Abstract:
Canada is confronting persistent challenges; low productivity, government budget constraints and a global economy undergoing fundamental change. As governments look to strengthen the country’s economic foundation, there is a unique opportunity to better leverage university research to translate discoveries into real-world solutions that drive domestic business growth. Our panelists will discuss what drives successful research commercialization and how Canada can tackle challenges to innovation. This moment underscores the need to translate academic expertise into industrial advantage, helping homegrown firms scale, retain intellectual property, and build economic resilience amid global uncertainty.

Summary of Conversations

The panel examined the persistent paradox where Canada excels in generating top-tier research talent and ideas but struggles to convert them into economic value. A central theme was the disconnect between academic outputs and successful market implementation, attributed largely to a lack of business R&D investment and risk-tolerant capital. Participants emphasized that current funding models are often too risk-averse, requiring revenue metrics that early-stage deep tech ventures cannot meet. The discussion highlighted the fragmentation of intellectual property policies across institutions as a significant barrier to speed and efficiency. Speakers advocated for a cultural shift toward a “portfolio approach” that creates many small, early-stage opportunities, accepting a high failure rate to find outliers that drive value. Furthermore, the importance of building regional ecosystems that are globally connected, rather than isolationist, was stressed as vital for retaining talent and attracting investment.

Take Away Messages/Current Status of Challenges

• Gap Between Research and Commercialization: While Canada demonstrates resilience in talent production and bibliographic output, there is a marked failure to translate this foundation into tangible economic benefits or sustained business R&D investment.
• Lack of Risk-Tolerant Capital: The ecosystem severely lacks private sector capital willing to invest in the early, pre-revenue stages of deep tech, unlike jurisdictions such as the US where risk tolerance is higher.
• Fragmented IP Frameworks: There is no national coordination on intellectual property management; instead, every institution operates with different policies, leading to slow, non-standardized licensing negotiations that hinder startups.
• Restrictive Funding Criteria: Public funding programs often require startups to demonstrate existing revenue or headcount minimums, effectively excluding research-heavy deep tech companies that spend years in development before monetization.
• Insufficient Program Scale: Current Canadian commercialization programs (e.g., NSERC I2I) operate at a fraction of the scale of international equivalents like the US SBIR, resulting in too few “shots on goal” to generate significant economic impact.
• Cultural Aversion to Failure: The Canadian ecosystem culturally resists failure, aiming for high success rates in funded projects, which contrasts with effective innovation models that accept high failure rates (up to 98%) to uncover unicorns.
• Misaligned Academic Incentives: Early-career researchers face disincentives to pursue commercialization as tenure and promotion structures prioritize basic research and publications over innovation and market translation.
• Unsuitable Matching Requirements: Applied research funding often demands 50-50 cash matching from industry partners, which forces early IP assignment to multinationals and prevents the creation of independent, investable Canadian startups.

Recommendations/Next Steps

• Adopt a Portfolio Investment Strategy: Shift funding models to place many small bets on early-stage startups, accepting that the vast majority will fail, but relying on the few massive successes to cover the costs and drive growth.
• Harmonize Intellectual Property Policies: Implement standardized, transparent licensing frameworks (such as the proposed “SAIL” agreement) across institutions to accelerate the transfer of technology from labs to startups.
• De-Risk Early Stages via Government Funding: Government should focus on funding the high-risk, pre-revenue stages of technology development to de-risk projects sufficiently for private capital to eventually take over.
• Create “Middle-Ground” Funding Mechanisms: Develop funding streams for optimization and market-aligned research that do not require immediate industry cash matching or IP encumbrance, allowing startups to retain control of their inventions.
• Reform Academic Rewards: Institutions should formally recognize and reward commercialization efforts and entrepreneurship within tenure and promotion criteria to encourage faculty engagement in innovation.
• Build Globally Connected Ecosystems: Focus on creating regional partnerships that integrate with global markets and supply chains, rather than trying to protect domestic innovations through isolationist policies.
• Scale Dedicated Commercialization Roles: Increase investment in dedicated research chairs and program funding specifically focused on commercialization to build a pyramid of talent (postdocs, students) aimed at market translation.

Redefine Value Metrics: Policy makers should broaden the definition of “return on investment” for public funds to include talent retention, IP creation, and the development of serial entrepreneurs, rather than just immediate financial profit.