Navigating Geopolitical Shifts

This panel aims to explore how Canada’s digital and high tech sector can navigate the evolving geopolitical and economic landscape to foster sustained innovation and competitiveness. Panelists will discuss the key challenges that are currently limiting innovation. The conversation will delve into how both government and industry can respond strategically, with a focus on improving policy alignment, fostering cross-sector collaboration, and enhancing private sector R&D investment. The panel will also identify emerging global and domestic opportunities that Canada is uniquely positioned to leverage in this period of transformation.

Executive Summary

The panel discussion explored the barriers and opportunities shaping Canada’s innovation landscape across key technology and industrial sectors. Panellists identified persistent structural challenges: slow and risk-averse public procurement that limits early market validation for domestic firms; a lack of patient capital for deep-tech ventures; and a research culture that prioritizes discovery over commercialization. These challenges are compounded by regulatory and procedural hurdles, a small domestic market, and growing concerns about data sovereignty and vendor lock-in.

To strengthen long-term innovation and competitiveness, panelists emphasized the need for government to act as a first adopter and catalyst for emerging technologies—through faster, mission-driven procurement and clear spending mandates that favour Canadian innovators. They recommended reforming funding models to provide larger, patient, and non-loan-based investments, and expanding collaborative cluster programs that bring buyers, researchers, and SMEs together under performance-driven outcomes. Strengthening industry–academia linkages and aligning incentives for commercialization were also viewed as essential.

Panelists agreed that private-sector R&D investment can be accelerated through targeted partnerships with incumbents, outcome-focused cluster programs, and competition or tax measures that reward commercialization. Canada’s comparative advantages lie in mission-driven innovation—particularly in Arctic, defence, and climate resilience technologies—coupled with its trusted governance, scientific excellence, and ethical brand.

Ultimately, the discussion underscored that unlocking Canada’s innovation potential requires aligning public demand, patient investment, and regulatory agility to build globally competitive companies capable of delivering value both domestically and internationally.

Summaries from the panel (4–6 bullets per question — anonymized, ordered by emphasis)

What are the top three challenges currently hindering innovation in your sector?

• Slow / misaligned public procurement and lack of “first-customer” adoption — panelists said government contracting timelines and rules don’t fit startup realities so early market validation is missed; this was flagged as especially acute for nascent deep-tech firms
• Insufficient patient capital for deep tech — the VC market was described as risk-averse (avoids hardware, dual-use, long timelines), so many deep-tech firms depend on public funding that is often fragmented, small, or loan-based. This drives early exits or relocation.
• Overemphasis on research outputs vs. value creation/commercialization — multiple speakers argued Canada often prizes publications and research process over market outcomes, leaving utility and industry formation under-prioritised.
• Cultural and regulatory friction that slows adoption — a tendency to confuse process with outcome, plus heavy regulation and procedural hurdles, choke small companies’ ability to bring products to market and for adopters to try them.
• Small domestic market and weak local demand signals — the panel emphasized Canada’s ~40M market limits “test and scale” opportunities compared with larger markets, making it harder to build reference customers and raise growth capital.
• Data/technology sovereignty and vendor lock-in concerns — worries about where compute and data reside, vendor lock-in, and the monetization of user data were raised as strategic challenges to domestic control of innovation.

How should government and industry respond to enable long-term innovation and competitiveness?

• Government as active first adopter & faster procurement (SBIR-style approaches) — panelists urged government to buy domestic solutions, use targeted programs where funds must be spent (example: SBIR-like 2% budget idea) and shorten adoption timelines so Canadian firms can scale.
• Incentivize local demand and procurement of Canadian solutions — intentionally prefer/try Canadian adopters first so companies acquire reference customers at home before exporting; clusters and consortia were presented as mechanisms to do this.
• Create mission-driven public R&D/defence purchases to pull industry forward — tie applied R&D to clear national missions (e.g., Arctic, NORAD modernization) to align researchers, startups, and defence/public procurement. This was singled out for quantum.
• Reform public funding to be more patient, bigger, and less fragmented — replace many small/loan programs with larger, mission-oriented, non-loan investments suitable for pre-revenue deep tech.
• Use cluster/collaborative models to accelerate adoption — regional cluster programs that place buyers and builders together (with rapid project turnover and competitive pipelines) were cited as delivering strong ROI and faster commercialization.
• Industry–academia translation incentives — change incentives so academic outputs are also rewarded for commercial uptake (not just publications), and support spin-offs to shift from lab culture to business models.

Key recommendations / next steps to enhance private-sector R&D investment in Canada

• Mobilize patient capital and adapt funding instruments for deep tech — establish or scale funds that accept longer timelines, and reduce loan-heavy supports for pre-revenue firms so they can scale without early sell-offs.
• Make procurement a lever (mandates + incentives) — introduce spending or procurement goals that direct a meaningful share of government buying to domestic innovators (and penalize slow uptake); use rapid pilot/scale pathways so adopters move from meeting to deployment faster.
• Encourage strategic partnerships between incumbents and startups — incentivize large firms to co-fund pilots and adopt solutions (large firms get R&D exposure; startups get customers and scale references).
• Scale cluster models and outcome-focused programs — expand cluster/collaborative programs that connect buyers, researchers, and SMEs with performance-based funding (panel cited cluster ROI and product counts as evidence).
• Target under-investing incumbents with competition / adoption signals — address sectors that under-invest in R&D (e.g., telecom, airlines, energy) through competition policy, tax incentives tied to commercialization, or public-private demo programmes.
• Promote national narratives & celebrate scale-ups — build a culture that celebrates grown-and-scaled companies (not only startups) to create urgency and pride that fuels private R&D and risk-taking.

What new opportunities or comparative advantages can Canada exploit?

• Mission-driven leadership in niche/high-impact areas (e.g., Arctic, quantum) — panelists argued Canada can be world-leading by aligning national missions (Arctic security, NORAD modernization, climate resilience) with applied quantum and other deep tech.
• Leverage strong research + trusted governance as a brand — Canada’s rule-of-law, human-rights focus and research excellence can attract partners and customers seeking ethical, stable tech partners (compare to “look east / diversify beyond the US”).
• Healthcare and education as big domestic testbeds — examples: rapid deployment of an AI “telewound” solution during COVID and clinical AI tools (skin-cancer triage) show Canada can scale patient-led and system-level solutions—if adopters in Canada buy them.
• Resource & mining tech (e.g., Earth X-ray) — Canadian research adapted into the world’s first “Earth X-ray” now used by major miners; this shows a clear exportable strength in resource-sector instrumentation and analytics.
• Turn constraints into advantages via alliances — being a smaller market forces creative international partnerships (co-development with friendly countries) and specialization; panelists recommended optimizing partnerships rather than trying to compete head-on with very large players.

This summary has been generated with the assistance of AI tools.