7 Funding Opportunities for Life Sciences & Health Technology Businesses

While the life sciences and health technology sector – LSHT for short – has seen an average of about 5% growth per year over the past decade, 2020 was a critical year for medical innovations as the world faced the COVID-19 pandemic. This crucial industry encompasses everything from prosthetics to pills, as well as therapeutics, diagnostic tools and methods, medical devices, pharmaceuticals, and any other product designed to treat a disease or aid in the treatment of patients.  

Now more than ever, the importance of R&D in the medical and pharmaceutical sectors is collectively understood, and topics like vaccine manufacturing capacity and the rapid development of new therapeutic treatments and technologies like ventilators has come to the forefront of our discussions as a society. 

Of course, with the increased need for PPE, new medical technologies, treatments, vaccines and more, the government as well as private sponsors have dedicated increased funds to projects related to the LSHT sector. In 2020 and 2021, Innovative Solutions Canada launched innovation challenges to develop new, compostable surgical masks and more inclusive respirators, for example.  

Other program sponsors have always been focused on funding life sciences and health technology innovations and helping ground-breaking Canadian LSHT companies grow. The rest of this article will highlight some key sponsors offering funding programs, support services, and accelerators specifically meant for pharmaceutical, health technology, and life sciences companies across Canada and in Quebec.  

 

Support Organizations and Research Consortia 

Montreal InVivo 

Montreal InVivo is a non-profit that represents the LSHT cluster of Greater Montréal and is a credible source of information and reference for the LSHT sector. It aims to create a business environment that fosters innovation, growth, and competitiveness of the public and private organizations in the LSHT sector. Their recent partnership with Fundica allows SMEs to search for private and public funding through a powerful search tool with smart filters and advanced customization.  

CQDM 

The CDQM is a biopharmaceutical research consortium that funds the development of innovative tools and technologies to accelerate the discovery and development of safer and more effective drugs. Their business model is based on a collaborative approach between world-class pharmaceutical corporations, several Canadian biotech companies, the best scientists from both the public and private sectors, as well as the Canadian and Quebec governments. The CQDM has raised over $90M and has established 11 funding programs, launched 49 calls for proposals and more than 800 evaluated projects, for a total of over $850 M in funding applications. 

The Quantum Leap program offered by the CDQM is a funding program for drug discovery research and strongly encourages public-private partnerships between Canadian universities and SMEs to achieve innovative translational biopharmaceutical research projects. The deadline to participate in the current selection round is August 12th, 2021.  

MEDTEQ 

MEDTEQ is a focus point for Canada’s medical technology sector in terms of research, innovation and the integration of leading-edge solutions in the delivery of health care. Through collaborative industry-led projects, MEDTEQ’s mission is to accelerate innovation and to position products and services developed by the Canadian medical technology industry on a global scale.  

MEDTEQ’s Impact and Partenar- IA program is aimed at all public research centers and Quebec businesses (primarily SMEs and startups) wishing to carry out an innovation project for the development and commercialization or adoption of artificial intelligence technologies. The deadline for their 17th Call for Project is July 15th, 2021, with eligible projects required to be carried out by public research centers in collaboration with at least two companies. 

 

Startup Support & Accelerators 

Because the pharmaceutical and medical industries are constantly evolving, various accelerator programs can help LSHT startups grow. Montreal Universities Concordia and McGill also offer their own accelerator programs for startups in the LSHT sector.  

AdMare Bioninnovations 

adMare Bioinnovations is a Canadian global life sciences venture that works with academic researchers and companies to advance research, scale existing companies and technology, and provide professionals in the field with the skills they need to succeed.  

They offer an acceleration program supported by the Canadian and Quebec government to scale up promising young life sciences companies. Companies will receive capital up to $150,000 and other resources such as coaching/mentoring and discounts on office or lab spaces.  

District 3 

Concordia’s District 3 focuses on advancing an open, collaborative ecosystem that enables entrepreneurs to thrive and succeed while taking no equity from the companies they work with. Their Biohub 8-week accelerator offers weekly workshops, networking events with industry professionals, and potential access to their state-of-the-art wet lab.  

McGill Dobson Centre for Entrepreneurship 

In the Spring of 2021, McGill’s Dobson Centre for Entrepreneurship opened applications for a Health Sciences Lean Startup Program to accelerate health-related innovation through the development of entrepreneurship. The 8-week program includes weekly workshops and exposure to industry experts and business frameworks. The deadline to apply is September 26th, 2021, with the program activities taking place from October 19 and December 7th of the same year.  

Quantino 

In a recent press release, high-tech business incubator provider Quantino announced a new partnership with Université Laval’s Québec Heart and Lung Institute Research Centre that will provide incubation services to emerging medical businesses.  

Their goal is to develop made-in-Québec solutions for preventing, diagnosing, and treating cardiovascular and respiratory diseases (including COVID-19 and other emerging viruses) as well as type 2 diabetes and obesity. Quantino offers first-rate facilities, world-renowned experts and top-of-the-line technology to their incubatees to further accelerate their progression. Interested LSHT startups can apply to become an incubatee as of June 22nd 2021. 

 

How R&D Partners can help  

If you have any questions about the programs we mentioned above, do not hesitate to contact Dominik Klein at [email protected], or at 1-800-500-7733 ext. 103. 

The Dos and Don’ts of Grant Stacking

Entrepreneurs looking for funding in Canada have access to a large number of government programs that can support many of the costs associated with running a business: from R&D salaries and subcontractor costs to export-related expenses like market research and advertising to name only a few.

Despite the variety of programs in existence—whether they be tax credits, grants, low-interest government loans or other—many end up having overlapping eligible costs. Meanwhile, “double-dipping”—the practice of covering the same expense twice with two or more programs, under certain conditions and scenarios—is not allowed, for obvious reasons.

In fact, governments often put out multiple grants and tax credits intentionally focused on the same expenditures. Therefore, the number of programs available explodes. However, the expenses that can be covered are finite and to what extent they can be funded is generally capped at a certain percentage. This creates two problems:

1) The government is inefficiently and independently managing applications, claims, and audits for two or more programs that could be just one since they essentially cover all the same expenses.

2) Entrepreneurs need to apply for several programs rather than one. They try to maximize government funding but often do so without realizing that there are restrictions on the amount of funding a project or an expense can receive. This often ends up being less than the combined maximum offered by the programs the entrepreneur applied to, and the programs essentially “cannibalize” each other.

Over the last year, we have seen the second issue reach new heights as several—albeit very important—COVID-19 support programs, like the Canada Emergency Wage Subsidy (CEWS), became available to businesses. Since both the CEWS and the CRA’s Scientific Research & Experimental Development tax credit program (SR&ED) fund employee salaries, businesses claiming SR&ED in 2020 that benefited from the CEWS see a layer of complexity added to their SR&ED claim—they essentially need to remove their CEWS funding from their eligible expenditures for SR&ED when calculating their tax credit.

This process is further complicated by the changing funding rates of the CEWS—a subsidy that offered varying rates of financial support depending on the calculated revenue loss—as well as the SR&ED’s eligible activities and time tracking requirements. The CEWS / SR&ED cannibalization scenario was previously documented here, but this problem is not exclusive to emergency COVID-19 support.

Here is an example to illustrate the grant “cannibalization rate” concept more broadly. Take an imaginary company headquartered in Quebec with annual salary expenditures of $50,000. They develop innovative products and are eligible for the SR&ED tax credit. They find a grant to cover 50% of their payroll expenses for the year. Should they go for that grant?

The quick, obvious answer might seem to be “yes”. If they apply to the grant program and are accepted, they will ultimately receive more money from the government to cover the year’s salary expenses. But is that extra money worth it? When we break it down further, we quickly find that it might not be as advantageous as it first appears. This fictional company would benefit from running the following scenarios before making a final decision:

Note that in this example, we assume that the company is a Canadian Controlled Private Corporation (CCPC) where the incremental expenditure is above the minimum QC threshold. We can see that 54% of the grant ($13,625) is cannibalized before you even get to the cost of applying for or managing the grant, or the expected success rate. This leaves our example company with an $11,375 possible grant that is further reduced to $5,688 when we take typical success rates into consideration.

The cannibalization rates are generally between 35% and 55% for the situation above across other provinces prior to grant management costs. These cannibalization rates increase even more when dealing with other grants competing for the same expenditures until a ceiling is reached. In many cases, the cannibalization rates can reach 100% as early in the process as the second grant because the stacking ceiling has already been reached.

The simulation above is also interesting because we notice that the cost of applying for, managing, monitoring, and—heaven forbid—supporting the audit for, a grant is important to understand as well. It is estimated to cost $5,000 in the example.

When we add everything up, this fictional company only has a weighted incremental benefit of $688 if they go for the grant. However, the grant also may also provide this business with greater cash flow as it is received before the SR&ED tax credit. The value it can bring is not exclusively in terms of the total contribution received from the government; the timing is also important when considering this added cash flow.

In the end, always make sure you understand the success rates, cost, cash flow needs, net benefit, and what is important to you in a grant application before you pursue it. If you are planning to access competing government programs, then make sure you understand the cannibalization rates associated with combining them as well.

There are some excellent government grants that we use regularly for our business, but make sure you are informed before devoting time, energy, and money to applications that may not yield the return on investment you hoped for.

If you have more questions about grant stacking and cannibalization rates or want to find out how R&D Partners can help you maximize your government funding and simplify your life, please contact Mike Lee at [email protected] 1-800-500-7733, ext 110.