Evidence of meeting #68 for Industry, Science and Technology in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was universities.
A recording is available from Parliament.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Thank you. I'll leave it at that, then.
The other aspect that's been mentioned is this concept of a database. Obviously, we talk about a database of IP, but as Mr. Musson mentioned, we should be talking about knowledge, not just IP, because there could be know-how, there could be expertise, and there could be IP as well.
Would you see value in having a database that was broader than just IP?
Executive Director, North of 41
Absolutely, because what happens is IP is just the foundation, and it's all the knowledge that's been accumulated in order to create that IP. A perfect example would be artificial intelligence. That can be used in various factors. It can be used in the medical field. It can be used in the connected car space. Having it focus on what the project is, a little bit of a description, and the areas that it covers, yes, it would be better than just being IP statuses.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
If we made a database, we should make sure that it is broader than just “this is the only patents that we have”, say, there's a professor who doesn't have a patent but he's a tremendous expert in making cheese, and I'm looking for that. We should somehow make sure that this information is readily available, too.
Executive Director, North of 41
Exactly, because what ends up happening from the entrepreneur and CEO side, from a technology business, if I can shave off six months in development because someone already is up to speed on it, and already has something that we can license, hands down, we're going to try to strike a deal with that person which means that I can get to market faster. I can repay my venture capitalist who's invested his money, and I can get commercialized and get creating some jobs.
Liberal
Managing Director, Mistral Venture Partners
I think it might be a challenge, candidly.
Just by example, there's one thing we've done recently. We licensed some technology from Jet Propulsion Laboratory in southern California. The researchers who built it seven years ago had no interest in participating. They had no time. They're very busy doing what they want to do. What we did was we hired a Ph.D. with specific knowledge in that area, and that person had one afternoon meeting with the original developer of the IP. Then they went off and spent four months coming up to speed and recreating the original results. There was a bit of a time lag, but from a practical point of view, it's difficult to get the IP as well as a bit of coaching at the same time. If you can, that's great, but I don't know if—
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
I'd like to expand a bit more on that, because you touched on the differences. You said you had a hard time dealing with Canadian universities, a much easier time.... In my previous life, I was a businessman. I still am. I found the same thing. As we say in business, you want to be easy to do business with. People do business with those who are easy to do business with.
Can you elaborate? You said you had difficulties with Canadians, and I see it differently from you. You said that someone was trying to maximize the profit. What I've seen often is that they're afraid of failure, that no deal is better than a bad deal, so, do you know what? I'm just going to be so difficult or demand so much because if nothing happens, I'm not punished, but if, by God, I license a cure for cancer and I don't get enough money, I'll never hear the end of it.
Have you seen that willingness to take a chance more in the United States versus Canada? Is that part of the issue?
Managing Director, Mistral Venture Partners
There's no question there's a cultural disparity between Canada and the U.S. I don't think that's a secret to anybody. Yes, we had a situation like that where the professor didn't want to give up the IP, and he had a say, and he was blocking the university from licensing it. I think that was an ego issue, at the end of the day, which was unfortunate.
I think it comes back to rewards versus behaviour. You're trying to motivate. If you're paying the professors market rates that are comparable to their U.S. peers or international peers, and you're compensating the universities fairly, I think it creates the right incentive.
Furthermore, one of the questions asked earlier was, what does the government do? Well, the government writes the cheques. When I don't see the behaviour I want out of one of my companies, I stop writing cheques, and they listen pretty quickly.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Do you think we might be able to lever some of the money we give to the universities?
Managing Director, Mistral Venture Partners
Well, I think so, absolutely. There are two things, and they're in my recommendations. One is to tie a specific percentage of your research dollars into technology transfer. Call it half a per cent.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
So if it's not happening, maybe you're not going to get that?
Managing Director, Mistral Venture Partners
Well, yes, that's the second piece. In other words, now let's measure you, and if your results aren't up to par and up to the industry standard or improving or some other KPI, then the dollars are going to flow to this university that is making a difference, that is licensing more technology. That's the feedback loop. You write the cheques, you call the shots.
Liberal
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
Thank you so much.
Thank you to the presenters for taking the time to join us today and for providing, obviously, some great testimony to this point.
I'd like to start with Code, if that's okay. Frank and others have started down this road already. One of the things that we talk a lot about around this committee is the lack of measurables within government, whether it's within our own budgets or when we're investing in a plethora of projects. Just to help us, can you outline for the committee what measurables you put in place when you're looking at projects you're investing in right now?
Managing Director, Mistral Venture Partners
That's a great question.
Within the first 30 days after we make an investment, we create a road map for the next 12 months. We do that because, with our seed investment, the company needs to raise a much larger amount within 12 months or they die. It's that simple. They run out of money and the company goes out of business. We take it very seriously. Essentially, we create a dashboard of what's important and what metrics need to be achieved within a time frame that matters. That's the high-level dashboard we create within 30 days. Then we fill in underneath that what the tactical steps are that they're going to take to achieve those metrics. I think the same strategy applies here.
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
I'm a banker by trade.
When you're looking at your measurables, and definitely in terms of raising capital, is that through commercialization, as well as other seed capital? Is it through government grants? Do you put measurables on what money is coming from where?
Managing Director, Mistral Venture Partners
It's less about that than about tangible business milestones that need to be achieved. There are two simple ones: what's your revenue today and what's it going to be tomorrow, and what's the delta between those? What's your growth rate and what is the revenue that you're at?
In the venture capital industry, there are clearly delineated milestones between stages, and there are clear goal posts, if you will, or brackets, around what metrics you need to have in order to deserve the next round of funding. That's how we do it.
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
One of the things that was in this year's budget—and this is for everyone—was $950 million over five years for superclusters, which really ties into, quite frankly, the entire conversation we're having here.
Is there a better way to spend those dollars than through the strategy that's been outlined to date? Is there a more direct route to do it, or do all of you endorse the current plan?
Managing Director, Mistral Venture Partners
That's scary ground. I don't know if I want to touch that.
Conservative
Alex Nuttall Conservative Barrie—Springwater—Oro-Medonte, ON
I will comment on this point.
I'm actually pretty upset that MaRS isn't here today. I know it's not your fault. Quite frankly, they helped craft the entire policy. They're probably going to reap hundreds of millions of dollars out of it, and then they can't show up at the committee.
I will leave it to you because I can't ask MaRS.
Managing Director, Mistral Venture Partners
I will say—sorry to interrupt if there are other comments—I'm involved with one supercluster, or one proposal, that's being put together. While I believe in their cause, there's no question that behind closed doors there's a lot of scrambling and finding ways to spend the money. That frustrates me as a kind of market-driven player. Maybe the time line is a bit rushed, and maybe it feels like if we inject a whole bunch of money we get political credit for that. Maybe that's as far as I'll go.
Executive Director, North of 41
What's interesting is that you can't regulate or force innovation. That is kind of talking across the board.
The government's role, I think, is to support it. I think you have to have a favourable tax rate to encourage innovation. When you look at entrepreneurs and government, entrepreneurs in the tech sector as it relates to risk have a different threshold for risk than government does. It's great that you have these superclusters, and I understand what you're trying to achieve, but just throwing money at a problem and trying to spend it is not going to develop innovation.
The government's role is to really set the parameters to allow for this to happen and to bring the people to the table.
Vice-President, Policy and Public Affairs, Universities Canada
As part of the science review and the innovation agenda review we welcomed the opportunity for clusters to be created, but with some broad principles underpinning that. One is that there would be an open, competitive process, that it wouldn't be picking winners, but through an open, competitive process the best would be chosen, and that institutions such as universities, colleges, and polytechnics would need to be partners because they bring a lot to the clusters that are being developed.
From what I understand there are a number being developed that are not only geographically clustered, but are drawing in expertise from across the country because geographically we need to be able to have a network approach to excellence when it comes to particular areas like agrifood and advanced manufacturing.
Our members have been quite interested in being partners in the superclusters initiative and are really getting behind specific proposals.
What I would add, though, is that it's a tool in the innovation ecosystem. I go back to my earlier comments that we also need to be investing at the front end of the pipeline. There's the Naylor report that came out in April, which talks about the need to reinvest in discovery research to fuel what is now our strong expertise in artificial intelligence. Thirty years ago Geoff Hinton at U of T was toiling away, through NSERC grants, and that was part of what led to what we have now in terms of Canada's global expertise in AI.
For us, the superclusters are an important element, but not without being in a broader context of well-resourced discovery research and some of the other programs we've talked about today.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to move to Mr. Longfield, for five minutes.
Liberal
Lloyd Longfield Liberal Guelph, ON
Thanks, Mr. Chair.
Thanks to all of you for being here. What a great discussion we're having this morning. I always wish we had more time.
In the interests of time, I want to zero in on the intellectual property management program that was discontinued in 2009 because the previous government, I think rightly, looked at that as something that was going into a lot of overhead without results, and possibly the measurables weren't in place as effectively as they could have been.
If we look at that and ask what types of measurables.... Previously, the tech transfer officers were trying to get research dollars into the universities. That was their goal, so they only dealt with businesses with lots of money to give to the universities versus small businesses or start-ups, or businesses with risk attached to them.
Mr. Cubitt, looking at the measurables, the number of patents released or the number of licensing dollars that businesses create as measurables, how could we pivot the IPM program to be more effective if we looked at reintroducing money into that stream?