A founder’s perspective
Fundamental or basic research aims to improve humans’ understanding of the natural world. It is also referred to as pure research, the pursuit of knowledge for more knowledge. So inherently there is no promise or guarantee the research will result in a commercial product. But over time, the understanding and knowledge gained from one or more areas of fundamental research could eventually reach a state that practical applications would be imminent. It is hard to determine or predict when this might happen, but we are witnessing one such occasion at the Perimeter Institute for Theoretical Physics (PI).
The Perimeter Institute was founded in 1999 with the purpose of conducting pure research in theoretical physics. Today, almost 25 years later, there are two companies started by the researchers active at the Perimeter Institute. This signals the beginning of a new era in fundamental research at this institution. It is too soon to tell whether these new companies will be successful, however it would be worthwhile to make a wager on them. This wager in some cases would be the sole lifeline sustaining these companies that are connecting fundamental research to commercialization. The question is: who will think this is worthwhile and will take a chance?
Startup companies do not have a unique path to prosperity. Economically, if they are growing (in customers and size) and making profit, they are deemed successful. How this happens is not an exact science. But everyone can agree startup companies require some level of funding. Some startups can acquire customers early and they slowly grow by growing their customer base. If the growth needs to happen faster due to competition or market demand, other forms of funding like loans, or venture capital could be injected into the company. Economically, this scenario portrays a very attractive startup. If you assume this case to be on one end of a spectrum which indicates the financial success of a new company, the other end is the deep tech end. Deep tech companies need to overcome substantial scientific or engineering challenges to move towards the other end of the financial success spectrum.The Perimeter Institute startups emerged from the recent fundamental research. So it is reasonable to assume that they are at or close to the deep end of the above spectrum.
Funding deep tech startups is a complicated affair. According to Wikipedia, governments and corporations such as Google, IBM, Meta, Amazon, and Apple (GIMAA) are the main sources of funding for deep tech. Accelerators such as Y combinator are also getting involved. The challenge lies in judging the feasibility of a deep tech business proposal. Often expert opinions and publications from fundamental research in science and engineering, are used in the assessment process. Some of these experts, who are or were academics, are even hired to lead the deep tech research and developments in the GIMAA corporations. This indicates the great position academic institutions such as PI have in fostering and nurturing new deep tech start ups.
Academic institutions can play a key role when it comes to distribution of government funding dedicated to novel and deep technologies. GIMAA corporations’ deep tech funding aligns with their own long term business plans. It also helps them reduce or eliminate future competition. Venture capital can be too cautious in deep tech funding due to the complex nature of proper tech assessment. The corresponding business proposal of a deep tech might be too risky for traditional lenders to approve suitable debts and loans. But government funding if set aside for pre-seed and seed stage companies can fill a gap here. This funding can be distributed through academic institutions at the forefront of fundamental research. They have the expertise and resources required for assessing deep tech proposals. They will not have the limitations of venture capital and lenders or the strings attached to funds from corporations like GIMAA.
It’s in situations like this that new and pro-innovation policies from the government become essential. These policies enable academic institutions to place informed and calculated bets on companies originating within themselves. This increases the chance that these new companies succeed. Also, it will further encourage visionary and diverse researchers to pursue commercializing their bold ideas. Overall new areas of growth will be created in Canada’s economy. These companies might compete with GIMAA giants at the same scale one day.