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 visiting Ottawa as part of Small Business Week to deliver a clear message about the importance of public policies that facilitate the development of innovative young companies, commonly known as startups, which are an important subset of small businesses.

Even if the era of creating the Ubers and Airbnbs of this world is over, the entrepreneurial model based on projects with high growth potential remains a necessary one if we want to create an economy based on innovation, capable of offering the world the fruits of the ideas, creativity, and determination of its best minds.

After all, innovative entrepreneurs are the driving force behind Canadian innovation, as they enable the transfer of knowledge from our brightest minds to potential businesses: those fresh out of business or engineering school, those pursuing in-depth research at university, and even those who see opportunities throughout their careers.

We need public policies that support these three types of entrepreneurial profiles, and much more, under three clear objectives:

1. encourage the emergence of a greater number of startups;
2. provide better financial support to businesses that reach certain important milestones in their entrepreneurial journey;
3. facilitate the mission of organizations across Quebec that support these entrepreneurs in making informed decisions to achieve their business objectives.

• 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 operating each year in Quebec.
• In the coming years, Quebec will experience a historic wave of business transfers and sales due to demographic trends, including an aging population.
  • Business takeovers can also be the driving force behind new innovative companies that will have the same momentum as startups.
• Entrepreneurial intentions and the rate of business creation are lower in Quebec than in the rest of Canada.
  • According tothe Quebec Entrepreneurial Index, the rate of entrepreneurial intent stands at 16.5% among the Quebec population.
• 57% of entrepreneurs and business leaders in Quebec have either suffered from mental health issues that required time off work or know an entrepreneur who has.

(information partly taken from the Quebec Federation of Chambers of Commerce)

Despite efforts to raise awareness of entrepreneurship in universities by entrepreneurship offices and other related organizations, companies emerging from scientific research are few and far between. We need to support existing programs that play a key role in better connecting university research with the creation of innovative companies, particularly in deep tech and social innovation, with government actions to facilitate the development of the entrepreneurial pipeline at the early stages:

1. Provide greater 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 humanities that could lead to the creation of legal structures other than private companies.
2. Consider introducing a start-up plan for first-time entrepreneurs which, like the Home Buyers' Plan for first-time home buyers, would allow entrepreneurs to withdraw funds from their RRSPs on a tax-free basis to finance the start-up of their first business.
3. Review the management of intellectual property rights between universities and researchers to facilitate the commercialization of research findings.
4. Coordinate efforts among members of different Canadian universities to review the funding available to promote scientific entrepreneurship and to review ways to create a better interface between academia and industry.
5. Ensure the renewal of initiatives that promote 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 must provide more adequate support to companies that are reaching key milestones in their growth, and enable entrepreneurs who take risks to be supported in their endeavors. We need government action to address certain challenges in accessing financing, but also the ability of these start-ups to obtain their first public contracts, which will then enable them to secure other sales locally and internationally:

1. Consider creating a loan and scholarship fund for entrepreneurs to enable them to devote themselves fully to developing their businesses.
2. Revise research and development (SR&ED) tax credits to include a requirement for private companies to reinvest a percentage of the tax credit amount in Canadian startups , either in the form of investments (dilutive or non-dilutive) or co-development agreements.
3. Add purchasing criteria and ambitious targets to government procurement to promote the acquisition of local solutions, in compliance with international trade agreements.
4. Establish an interdepartmental committee to assess the origin of technological solutions in the various industrial production value chains and issue recommendations on how to enable more local businesses to play a key role in these value chains. 
5. Add targets to promote entrepreneurs from ethnoculturally diverse backgrounds in non-dilutive government funding sources and funds invested by the Government of Canada, such as the Venture Capital Catalyst Initiative.

The Government of Canada, primarily through federal economic development agencies, plays a key role in providing diverse and specialized support to entrepreneurs. We must review the support experience to ensure continuous, flexible follow-up that is consistent with the needs of businesses, and ensure that it is of the same high quality regardless of where in Canada these businesses are incorporated.

1. Create a folder startup Unique to economic development agencies, owned by the company's founding team, containing essential information about the company's profile from the moment it is incorporated.
   1. This dossier will be useful both for those involved in working with the startups to accelerate its progress, as well as for those seeking to gain a better overall view of the ecosystem in order to tailor their interventions.
2. Develop connections to ensure better access to the network of peripheral actors (sales representatives, embassies, private companies, etc.) who can become partners of the startup in its development.
3. Respect at all times the autonomy of the various organizations that support innovative companies in positioning their support services and developing them in line with changing needs and market conditions.