Canadian Government Funding: Innovation Demonstration Fund Application

The Ontario Ministry of Research and Innovation (OMRI) has issued detailed information regarding its Innovation Demonstration Fund (IDF).  For those unfamiliar with this government funding for business initiative, the IDF is a discretionary, non-entitlement research and development funding program that focuses on emerging technologies, with a preference towards environmental, alternative energy, bio-products, hydrogen and other globally significant technologies.  This article is a follow up to our Overview of IDF Canadian government funding.

Companies Eligible for Government Funding for Small Business

Companies that receive a form of Canadian government funding from this program will be businesses in the process of commercializing innovative, new and emerging technology to create “green products” that prove to be among the most competitive in North America.

Recipients of IDF Funding for Small Business Must Demonstrate How:

• The proposed Pilot Demonstration Project will provide a competitive advantage for Ontario or other significant benefits (environmental, economical, social, etc.);
• The proposed technology has been tested and proven to be viable, and can provide sufficient data to warrant a Pilot Demonstration Project;
• Upon successful completion, the technology, product or process will be commercialized in Ontario as well as moved into the global market; and
• The technology, product or process is best in class and will lead to a globally competitive business and market opportunity.

Costs Eligible for Funding for Small Business

Eligible costs will be those incurred after the completion of the application, will be deemed by the Ministry as necessary and directly related to the project, and incurred in Ontario.  IDF government funding for business may cover the following costs:

• Start-up costs associated with the development and design of Pilot Demonstration prototypes;
• Equipment purchase, installation and retrofitting costs;
• Direct labour costs for personnel involved in the project;
• Maintenance costs;
• Costs associated with training of skilled resources; and
• Monitoring and evaluation costs.

Costs Ineligible for Coverage by Ontario Government Grants & Loans

Costs that are not eligible for coverage by the Innovation Demonstration Fund include but are not limited to the following:

• Land;
• Business case preparation, success fees, third party government relations consulting services;
• Existing business activities;
• Operating expenses that are not directly related to the approved Pilot Demonstration Project;
• Other expenses not directly related to the Pilot Demonstration Project (such as the salaries of senior management, the purchase of office supplies and commercial space décor or renovations);
• Vehicles and off site equipment;
• Marketing and public awareness;
• Meals, travel and hospitality
• General working capital requirements not directly attributable to the approved Pilot Demonstration Project including debt service costs, Federal or Provincial income taxes, surtaxes or special expenses;
• Remuneration to Shareholders and Board of Directors not directly associated with the Pilot Demonstration Project; and
• Any expense incurred by the Borrower that Ontario or the Federal government or other public agency has paid or committed to pay under another agreement or program.

Government Funding for Research and Development Application

Projects funded through IDF Ontario government funding must demonstrate new and innovative technologies, processes or products with high potential for commercialization in Ontario.  Rigorous due diligence will be undertaken by the Ministry or its agents to assess the Applicant’s Business Plan. Projects will also be assessed on the following, which include, but are not limited to:

• Global competitiveness of the technology, product or process to be piloted;
• Demonstration of technical feasibility;
• Feasibility of the Business Plan to demonstrate market success of the project within a reasonable timeframe;
• The technological, managerial and financial plan to achieve the stated objectives of the project;
• Impact on societal needs and challenges in the areas of:
  • Environmental benefits;
  • Waste minimization;
  • Alternative energy development;
• Potential to provide economic benefit and contribute to Ontario’s competitive advantage in global markets;
• Feasibility of the Business Plan to ensure commercialization of the technology beyond the Pilot Demonstration phase in Ontario, including ownership or unrestricted access to intellectual property;
• Feasibility of the Business Plan to increase domestic and global consumer and investor awareness and acceptance of the technology; and
• Financial capacity to undertake the Pilot Demonstration Project, including the ability to provide adequate security for the loan from the Province.

The legal structure of the venture, the requirement for further assurances (such as guarantees from related parties), and the parties with whom a contractual relationship would be expected would be part of the conditions of any funding approval.

Ontario Government Fund Application Evaluation

The Ministry will conduct an initial review of the applications and, if deemed complete and eligible by the Ministry, will seek a technical review from external experts as well as a financial due diligence review by an independent Third Party reviewer before approving Canadian government funding applications.  The Ministry of Research and Innovation is committed to making timely decisions on all Full and Complete Applications once submitted.

The evaluation process will be as follows:

• Initial review by the Ministry; and
• Questions seeking clarification on issues raised by the initial review.

If the Business Plan meets the necessary program eligibility criteria, it will be;

• Evaluated by an inter-ministerial review team (usually involving 6 Ontario ministries); and
• Reviewed for Technical Feasibility by external Third Party experts.

If the inter-ministerial and technical reviews are favourable, a financial due diligence review by Third Party external experts will be performed. An evaluation of the reviews by the Ministry will be undertaken and subsequent funding decisions will be made.

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More Information on IDF Ontario Government Grants for Small Business

Please choose one of the following areas of interest for more information on the Innovation Demonstration Fund:

Contact a Canadian Government Funding Expert for Guidance

Selecting the right government funding for business program and navigating the application process doesn’t have to be complicated.  Contact a Canadian government funding expert for more information on how we can help.  For regular updates on programs that your business may be eligible for please subscribe to our Canadian government funding E-newsletter.