between those who create innovation – and those who require innovation. It is hence that today world’s leading brands perform R&D operations worth billions every year at Ontario. Here’s how they seemed to have cracked the model:
1.Retaining research talent
Ontario is home to 44 Universities – and a talent base of more than 100,000 researchers. They also host National Research Council labs – specializing in areas like aerospace, automotive, biopharma, ICT, construction and medical devices. Furthermore, globally leading scientists do stopover at Ontario – as they get an opportunity to work on some cutting-edge projects, get access to generous funding programs and great lab facilities. Ontario government is investing almost USD 3 Billion over last 8 years to support research and commercialization at universities, colleges, hospitals and research institutes
2.Fiscal incentives from government
The government offers series of fiscal and financial incentives to corporates promoting research and entrepreneurship. This primarily comes through:
Low Business Taxes: The Ontario government is progressively reducing corporate taxes to attract fresh capital. The marginal effective tax rate on new capital now stands at 18.6% in 2010 compared to 32.8% in 2009 and will continue to fall, to reach 16.2% by 2018
Strong R&D tax incentive: The after-tax cost of a USD 100 R&D expenditure can be reduced to appropriately USD 56 – or even less than USD 37 for small businesses
3.Support for Commercialisation
This perhaps is the biggest success factor – where the government has been able to set right some innovative mechanisms – primarily to encourage and facilitate the businesses to leverage the research talent base and ensure that both industry and academia are well tuned towards common objectives of job creation and wealth optimization.
Ontario Centres of Excellence (OCE) is a not-for-profit program, funded by Government of Ontario – founded principally with the objective of match-making research skills and business organization requirements. Be it large corporates seeking revolutionary solutions – or even start-ups, working on new technological possibilities – OCE – through its series of programs – helps them all. During 2008-09, it invested USD 29.3 Million in 635 projects and connected 752 companies with researchers, leveraging USD 44.7 Million from industry partners in further investments – almost 24% increase from last operating year. It focuses on IP Commercialisation and even offers co-investment funds to early stage ventures to further develop gen-next technologies. Some of these funds include USD 250 Million Emerging Technologies Fund and USD 50 Million Innovation Demonstration Fund. OCE covers four key areas of convergence – advanced manufacturing, health technologies, energy & environment and ICT
Initiatives at the researcher end – such as Early Researcher Award, which provides funds upto USD 100,000 to researchers, primarily to further build on their research teams and early prototypes
Ontario Network of Excellence (ONE) – This perhaps is one of the most ambitious and successful collaborative initiative that we have witnessed so far. ONE Network is a collaborative network of several organizations – including more than 50 research centres & universities and around 20 regional innovation and start-up acceleration centres – all working together with an objective to commercialise innovation. Our next article will be focused on ONE and how it works.
Inspiration for India
There’s no doubting the liberal budgetary allowances and R&D initiatives doled out by Indian government every year. There’s also no doubting the immense research and technological talent that resides in the country.
What perhaps, we can learn, is to set initiatives to bridge innovation and real on-ground business. If we leave aside some select premier technology and research labs in India – the work done in most of our technology institutes never see the light of the day beyond the lab. There are significant innovations happening even at our rural hinterlands – but yet again, most of them remain there. There are limited R&D incentives, if any, for our manufacturing and business organizations to proactively seek research inputs from our institutes. And our tech start-ups, who might be working on some revolutionary technologies – still have handful of angel investors or business incubators to bail them out. And I hardly believe that there is one central database of all research projects and talent available in the country – which could then facilitate industry connect.
So what more do you think ails our innovation engine? What stops India from being a research powerhouse – and perhaps a strong innovation partner to countries like Canada? Please do share in your views…
…and we will return shortly with Part 2 in series: wherein we talk about the magic of collaboration – and what Indian start-up ecosystem players need to take out of it!