Science and Research Committee on April 25th, 2023

[Jarret Leaman]

I can think of an example rom the technology perspective in regard to representation of indigenous culture and expressions in video games. How is the money from that game made off that cultural expression, and where does the wealth model go from that knowledge that's used? That may be an example of an indigenous game designer who's going forward to include those aspects of knowledge in their game that they then share with the world. I don't know if the frameworks are set up in the country in order to really look at a collective interest and knowledge of ownership of TK or TCEs—traditional knowledge and traditional cultural expressions.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay. Thanks.

How much time do I have, Mr. Chair?

[The Chair, Liberal, Lloyd Longfield]

You have about a minute and 10 seconds.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay.

I will turn to Ms. Jones.

You mentioned procurement as an important component of government support. I'm just wondering, again, if you have examples there. It seems that procurement is so important, not just to provide funding during that difficult period for innovative companies but also for them to show to other clients that “At least my own government believes in us” and that kind of thing. If you have any further examples of that, they could be instructive to us.

[Krista Jones]

Thank you.

When we look at procurement, we see it's deep and specific and that there are different procurement needs, depending on the different sectors of the advanced industry you're looking at.

We can look at some of the examples. I'm going to talk a little bit about some of the work we're doing on clean tech. We're trying to create procurement marketplaces for large governments like the federal government, as well as for small municipalities. This enables us to help those companies help the government agencies figure out how to qualify and protect their RFP process to enable them to procure properly and give the start-up companies a chance in that environment. Those are some of the examples when we look at government procurement.

[The Chair, Liberal, Lloyd Longfield]

Thank you very much.

Now we have Mr. Soroka for five minutes, please.

[Gerald Soroka, Conservative, Yellowhead, AB]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

I'll start off with you, Ms. Jones.

There have been several articles written lately about how this Liberal government's approach to innovation or IT has been mediocre at best. In what ways do you think we can improve upon that from a government perspective?

[Krista Jones]

I think improving the overall policy is a big question. What I'd rather do is comment on a couple of really specific suggestions that we think could help add to what is already under way.

One of them is that right now we really need to look at the risk capital that's available in the ecosystem to grow deep IP-based companies. It's that lack of availability of risk capital that sometimes causes the IP to end up in foreign hands. That's one of the areas.

Another area is looking at the commercialization talent that is required. This is beyond the engineers and the developers that we're looking at. One thing about our ecosystem that I think holds back the growth of these sectors is the lack of executives who live in Canada who actually have experience in some of these advanced industries and in growing companies to $100 million, $500 million or $1 billion in revenue. Some work and some focus are needed on the executive level and on the mid-management level and above, the commercialization talent. I think there is a big gap in the innovation spectrum in how we are actually able to provide that support.

One of the last ones is on some of the regulatory processes and environments that exist to help our companies and some of the rules that help our companies to be able to compete globally. Even at the health side, it's about being able to have a regulatory environment that is sought after globally, like the FDA is, such that when companies are approved here, they can be viewed as approved globally.

[Gerald Soroka, Conservative, Yellowhead, AB]

When it comes to these companies such as Volkswagen investing billions of dollars, do you think that besides jobs, we should be looking at some kind of an agreement, whether it's licensing contracts or even being a partner in the patents, so that we get a percentage of this back to sort of reclaim the money that's been invested? Is that appropriate or not?

[Krista Jones]

Is it appropriate? That's a tough question for somebody with my vantage point to answer.

What is appropriate, I think, is that we incentivize. There are various means of providing that incentive so that for people who invest in Canada, ourselves as well as foreign companies, there is an incentive to actually buy Canadian and help these companies that are growing.

For me, if what you're talking about with regard to types of work is about some way to ensure that the investments come in and enable the incentive for Canadian-owned IT to remain here, then I would say, yes, it's appropriate.

[Gerald Soroka, Conservative, Yellowhead, AB]

That's exactly what I was getting at. When you're investing up to potentially $14 billion in one company, it's one thing to talk about creating jobs, but you also want that sustainability. If all you're going to get out of it is jobs, well, you almost could pay the money for each individual for the rest of their life and save money in the end. It shouldn't just be about job creation. I think there has to be that retention of knowledge as well as the financial gain from this, through either licensing contracts or patents, and being a partner in that as well.

[Krista Jones]

I think multiple complex environments end up in the value chain around this entity. I think it is about making sure that we understand the full ecosystem of the innovations that are occurring.

Yes, I think there is the need for us to look after the homegrown IP that surrounds an entity like an EV plant that Volkswagen is putting in Canada.

[Gerald Soroka, Conservative, Yellowhead, AB]

Thank you for that.

Mr. Leaman, you talked about how we're trying to make sure that we do reconciliation through IP. I think you gave a few examples. Do you think the government is giving you enough funding, or is there more that they could be doing? What various efforts would make it better for your organization?

[The Chair, Liberal, Lloyd Longfield]

Please give a very short answer.

[Jarret Leaman]

Additional funding would be welcome. We have, as an organization, received funding to help us support youth summer learners, and that is it from the federal government. The rest has been done through the private sector and volunteers. Additional work is needed. Coordination around the topic of commercializing and making money off traditional knowledge is something that I think needs to be supported, and I believe that it is under way.

[The Chair, Liberal, Lloyd Longfield]

Thank you.

[Gerald Soroka, Conservative, Yellowhead, AB]

If there's any more information you'd like to supply, please write in.

[The Chair, Liberal, Lloyd Longfield]

Yes, please write in if you have more information or details.

We will now move to Valerie Bradford. You have five minutes, please.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you so much, Mr. Chair.

Welcome to our committee and to our chair, and welcome to our witnesses. It's so nice to have you with us today.

Ms. Jones, in my previous role as an economic development officer for the City of Kitchener, I had the opportunity to visit the MaRS District many years ago now, and I was very impressed by all the work that was going on there. I'm sure it's even more impressive today.

I was interested in your opening remarks. There are a lot of incubators that focus on start-ups, so I was interested to know that you're focusing a lot on scale-ups, which of course we refer to as the valley of death. We're really good at start-ups, as previous witnesses have said, but it kind of all falls apart during the scale-up phase, which produces its own unique challenges.

I was wondering if you could speak to the new ElevateIP program that the federal government has announced. How will that will help in this space, and what is your experience with that so far?

[Krista Jones]

Regarding the experience to date with the ElevateIP, since it hasn't been rolled out, we can't comment as to how it's going to work in practice. We're working closely with the recipients of the grant to make sure that we have the pathways to get their great work, as well as the work of the other IP-based organizations that have been funded, into the hands of the entrepreneurs who need them.

There's a great incentive for our companies to continue to fund the development of their IP as they grow. In the work that MaRS does, the work we're doing now, we do support companies from zero. They have to be in market, but we support them from pre-revenue all the way up to the $100-million mark. The reason we've chosen to work on that pipeline of activity is that this is where we think we get the broadest chance of success of their remaining headquartered in Canada and growing.

What we hope to be able to achieve with programs like ElevateIP is that the companies that are scaling and growing will be able to continue to develop the IP inside. In the programs that we provide, we focus heavily on what we call commercialization, which is when we help them with sales and with pricing. We have a very extensive program of M and A on the reverse side—mergers and acquisitions—teaching our companies how to become acquirers of IP as opposed to selling their IP. We do that type of work, which kind of we call the “dirty scaling”. It's the commercialization activity that is needed in our companies.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you for that.

What is the role of venture capital in this? Does MaRS play a role in helping to access that? I know that Communitech in our area of Waterloo does play a role in that. I wondered what your feeling is on this and what MaRS' role in that is as well.

[Krista Jones]

Venture capital is an essential part of this ecosystem. I heard comments earlier about private industry and what role private players have. We don't exist without venture capital, and we know that in our high-growth industries, close to 70% of the capital that gets invested in our companies comes from foreign sources.

Our companies need capital to grow, and if you look at what's happening right now, you see that we tend to invest in more capital-efficient areas. We do well in SAS—statistical analysis software—and in software-type companies. Our deep IP—industrial IP, medical devices and drug development—is the area where we don't have access to as much venture capital as we need.

The role that MaRS plays is we're the convenor. We run syndicates, we try to bring them in and we try to do the introductions. We also have a capital arm that is third party from the charity in terms of the work that we try to do. We try to provide that convening capability to match people up with the funding that they need so that they can compete on the global scale, because the market for our customers, the start-ups and scale-ups that we support, is global. They need to have equal footing in the global market in how they're funded and how they have the risk capital to grow.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

It would seem to me that if we want to keep these companies in Canada—which we clearly do, because we spend a lot of money growing and nurturing them—the role of Canadian venture capital would be pivotal. It stands to reason that if they get U.S. capital, they might, and they do, flee down to the U.S.

What are your thoughts on how we can encourage more Canadian venture capital to take the risk—they're generally risk-averse—and take a bet on scaling up these companies?

[The Chair, Liberal, Lloyd Longfield]

Give a very short answer, please.

[Krista Jones]

The key to all of this is people. You need people who have done it before in the industries that we're looking to support.