How can the governments spur innovation in the mobile ecosystem? This is a question that I was faced with yesterday afternoon, while on the phone with someone at the Ontario Centres of Excellence. It was an opportunity to legitimately think about what is out there to help entrepreneurs and start up companies, and to weigh-in on ways to improve the mobile ecosystem in Canada. 

Companies can apply for IRAP funding (provided by the NRC) that provides a range of both technical and business oriented advisory services along with potential financial support to growth-oriented Canadian SMEs. Their funding cycles usually begin in May, but lately they have been running out of money to fund most requests.

Second, there is the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program. This is a federal tax incentive program, administered by the Canada Revenue Agency (CRA) that encourages Canadian businesses to conduct research and development (R&D) in Canada. Organically grown or VC-backed companies can claim a considerable amount of R&D expenses each year. The specific claim will vary by province; however, Ontario and Quebec-based businesses can expect something claims on the order of 45-55% of R&D costs. Companies, if you don't know how to do this -- send me a note; I'll tell you! This is a great service by the Canadian government and every start up doing R&D should be applying for SR&ED claims.

In addition to the programs mentioned, there are a number of Ontario-specific programs currently exist for companies in this sector:

• The Investment Accelerator Fund (IAF) is an early stage seed fund managed by the Ontario Centres of Excellence (OCE) that is designed to help Ontario-based, start up and early stage technology companies bring their products and services to market. Through investment of up to $500K, the IAF helps launch high potential technology ventures.
• MaRS Discover District has a number of services that can help entrepreneurs. They have funding from the Ministry of Research and Innovation for business projects and investments of up to $500,000 in seed capital. They can also help businesses prepare for and provide contacts to angel networks and other VCs.
• Ontario Centre of Excellence for Communications (OCE) and Information Technology helps startups by co-investing in the research and development of leading-edge, industrially relevant, technologies through partnerships at universities, and moving the results into the marketplace, through existing companies or new, spin-off enterprises.

OCE for ICT provides a grant to start ups. Grants are great because they are a non-diluting source of capital. Entrepreneurs, Angels and VCs all love grant money. In our discussion, I mentioned that mobile companies would benefit from grant-based R&D in the areas of engineering algorithms to improve mobile search, mobile analytics and metrics, mobile interface design, mobile infrastructure development, and location-based services. I also supported grants to support psychology and social science students researching social patterns and demographics in the context of technology usage, habits and reach

Transparency, Community and IP Rights
Although grant money is great, grants from OCE (and other governments) are tied to research done by Master's and Ph.D. students within universities. This makes things tricky on a number of levels:

• Transparency: Businesses that want to have some R&D sponsored by a grant need to understand what pool of students are available. My recommendation to the government to mitigate this problem is to collect information on research interests from students and Principal Investigators ("PIs") earlier in the process (before students have reached the Masters or Ph.D. level). This information should be posted in a community the bridges the educational facilities and the business community. This would allow industry to identify good candidates to supplement their R&D teams in advance of imminent need, and allow students to gain valuable experience in industry.
• Community: As previously mentioned, I made a recommendation to create a community that bridges SMBs, PIs, and students. It would have full listings that display research interests of students and allow for connections to be made with businesses or VC firms looking help grow portfolio companies in a more cash efficient way. A company called Igloo Software (full disclosure: Igloo is a portfolio company of RBC Venture Partners) has made a number of these communities to support Not-For Profit organizations including the David Suzuki Foundation and BRICSAM.
• IP rights: Intellectual Property is extremely important to start up companies. It is one of the ways it can assert value and defensibility of its product or service. Handling of IP rights should be made simple so that agreements can be made more quickly between both parties. All stakeholders need to be considered, and those include the management of the company, possible shareholders of the company (including VCs), the student, the educational institution, and the government.

The BlackBerry Partners Fund Jump Start Program
In addition to governmental programs, the BlackBerry Partners Fund has a seed-stage pool of capital specifically allocated for young mobile start ups called Jump Start. Jump Start looks to invest up to $250,000 (CAD) of seed capital into companies in the form of a Convertible Debenture. This is meant to provide companies with the capital to get started and prove out initial concepts before raising larger amounts of equity from venture capital firms.

I hope that I've managed to shed some light on the state of the opportunities available for funding and assistance to Ontario-based companies in the mobile space. If I missed out on any available sources of funding and assistance, please let me know by posting your comments as a reply to this blog post. I actively invite you all to join our community here at BlackBerry Partners Fund, and to continue this discussion thread.

- Josh