Thank you very much. There were some speaking notes provided, but that was fairly late in the game, so I don't know if those came across. If not, that's fine.
Thank you very much to the committee for letting me provide my testimony. My name is Bryan Watson. I am the managing director of CleanTech North. It's perhaps also relevant to this discussion that I was a partner at Flow Ventures, and previously the executive director of the National Angel Capital Organization, focusing on early stage capital.
Specifically on CleanTech North, we are a consortia of clean technology companies from across Canada. Our mission is to help clean technology companies commercialize their innovations and grow internationally. We take a consortia-based approach and focus specifically on the technology companies, not necessarily on the projects where they are being implemented. For example, we would be working with companies that have a new wind turbine, but not necessarily working with companies that are providing the wind farm and that project rollout. That's the context that I'll be approaching things from.
I believe we are the only organization that focuses on a broad base of clean technologies and not strictly on water, oil, or soil remediation. We look at all technologies. We find that provides a good cross-sector perspective.
The questions that were posed to this committee and to witnesses like me fed quite nicely into a survey and round table discussion that we hosted about a year ago, so I'm going to address those in terms of the recommendations and findings we had from that survey and round table session.
The specific topic of that survey and session was what the challenges are both for selling to and for adopting clean technologies. The participants in that were all our members. They included companies that were selling clean technologies into industry—early-stage SMEs, venture backed and angel backed; end users, such as utilities and others of that ilk; and, of course, angel investors and venture capital funds.
There were four main categories of recommendations and risks that were identified. I'll go through those sequentially: financial de-risking, including access to capital; industry receptor capacity development; technological de-risking; and, ecosystem navigation and support.
With respect to financial de-risking strategies, there were a couple of recommendations. For the preferred recommendation and preferred mechanism for helping de-risk early-stage technology and growth companies from a financial perspective, two were highlighted.
The first was using the SR and ED tax credit instrument as a vector for helping induce more investment into early-stage clean technology companies. In Ontario, for example, that input tax credit was reduced in 2016. That certainly had a negative impact on the amount of money our companies were able to spend on the R and D side of things. The recommendation from our group was that there be a focus on clean technology and upping that at the federal level.
The other side, which speaks more to the access-to-capital side of the equation, is an investment tax credit. Similar models have been in place in B.C., Manitoba, and many states in the U.S. In B.C., this is specifically a venture capital and angel tax credit, which provides for an incentive to pull money into early-stage technology companies. I can speak more on that later, if requested.
The third recommendation was to augment capital. In Ontario—and in another couple of other provinces, I know—a number of programs are set up specifically to act as co-investment funds to leverage the investment that private investors are putting into companies. Specifically, there is the investing in business innovation program of the Federal Economic Development Agency for Southern Ontario, which invests usually via a debt mechanism of one third to two-thirds. That means industry and angel venture capital investing two-thirds, with FedDev doing their own due diligence but often following on as a co-investment fund for that extra third of the capital needed, up to $1 million.
The full recommendations were to introduce a 3% to 5% clean technology R and D tax credit; to support an investment tax credit based on the B.C. model; and to continue to fund such programs as the FedDev IBI program, similar to those in other provinces, and to ensure that those programs do not run out of funding within a five-year window, which has happened numerous times in the lifespan of FedDev internally in Ontario.
On the industry receptor capacity development side of things, the recommendations were to support industry receptor capacity-building on both the private and public sector sides. There is a lack of confidence in new technologies and ways to bridge that gap such that new technologies can be trusted to be implemented. There are many ways to do that. One that was recommended, and I think referenced earlier, was the U.S. Department of Energy's small business vouchers pilot program. We could implement a similar program here with a clean technology voucher program to support the engineering, legal, financial, and other services that are necessary to give end-users the confidence they need to implement clean technologies.
The other recommendation from our members was to support a clean technology version of the NRC IRAP program, the digital technology adoption pilot program. This was focused specifically on digital technologies for the web-cloud infrastructure, but the recommendation was to repurpose a program such as that to focus on clean technology adoption.
The third recommendation was for technological delisting. There are many programs out. There are more acronyms of programs than I could possibly list that support and provide grants and other supports to early-stage clean technology programs. They're generally effective, but they often don't match the pace of business. They often have a year-long application cycle and by that point a lot of the projects people hoped to undertake have had to begin regardless of the grants. The recommendation is to support those programs to take the technology readiness level from a six-to-seven range to an eight-to-nine range but to focus specifically on those granting agencies that can provide that in a timely manner and ideally, through a local entity that can help form consortia of end-users as well as funders with that early-stage company.
Finally, we recommend ecosystem navigation support. The clean technology innovation ecosystem is a confusing and many-faceted one. There are many different partners that a clean technology company needs to employ from end-users to investors to various different government programs, to R and D partners, to universities and colleges. It is a confusing ecosystem to say the least, so the two recommendations that our members brought forth were to set up a strong cross-sector community of interest to support the technology companies in the navigation of that process and to set up a concierge service to help navigate that process so that those companies can actually both find end-users and navigate the process through the various different grants and other services needed.
I have a quick comment on what's working and what's not working, and we can certainly be open to more of these as requested. Things that our members highlighted that were working well were the SR&ED tax credits program and the programs hosted by Sustainable Development Technology Canada and all of the partner programs with organizations such as the Ontario Centres of Excellence, Alberta Innovates, etc.
There are also the network centres of excellence programs, particularly the business-led network centres of excellence, which require business-led consortia to be put together to pull technologies into use by those consortia. Specific examples include the GreenCentre Canada and LOOKNorth out of Newfoundland and Labrador.
There are also government procurement programs. The Build in Canada innovation program was well received by our members, who found it to be a good process to help companies get the government to be their first consumer, thereby helping support access to capital as well.
With that, I will turn it over to the committee again.