Funding Opportunities for AI Quebec Companies

The Pan-Canadian Artificial Intelligence Strategy, launched in 2017, has catapulted Canada as a leading global player in AI. According to a report by the University of Toronto, this initiative has injected $125 million into the country’s top AI talent and research institutions as of 2020. It has also made Canada a true leader of AI innovation, bringing 50,000 jobs and $3 billion in investments to the country since 2015. In Quebec alone, there were 131 companies developing flagship products using AI in 2020.  

The implementation of the Innovation Supercluster strategy in 2018 and the establishment of an AI innovation supercluster in Montreal – Scale AI – continues to make Quebec a great place to develop artificial intelligence’s potential.  

As a result, significant investments have been made by government, not-for-profits and other key stakeholders to facilitate the growth of companies developing AI-powered technologies. There are now countless funding opportunities that AI startups, SMEs and entrepreneurs at various stages of their journeys can leverage to continue developing and implementing innovations related to artificial intelligence. 

Keep reading to find out more about five key funders that any company developing or implementing AI in Quebec should know about.  

 

Scale AI 

The Supercluster Initiative was launched in 2018 with the goal of fostering innovation in key economic sectors, increasing collaboration between the private sector and researchers, creating jobs, and giving Canada a competitive edge when it comes to technological development. There are five superclusters across Canada, each focused on one key industry sector: digital technology, plant protein development, advanced manufacturing, marine technology and artificial intelligence. This last supercluster is known as Scale AI 

Scale AI offers grants meant to create customized training programs for companies to enhance their employees’ knowledge and understanding of AI tools. These training grants can subsidize up to 85% of the first $100,000 of eligible training costs. 

They also offer an Acceleration program, which supports accelerators, incubators, innovation hubs and others involved in supporting and scaling-up Canadian AI startups with great potential. This program does not offer direct support to startups, but rather seeks to develop a robust innovation ecosystem through accredited partners.  

Scale AI’s main hub is located in Montreal and its activities are co-funded by the Federal and Quebec governments, but funding is being made available to companies Canada-wide. For example, their Acceleration program was expanded to British Columbia and Ontario in 2020.  

Want to learn more about this supercluster and the four others available to innovators in various industries across Canada? Read our article dedicated to the Supercluster Initiative.  

 

IVADO Labs 

IVADO Labs is a leading provider of AI-driven supply chain solutions. This Montreal-based organization was launched in 2017 with major support from the provincial government and in partnership with IVADO and its founding academic institutions. Through this unique partnership, IVADO Labs has access to a world-renowned faculty fellow network of the largest Canadian AI R&D federation of labs. 

The INVEST-AI program is a division of IVADO Labs with the mission to help small and medium Quebec companies increase their performance by integrating and applying AI to their business processes. This program has 4 main objectives: 

  • Improve the productivity and competitiveness of businesses in Quebec through the application of AI 
  • Enable companies to implement the AI solutions they develop within two years 
  • Provide businesses with the capacity to maintain those AI solutions
  • Expand the use of AI to other areas of the business  

Mitacs 

Mitacs is a National Canadian non-profit organization that builds partnerships supporting industrial and social innovation nationwide through its partnerships with 70 universities, 6000 companies, and both the federal and provincial governments. From aerospace systems to childhood literacy rates, Mitacs-funded research helps to strengthen connections, improve economic performance, and create jobs. 

While they are perhaps best known for their paid internship program, Accelerate, Mitacs offers an eight-week Digital Revolution collaboration course for companies of all sizes hiring students and post-doctoral fellows who are well-versed in AI, quantum computing, and cybersecurity to help them develop and harness these new crucial technologies.  

 

Quebec Ministry of Economy and Innovation 

The Quebec Ministry of Economy and Innovation offers funding programs of its own and partners with other sponsors to further accelerate scientific and technological advancements in Quebec. The Ministry emphasizes the importance of research and innovation, and assists organizations dedicated to the promotion, development and transfer of research and innovation.  

The Partenar-IA Business program is aimed at business groups, including start-ups or a minimum of 2 SMEs, wishing to carry out an innovative and collaborative R&D project. This call for projects originates from the Ministry of Economy and Innovation, but is administered by Quebec’s nine Industrial Research Sectorial Groups – Regroupements sectoriels de recherche industrielle or “RSRI” in French. These groups are dedicated to promoting the development and adoption of AI in their specific industry areas. 

Eligible projects are those that highlight research related to the field of artificial intelligence and that is carried out in collaboration with an eligible public research center. At the time of publication, the next application deadline for this program is October 15th, 2021. It is important to keep in mind that, as with many Quebec Government funding programs, most information about the program is in French.  

The MEI also currently has an active Call for Innovative Artificial Intelligence Projects that offer grants to fund various AI projects through 3 components: 

Component 1 is geared towards SMEs and startups wishing to carry out an innovation project for the development and marketing or adoption of artificial intelligence (AI) technologies. Component 1 is intended for artificial intelligence startups that currently receive (or plan to receive) support from a business incubator or accelerator. 

Component 2 is open to all Quebec companies, with priority given to SMEs and startups wishing to carry out an innovation project for the development and marketing or adoption of artificial intelligence (AI) technologies. It is intended for artificial intelligence projects related to the production of goods and services or for carrying out in-house research and development activities. 

Lastly, Component 3 is intended for major collaborative projects undertaken by consortia composed of at least two Quebec companies. The businesses involved in these collaborative projects must share the costs, benefits, and intellectual property of the project.  

Program details for all components are only available in French, and, at the time of publication, the next deadline for all three components is October 15th, 2021.  

 

CEIM Montreal 

CEIM Montreal is a pioneer of Montreal’s startup ecosystem that has contributed to the successful launch and development of various companies. Through its offering of accelerator and incubator programs, CEIM’s mission is to support entrepreneurs with innovative projects by offering them tailored coaching and mentoring services. 

The AI for Supply Chains program offered by CEIM Montreal has both an incubator and accelerator that can offer $35,000 to both early-stage or growth-stage startups. Both programs are directed towards earlier stage startups developing an AI solution that can have applications in supply chain management.  

 

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 

 

Further reading:  

Canada’s AI Ecosystem: Government Investment Propels Private Sector Growth (University of Toronto) https://research.utoronto.ca/media/541/download 

COVID-19 Funding and SRED: Best Practices for Canadian Companies

Over the past few months, we’ve seen various levels of government create many new funding programs for Canadian companies that were hit hard by COVID-19 or the necessary lockdown measures. This has affected nearly every industry, from the biggest industrial manufacturers to our favourite local restaurants and independent coffee shops. However, receiving this funding is not the end of the journey. For many innovative Canadian firms, getting ready to file a SRED claim for 2020, the influx of government subsidies and other supports brings confusion about how these funding programs interact with the SRED claim.

As a general rule, any government funding that a company receives and that goes towards their R&D expenditures must be deducted from the amount they include in their SRED claims. This is to avoid what is commonly called “double-dipping”, which happens when the same expenses are covered by two or more different sources of government aid. Moreover, stacking rules as specified by each funding program must also be adhered to. As your company prepares its SRED claims, forgetting to deduct non-repayable COVID-19 pandemic support from your SRED-eligible expenses could end up costing you time and money, especially if an audit is conducted. Below, you will find important information about two of the most important Federal Government coronavirus relief programs and how they may interact with your SRED claims:

1. Canada Emergency Wage Subsidy (CEWS)

This wage subsidy has already seen a few different iterations in its short existence. This corner stone of the federal COVID-19 support strategy has distributed over $60 billion to Canadian companies to date and will continue to approve applications until at least June 2021.

You may have accessed the full 75% wage subsidy in its early months, and then, depending on your industry and how much it was affected by COVID-19, seen your subsidy rate go up or down with the introduction of the base and top-up subsidies system that allowed some businesses to cover up to 85% of their eligible salaries.

When it comes to R&D expenditures, the principle of how to treat the CEWS funds remains the same, regardless of the claim month and exactly which proportion of your employees’ salaries was subsidized. However, individual calculations will vary greatly. You will need to keep a few key things in mind:

  • You only need to deduct the amounts of the wage subsidy that apply to employees that are actively engaged in research and development activities; and
  • You only need to deduct the amounts of the wage subsidy that are proportionate to the amount of time your employee actually spent on research and development activities in a given month.

Here is a practical example: Let’s consider a company that has 10 employees and benefited from a 75% wage subsidy from CEWS in April 2020. Each employee’s salary amounts to $1,000 a month, bringing the total CEWS amount the company benefited from for April to $7,500.

10×(0.75×$1,000)=$7,500

However, that month, only three employees spent time on research and development activities the company can include in their SRED claim. Therefore, only $2,250 would need to be deducted from eligible SRED expenses at most, and that is if all three employees spent 100% of their time on eligible R&D activities that month.

3×(0.75×$1,000)=$2,250

Say two of these three R&D employees spent 50% of their time that month on eligible activities, with the last spending 75% of their time on eligible SRED work. For our first two, you would only need to deduct $375 each, and for our last eligible employee $562.5.

50%×(0.75×$1,000)=$375

75%×(0.75×$1,000)=$562.50

(2×$375)+$562.50=$1,312.50

In total, you would have to deduct a total of $1,312.5 from April expenses from your total SRED claim to account for the monies received from CEWS that month and avoid any double dipping. Repeat this process for every month you received CEWS and conducted eligible R&D. This will give you the total amount you need to deduct from your claim for the financial year. Do not forget that your CEWS rate will vary from month to month and make sure to adapt your calculations accordingly.

(2×$375)+$562.5=$1,312.50

2. Canada Emergency Business Account (CEBA)

This program was initially introduced as a $40,000 interest-free loan with the possibility of up to $10,000 of that loan amount being forgiven if the remainder is repaid by December 31, 2022. On December 4, 2020, the total loan amount was increased to $60,000, with now $20,000 eligible for complete loan forgiveness.

While it is officially a government loan administered by various local financial institutions across Canada, the potentially non-repayable portion of CEBA should generally be treated like a grant at this time for tax accounting and purposes (this can be reversed if the loan is not repaid on time and the grant portion is thus lost). This grant portion is a form of government funding that should be deducted in the year it is expected to be received and could impact other government funding. The R&D tax credit expenditures are reduced by government aid that is associated with R&D activities and this may include both grants and loans with “noncommercial” terms, as long as the government aid is directly associated with these R&D expenditures.

The important element to keep in mind with respect to interaction of financial aid and the SRED tax credit program is that any government or non-government aid your business benefited from that is directly associated with the SRED expenditures must be taken into account. Complex and often competing stacking rules for each program must be considered as well. This includes the programs mentioned above and the many other COVID-19 and other government incentives, even if we did not specifically mention them in this short overview.

How R&D Partners can help:

If you have any questions about SRED or COVID-19-related government funding, or if you are considering submitting a SRED claim, do not hesitate to contact me, Mike Lee, at R&D Partners:

1-800-500-7733, 110

[email protected]