Science and Research Committee on Nov. 3rd, 2025

[The Chair, Liberal, Salma Zahid]

You have 30 seconds.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I have a quick question for Ms. Yuyitung.

You talked about the need for experienced executives, and it sounds a bit like what we've just heard. How do we develop experienced executives here in Canada?

[Gay Yuyitung]

I'd say there are two strategies to it. As we have a few here, one is trying to further develop them and bring them in. There is also an attraction strategy we can bring forward for Canadians who are expats.

[The Chair, Liberal, Salma Zahid]

Thank you.

We will now proceed to MP Blanchette-Joncas for six minutes.

Please go ahead.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

My first question is for Mr. Vincent‑Herscovici.

Thank you for joining us today.

Axelys is at the centre of Quebec's model for capturing the value of research.

Could you explain how your approach differs from what exists elsewhere in Canada, especially how you connect public research with college centres, technology transfer college centres, and businesses?

[Jesse Vincent-Herscovici]

Thank you for the question.

Two key elements stand out from the usual process for capturing the value of research.

The first one is including the entire innovation cycle value chain I talked about earlier, because you have to start from the beginning. Our mandate and that of Ms. Watts‑Rynard's organization are slightly different. Right from the start, we try to measure the market potential of a promising invention and possible spinoffs. We do so before moving on to the next step, which is to see whether we can register it as intellectual property.

We then move on to technological maturation and the pathway to the market, to potential buyers. We don't want to move too fast if we don't see potential spinoff. We have teams that do the analysis, and project managers to work on the pathway, and assess the real value and fair trade value between the public dollars invested in the technology and the investment that will be needed to get the technology to market. We need to strike that balance, and different types of expertise are needed. There can be only one pathway, though, one overall picture. We have to avoid breaking things up too much, with too many smaller mandates.

The second element is really important: the benefits. We don't measure the benefit to the research establishment transaction-wise. Obviously, there needs to be some value for the establishment, but what we're looking for are the benefits for society. Where could the invention have the most impact for society in order to justify the investment of public funds? Sometimes we could get more money dealing with a multinational, but we prefer to transfer the technology to a Quebec or Canadian SME, domestically, because it will have a greater impact nationally.

These are two fundamentally different elements.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

Thank you.

Let's stay on the subject of benefits.

In Canada, only Quebec has implemented such a complete integrated model. It comprises Axelys, Synchronex, the Conseil de l'innovation du Québec, and the 59 college centres for technology transfer. That said, Axelys has yet to receive any funding from the federal government.

Do you think this lack of national recognition or support limits your ability to work nationwide and maximize the value of research done in Quebec?

[Jesse Vincent-Herscovici]

Having that support would certainly help us move faster.

The different levels of government provide several funding tools and mechanisms, but everything is fragmented. What that means is that, instead of being invested and leveraged in Quebec, that money is invested elsewhere piecemeal. That can actually be harmful when different bodies try to do the same thing and want the lion's share. It doesn't necessarily allow for the same pace of progress or for investment outcomes to be scaled up across the country.

Let me give you a few examples. A provincial ministry can fund higher education. The Fonds de recherche du Québec funds a lot of research infrastructure. The federal government mostly funds research projects through its three councils or more specific programs from the Department of Industry. Without proper coordination, funding can't be aligned, and the benefits can't be felt nationwide. Everything is fragmented, scattered here and there.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

The Quebec model for capturing value has already been proven. You also talked about the transfer rate, as well as measurable and recognized results, but there is no federal program to support businesses such as Axelys.

Does the lack of mechanisms limit your ability to scale up the economic benefits and co-operate nationwide?

[Jesse Vincent-Herscovici]

Absolutely. There's no denying it. With cuts affecting everyone, how we invest in and build our research capacity is very important. We need to coordinate funding and mandates now more than ever, because organizations already exist to build this capacity.

We're starting to do it organically. We're working with a network of CEOs of organizations similar to ours elsewhere in the country, including Export Development Canada and Intellectual Property Ontario. We're trying to do similar things and hold informal meetings to share best practices. It's a natural thing to do, but it also needs to be structural. We have a memorandum of understanding with the Fonds de recherche du Québec to coordinate these efforts, and another with the Natural Sciences and Engineering Research Council of Canada. Again, it's a natural thing to do, and we're doing it ourselves.

It's important to structure this correctly and make sure we can work across the country.

[Maxime Blanchette-Joncas, Bloc, Rimouski—La Matapédia, QC]

Many countries that excel in innovation, the U.S., Germany, Israel and South Korea, for example, have direct incentives built into their research programs to unlock the value of research. The more a discovery is transferred or commercialized, the more support it gets.

Do you think something similar could be built into federal programs, to encourage organizations such as Axelys to tangibly increase the economic impact in Quebec?

[Jesse Vincent-Herscovici]

Yes. Quebec just revised its industrial R and D tax incentives, specifically to encourage precommercialization, infrastructure and so on.

We work with Quebec's finance department to support patents arising from public research and, where public research has produced technologies, to incentivize taking them further. I think aligning those measures with federal tax measures would be a very positive step. Quebec's revised model is a good example of changes that are helpful.

Again, that alignment matters because it allows for co-operation at the national level versus a patchwork of efforts.

[The Chair, Liberal, Salma Zahid]

Thank you.

This ends our first round. We will start our second round with MP Mahal for five minutes.

Please go ahead.

[Jagsharan Singh Mahal, Conservative, Edmonton Southeast, AB]

Thank you, Madam Chair.

I would like to continue with Jesse Vincent-Herscovici.

It's quite astonishing to know—I think I'm having goosebumps—that the majority of our data is not stored in Canada. It goes to the U.S. or to other jurisdictions.

We have a government that has been in power for the last 10 years, at least, and now it's into its 11th year. Do you think it's a serious concern that oversight didn't happen when they did not think of the national security of military files? We can talk about a lot of important things. How important is it to you that we maintain all data within Canada? How badly has the government been lacking there, and what should they do to correct the mistakes they've made in the last 10 years?

[Jesse Vincent-Herscovici]

I will repeat that this is not my area of expertise. I really want to be clear that I have to caveat my answer. I'll try to be limited to what I've seen.

My understanding is that many of the servers are in Canada. It's just that they're not owned by a fully Canadian-owned organization, which leaves the door open to potential risks, if ever situations were to happen geopolitically that would require them to be open.

I think much of the data is actually stored in Canada, but it's not owned by fully Canadian corporations. Again, this is not my area of expertise.

[Jagsharan Singh Mahal, Conservative, Edmonton Southeast, AB]

I can fill that in.

We had a former MP here, Ryan Williams, who commented during the committee meeting that, while we have all the data in Canada, the foreign companies that own it still have access to it. It's not access-immune.

[Jesse Vincent-Herscovici]

Thank you. This is the precision I wanted to make. It's technically in Canada, but it could be.... That's the limit of my expertise there.

To answer your question, we need to find opportunities to pilot things here as much as possible and to build capacity in Canada. We can't just do that ad hoc. We need to find strategic partnerships where there are high-value potential usages of these servers, then make sure capacity is given to organizations that provide both the storage space and the computing capacity, and to organizations that want to deploy the intelligence out of that data. That link is where data becomes useful, very potent and potentially very impactful for Canada.

It's about finding linkages between the service providers, the actual infrastructure and the ones using it so that we're talking not just about storage space but also about strategic deployment in areas that are priorities for Canada, like intellectual property and maximizing the fruits of our public research.

[Jagsharan Singh Mahal, Conservative, Edmonton Southeast, AB]

Is the government doing enough when it comes to protecting data and making sure we have it stored in Canada, or does it need to do more on this?

[Jesse Vincent-Herscovici]

Measures like creating mandates dedicated to artificial intelligence—like the one created in recent history—are a step in the right direction. I think we must do much more.

[Jagsharan Singh Mahal, Conservative, Edmonton Southeast, AB]

More needs to be done when it comes to national security and issues that matter to Canadians. Thank you for that answer.

You were not able to complete your answer in regard to MNCs, the development of small Canadian companies, and supports from government. Can you expand on the portion left out of your testimony?

[Jesse Vincent-Herscovici]

Sure. Thank you.

We are a nation of small and medium-sized companies that generally underutilize intangible assets like intellectual property. We know that the proper use of intellectual property by a company is directly linked to or has a high impact on productivity rates, the potential to compete and the potential to export. I think we should be much more careful about how we manage intellectual property when there are partnerships with public research.

I have a bit of a distinction. I don't think it's enough to say that a company is given IP rights in a project and that we cede all intellectual property without knowing whether or not they know how to manage it. If we give it to a start-up, what happens if that start-up gets acquired very early in its existence by a company in another region? That intellectual property is gone and we don't track it. What happens if the start-up does not survive, like the majority of start-ups? What happens to the intellectual property we've invested in?

Finally, if we give exclusive intellectual property rights to one organization, we lose the potential to share it with multiple other SMEs that could have competed and used it in more non-competitive areas than the one that was initially collaborating with the public research entities.

I think we need to be more sophisticated in the way we negotiate and handle intellectual property, in general. It's not enough to say that a company has a right to exploit IP, because often it does not get exploited and is left on the shelf. Others cannot then exploit it, because it wasn't well packaged.

[The Chair, Liberal, Salma Zahid]

Thank you. The time is up.

We will now proceed to MP Rana for five minutes.

Please go ahead.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Thank you very much, Madam Chair.

Thank you to all the witnesses for their valuable time.

Ms. Yuyitung, Canadian companies such as Enedym, VoxNeuro, Acuity Insights, Elarex and Synmedix show McMaster's growing success in commercialization. In fact, McMaster's affiliated start-ups have created over 500 highly skilled jobs in Canada and 800 globally. They have generated more than $20 million in annual revenue and secured over $570 million in investments. They have reached a combined market capital of $715 million in total. These are very attractive numbers.

What are the most common investor concerns you see when researchers pitch their tech-based start-up ideas in Canada?

[Gay Yuyitung]

I'd say the team is a critical piece investors are always looking at. That's why I was advocating that we consider supporting the training of highly qualified personnel. It's also about having executive management that can continue to scale those companies. That is critical. We also see IP and all the regular things.

I'll also point to one of the other things I've heard before: the ability of companies to grow in Canada by selling in Canada, and having investor and purchasing confidence in Canadian companies among Canadians.

[Aslam Rana, Liberal, Hamilton Centre, ON]

Which federal or provincial policies can push private investors to invest more in this research work?