Good morning.
As a point of clarification so that it's essentially perfectly clear, I'm here speaking on behalf of the U15 Group of Universities, but I'm also the VP of research for the University of Waterloo. The brief I'm presenting today is a U15 brief.
The U15 welcomes the committee's efforts to increase the benefits that flow from partnerships, technology transfer, and intellectual property in Canadian post-secondary institutions. Disseminating new knowledge and research results is a core part of the university's research mandate. U15 universities have a strong track record of turning our world-class research into commercial successes, from insulin and Plexiglas to vaccines and, more recently, breakthroughs in artificial intelligence.
Canadian investments in investigator-led research generate three major outputs for the private sector, and I'll speak specifically to each of these. The first is a highly skilled workforce, the second is research partnerships, and the third is commercialized discoveries.
First, an innovative economy requires a highly skilled workforce. Investigators use a significant portion of the research funds that support their research to hire graduate students as research assistants. In fact, about 80% of the non-capital investment in research in universities goes to support graduate student education. The experience those students gain through their cutting-edge research provides them with the skills they share with future employers.
Second is partnerships. Our investments in investigator-led research build expertise in exciting and emerging fields that businesses can then access through research partnerships. Recent investments by Google, Microsoft, the five big banks, and others in the Canadian artificial intelligence research space are in fact the results of two decades of fundamental research in AI within the university system. This is an area where Canada performs better than most people believe. Canada is second in the G7 in terms of the percentage of higher education research that businesses fund. The U15 group undertakes more than $700 million per year in business-funded university research, or more than 80% of the Canadian total.
The last item, and the one I want to spend the most time on, is commercialization. Investigator-led research can lead to discoveries that have significant commercial potential. University technology transfer offices work to protect these discoveries with respect to IP and then commercialize those by either licensing the IP or creating a spin-out company.
Often, people focus on trying to find the perfect IP ownership model. The reality is that models differ, based on a variety of factors and local conditions. Institutions that are highly successful at commercialization use the same policies as institutions that are not as successful. The key determinants of success are not which IP ownership model or practices an institution adopts, but rather how well those practices align with the local market and within what context the university executes those activities—to be more straightforward, how well the universities execute their policies.
We have some extremely successful stories and examples of execution. U15 universities currently hold 2,900 active licences. Interestingly, of the new licence agreements the U15 executed in 2015, about 60% were with small and medium-sized businesses. In addition, over the years, the U15 has created an estimated 600 spin-out companies that remain active. It's also worth noting that 89% of the spin-outs our universities created in 2015 were founded in the institutions' home provinces, creating a significant potential local economic impact.
Although these are good numbers, we almost certainly can do better. Almost by definition, groundbreaking discoveries with significant commercial potential occur at a very early stage and need significant work to make them market ready. Effectively, what you need to do is de-risk the associated business development potential for that IP. This gap between commercial potential and market-ready products or services is one that the U15 thinks the government could help us close.
To do so, we recommend that the government introduce two complementary programs.
The first is a program modelled on the United States small business technology transfer program, to help fund R and D that turns early-stage discoveries into market-ready products and services. NSERC runs an I2I program on innovation to industry. These are effectively early-stage programs that allow you to take IP and develop it into a commercializable product.
The second is a program modelled on the United States innovation corps program, which provides robust entrepreneurship training to researchers, including helping them develop a better understanding of customer needs. This is a strategy that we adopted at the University of Waterloo about 10 years ago, in terms of educating researchers about the potential of the IP they own.
To conclude, I'd like to remind individuals about the importance of investing in investigator-led research so that we can deliver these benefits for all Canadians. There are worrying signs that Canada's strength in these areas is slipping. Although lagging investments are unlikely to undermine our economy in the short and medium term, if Canada is to excel as an innovative nation over the long term, investment in research must be sustained. Given the lag time associated with research and with training top university researchers, stagnant or declining investment in research excellence poses a pressing threat.
The recently released fundamental science review report, commonly known as the Naylor report, provides important recommendations about how to reinvest in and reinvigorate Canada's research ecosystem.
I urge the committee members to consider the importance of ensuring that Canada continues to have both a strong research capacity and the ability to maximize the impact of that research.
Thank you for your time.