For public policies that facilitate the development of startups

OTTAWA, October 23, 2024 - A delegation of a dozen organizations that support Quebec startups on a daily basis is in Ottawa as part of Small Business Week, to deliver a clear message on the importance of having public policies that facilitate the development of young innovative companies, commonly known as startups, an important subset of SMEs.

Even if the era is no longer about creating the Ubers and Airbnbs of this world, the entrepreneurial mode based on projects with high growth potential remains a necessary mode if we want to create an innovation-based economy, capable of offering the world the fruit of the ideas, creativity and determination of its best brains.

After all, innovative entrepreneurs are the lifeblood of Canadian innovation, as they help transfer the know-how of our brains into potential businesses: those fresh out of business or engineering school, those pursuing in-depth research at university, and even those who see opportunities along the way.

We need public policies that support all three types of entrepreneurial profile, and more, with three clear objectives:

1. encourage the emergence of more startups;
2. better financial support for companies passing certain important milestones in their entrepreneurial journey;
3. facilitate the mission of organizations across Quebec that help entrepreneurs make informed decisions to achieve their business goals.

• SMEs account for 99% of Quebec businesses. They employ 3 million Quebecers and account for 50% of Quebec's GDP.
  • We estimate that there are, on average, between 2,000 and 3,000 startups in operation every year in Quebec.
• Over the next few years, Quebec will experience a historic wave of business transfers and sales, driven by demographic trends such as the aging of the population.
  • Takeovers can also be the driving force behind new innovative companies that will have the same velocity as startups.
• Entrepreneurial intentions and business start-up rates are lower in Quebec than in the rest of Canada.
  • According to theIndice entrepreneurial québécois, the entrepreneurial intention rate is 16.5% in the Quebec population.
• 57% of entrepreneurs and business leaders in Quebec have suffered, or know of an entrepreneur who has suffered, from mental health problems requiring time off work.

(information taken in part from the Fédération des chambres de commerce du Québec)

Despite efforts to raise awareness of entrepreneurship in universities through entrepreneurship offices and other related organizations, there is a dearth of companies emerging from scientific research. We need to support existing programs that play a key role in better linking university research to the creation of innovative businesses, particularly in deeptech and social innovation, with government actions to facilitate the development of the entrepreneurial pipeline at the start of the journey:

1. Give more support to organizations working to raise awareness of entrepreneurship, especially for more scientific profiles and in regional universities, but also for research projects in the social sciences and humanities that could generate the creation of legal structures other than private enterprise.
2. Consider introducing a first-time business start-up plan that, like the HBP for first-time home buyers, would allow entrepreneurs to draw on their RRSPs tax-free to finance the start-up of a first business.
3. Review the management of intellectual property rights between universities and researchers to facilitate the commercialization of the fruits of research.
4. Coordinate work between members of different universities across Canada to review the funding available to foster scientific entrepreneurship, and to review ways of creating a better interface between academia and industry.
5. Ensure the renewal of initiatives that foster business creation in communities, such as the Black Entrepreneurs of Canada program and the Initiative to Support Black Communities in Canada.

In addition to initiatives to increase the number of innovative start-ups, we need to provide more adequate support for companies that reach various key milestones in their growth, and enable risk-taking entrepreneurs to be supported in their endeavors. We need government action to resolve certain challenges of access to financing, but also the ability of these start-ups to win initial public contractswhich will enable them to go on to win other sales, both locally and internationally:

1. Consider creating a loan and grant fund for entrepreneurs, to enable them to devote themselves entirely to developing their businesses.
2. Revise research and development (SR&ED) tax credits to include an obligation for private companies to reinvest a percentage of the amount allocated in tax credits in startups. startups either in the form of investments (dilutive or non-dilutive) or co-development agreements.
3. Add ambitious purchasing criteria and targets to government procurement to encourage the acquisition of local solutions, while respecting international trade agreements.
4. Set up an inter-ministerial committee to assess the provenance of technological solutions in the various industrial production value chains, and make recommendations on how to get more local companies to play a key role in these value chains. 
5. Add targets for ethnoculturally diverse entrepreneurs to government non-dilutive financing sources and funds of funds invested by the Government of Canada, such as the Venture Capital Catalyst Initiative.

The Government of Canada, especially through the federal economic development agencies, has a key role to play in providing diversified and specialized support for entrepreneurs. We need to review the coaching experience to ensure that it is continuous, mobile and consistent with business needs, and that it is at the same level of quality no matter in which region of Canada these businesses are incorporated.

1. Create a folder startup unique to economic development agencies, held by the company's founding team and containing essential information on the company's profile from the moment of incorporation.
   1. This file will be useful for all those involved with the startup to accelerate its progress, as well as for those seeking a better overall view of the ecosystem in order to modulate their interventions.
2. Develop connections to ensure better access to the network of peripheral players (trade commissioner service, embassies, private companies, etc.) who can become partners for the startup in its development.
3. Respect at all times the autonomy of the various organizations that support innovative companies to position their support offer and develop it in line with changing needs and market conditions.