Science and Research Committee on Nov. 17th, 2025

[Vincent Ho, Conservative, Richmond Hill South, ON]

I'd rather just wait.

[The Chair, Liberal, Salma Zahid]

Okay. We will suspend the meeting, and we'll have a look at his connection.

The meeting is suspended. Thank you.

[The Chair, Liberal, Salma Zahid]

The floor is with MP Ho. We'll start the clock from the beginning.

MP Ho, you have six minutes for your round of questioning.

[Vincent Ho, Conservative, Richmond Hill South, ON]

Thank you, Madam Chair.

My first questions are for Mr. Linke.

You mentioned in your your opening statement that private investment in Canada in artificial intelligence research has been relatively weak. Do you think this is the result of a failure in government policy that's causing our companies to fall behind relative to our peers?

[Cam Linke]

I think there are a couple of structural things, as I mentioned. One is that, realistically, we have a lot of SMEs, and cash is king in SMEs, so it's tougher for them to make investments. The second one is that we have a lot of protected industries, and the incentive for protected industries to invest in R and D is a lot lower.

Risk capital matters a lot, and I was heartened in the last budget that there was funding specific for risk capital. I believe this is something that we need to do a lot more of in Canada. There are some structural things that we can maybe improve on the policy side, but to be honest, to me, it's a lot more about the amount of available capital that's causing a big part of the challenge.

[Vincent Ho, Conservative, Richmond Hill South, ON]

You mentioned the structural piece. There are a lot of protected industries in Canada with a relatively small number of firms.

Do you think the cause of that market structure is a result of too much regulation, too much red tape? That tends to favour the large companies that are able to comply with that red tape and protect their market share from new entrants who will need to be burdened with extra regulatory costs in order to compete with the bigger firms.

[Cam Linke]

There are things we can do to bring competition into the country. I think competition drives investment in research and development. If we're going to protect industries, there should be an encouragement or an expectation that those companies are investing in R and D to drive forward Canadian competitiveness.

[Vincent Ho, Conservative, Richmond Hill South, ON]

You mentioned government funding and supports for research, development and commercialization. Depending on which study you look at, there are upwards of 100—close to 200—federal funding programs out there. That's a lot of programs. It's a lot of bureaucracy.

Do you think the sheer amount of bureaucracy and paperwork involved is part of the reason we're lagging behind our peers?

[Cam Linke]

I think it contributes to it. I mentioned that we tend to be grant heavy and capital light. Personally, I'm a simple person. I'd like to see a lower number of programs that are targeted and that have low administrative expectations. To me, that capital should be focused on risk capital with people who know how to make these investments.

Again, an example of that is the fund of funds investment in the last budget. These types of investments are ways of growing the capital in the Canadian ecosystem in order to capitalize private Canadian companies to be able to grow and have the resources to make investments in R and D.

[Vincent Ho, Conservative, Richmond Hill South, ON]

Why do you think we have a lack of private investment in Canada? Is it too much red tape, or is it too hard to get approvals to get things done? Is it taxes being too high or just an overall uncertain environment, with the government getting in the way of projects that are trying to get off the ground?

[Cam Linke]

What we're seeing is a little bit of momentum. You're seeing a bit of an increase recently in venture momentum. That needs to increase, and we should be looking at capitalizing the Canadian ecosystem better. Things like expectations around the large Canadian pension funds investing in venture in Canada would help grow the amount of capital in that ecosystem.

Some of the structural barriers for venture investment in Canada have gone down, and we've seen increases in Canadian venture because of it. To me, it's about getting more capital into that ecosystem overall.

[Vincent Ho, Conservative, Richmond Hill South, ON]

My next set of questions is for Mr. Outterson.

Do you think there's a mismatch in incentives in terms of supports for research and development and the commercialization of new ideas in Canada?

[Kevin Outterson]

There certainly is globally. Canada follows a similar pattern. We have pretty good funding for basic research. I'm sure researchers in the U.S., Europe and Canada would all say we need more, but at least there's a stable base there. What's lacking is the ability to translate that into a product that survives market entry.

[Vincent Ho, Conservative, Richmond Hill South, ON]

What are some of the ways you think we can support that ecosystem?

[Kevin Outterson]

The “Overcoming Resistance” report from the Council of Canadian Academies from two years ago has a comprehensive list. I was one of 11 co-authors of that report. The majority of the authors are Canadian. I fully support those recommendations, which are basically that we need to find ways for these drugs to be launched on the Canadian market and for there to be some way to recover the sunk cost investment in research development.

The prices are relatively low in Canada for antibiotics. As a result, the smallest number of new antibiotics have been launched in Canada compared to all of the G7 members plus seven other high-income countries in Europe that are not members of the G7. That has everything to do with the company's commercial decision that we're not going to make enough money for launching.

Then Canadian doctors are put into the position where, if their patient needs an antibiotic that is not yet approved in Canada but has been approved in Europe and the United States for five years or longer, they have to go through an—

[The Chair, Liberal, Salma Zahid]

I'm sorry for interrupting. Your time is up.

[Kevin Outterson]

They have to go through an emergency process to get that drug. The patient needs it now, not three days from now.

[The Chair, Liberal, Salma Zahid]

Thank you.

We will now proceed to MP Noormohamed for six minutes.

Please go ahead.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Thank you, Madam Chair.

Thank you to our witnesses for being here. I'm going to start with Mr. Linke.

Cam, it's always great to see you. Thank you for the work you and AMII do.

I want to pick up a little bit on what you talked about in your opening comments and in your response to Mr. Ho's question. There are folks who are desperate to try to figure out how to blame government for the fact that there isn't as much early-stage start-up capital in this country. As you rightly pointed out, it's less about government and more about the risk appetite of pension funds and others in this country. We've spent a lot of time talking about the need for the venture community in this country and for investors in this country to take the same types of risks on Canadian businesses they're willing to take outside of Canada.

In this budget, there's $1 billion, as you pointed out, for venture and another $750 million for early stage. This is to incentivize the private sector. What do you think it is that the private sector investment community in this country actually needs, psychologically, in order to be able to value Canadian early-stage companies in the same way they value other early-stage companies from outside this country?

How do we incentivize—not just with money—or open the eyes and minds of investors in this country to look beyond the first round? How do we make sure they are the first money rather than waiting for others to take the risk?

[Cam Linke]

That's a great question. I always appreciate this discussion overall.

There are two challenges that I've talked about in the past. One is capital, and the other is customers. Both of those, I think, are really vital. There's a bit of a structural challenge in Canada of where dollars are going. There are more in venture, but this typically is later in the process versus in that first cheque. There's an opportunity to be able to fill the gap on that first-cheque investment that needs to happen. If not, what we see over and over is that those companies will go south of the border for that first cheque, and the odds are that they're going to move south of the border in that process.

The second part is that we have a low velocity when it comes to customer interaction with our start-ups here in Canada. The amount that our Canadian companies.... Because our adoption of our technology is low, that leads to a lower customer base for Canadian start-ups. This means that if the government is not a customer of companies and if Canadian businesses aren't customers of companies, then you're, again, selling outside of your jurisdiction, which is typically south of the border. Now your capital is south of the border and your customers are south of the border, so the odds of you staying north of the border are not really high.

I think those are two really big things. Capital I've talked about quite extensively. I think the other one is customers. If we can do a lot to encourage Canadian companies and Canadian governments to buy from Canadians, we can help head that off.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

As you know, a big part of this budget is making sure that there is incentive for Canadians to buy Canadian and for the Canadian government to procure Canadian. One of the challenges, of course, that I think a lot of early-stage companies in this country face is how to get their fellow Canadian companies to see Canadian innovation as “as good as”. I think this is something that you and others in this space are working towards.

I mean, I'm heartened by, unfortunately, the instability of the United States that has actually forced Canada to look inward in terms of those opportunities. However, you know, digging a little bit deeper into this question about customers.... Obviously, government can procure and is now mandated to procure Canadian at the federal level, and at the provincial level there is a lot more of that happening. For Canadian companies, that risk, the perceived risk that they have to take to buy Canadian or to buy from a Canadian company that they may not know as well as a big name from another country.... How do we get over that? How do we get around that hump in the first instance?

The second piece, really, is this: If we need to, how do we backstop that so that we see that growth happening in terms of the customer set for Canadians? I'm not talking about government intervention here because I think that maybe people will then rail against them and say that they're not really viable and this, that and the other. However, how do we make sure that the commercially viable businesses that are being built in this country are able to sell to Canadian government, and not just to government but also to the private sector in this country?

[Cam Linke]

On the government side, every start-up I've talked to has not asked for priority treatment—like, “Hey, we're the worst product, but buy us anyway.” They want to be able to compete on a level basis. There are a number of structural pieces in there.

I'll give you an example of a company I know. It can't sell to the Canadian government because it hasn't sold to the Canadian government, which seems like a funny cycle that it'll probably never get around.

I think there are some structural pieces from the government that just level the playing field to buy from Canadian companies. We've seen some pieces there where that reference customer makes a big difference, and then Canadian companies will adopt after.

On our side, the other piece we do is help on the hand-holding side of working with companies directly—but on Canadian platforms. The ability for us to be a bit of that bridge between the two.... We've seen that help make sure that companies we work with end up on Canadian start-ups as a platform, and we always seek to do that in our work.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

With the remaining time I have left, which I think is—

[The Chair, Liberal, Salma Zahid]

It's 15 seconds.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Then I will not ask another question. I will just thank you both for your time.