Grants in Canada: how to get funding for tech startup
Starting a new business and securing additional funding is challenging. However, startup fundraising in Canada has become more accessible with a growing number of government grants and a thriving venture capital ecosystem. According to StartupBlink’s Global Startup Ecosystem Index for 2023, Canada ranked fourth, with 39 cities in the top 1000.
The Canadian government typically supports small and mid-sized businesses, recognizing their value. Sometimes, it is difficult for early-stage startups to demonstrate their positive impact on the economy and job creation. Nevertheless, there are still funding opportunities available for startups in Canada.
Operating in Vancouver as a software development company, Integrio understands the local startup landscape and funding opportunities for young businesses. In this article, we will discuss what is required to receive a technical grant and which major Canadian organizations can provide funding.
Why Startup Grants in Canada Are the Best Option
When it comes to securing financing for your startup, there are three primary options:
Bootstrapping is financing your tech startup using personal savings and, if necessary, loans. You have complete control over your business, as you are not giving away equity or ownership to external investors. However, it comes with the responsibility of repaying any loans you take out.
Seeking investment from angel investors or venture capital (VC) firms is another financing option. Angel investors are typically individuals who provide capital in exchange for equity in your startup. VC firms, on the other hand, invest in startups in exchange for equity and play a more active role in the business. That means significant funding without requiring repayment, giving up a portion of ownership and control.
Applying for a tech startup grant can secure non-repayable funding for your business. Grants are often offered by government agencies, non-profit organizations, and private foundations. They support startups and businesses with specific goals, such as job creation, innovation, or economic development. You shouldn’t give up equity or repay the funds. Additionally, many grant programs also offer training and networking opportunities.
As you see, getting approved for a small business startup grant gives you all the benefits of bootstrapping and dealing with angel investors or venture capital firms.
Canada is interested in helping businesses grow and compete globally. The country offers various types of financial help, like government grants and support programs. This money can be used for things like research, making new products, hiring employees, and expanding into new markets.
No matter how big or what kind of business you have, there's money out there. The trick is knowing where to find it.
Startup Grants in Canada: Essential Documents to Provide
When applying for tech business grants in Canada, it's crucial to understand that the government wants to guarantee that your startup is a viable and promising venture. Therefore, when applying for startup grants and ensuring your eligibility, you need to provide substantial information:
Business plan. This document outlines your business objectives, marketing strategies, and market opportunities. It gives a clear picture of your startup's goals and how you plan to achieve them.
Certifications and licenses. Some grants may ask for proof of specific certifications, licenses, or memberships related to your industry. If you don't already possess these, you must allocate time to obtain them.
Financial information. Financial data is essential, especially if you're applying for grants that involve "matched" funding. In this case, the grant provider contributes some of the money, and you must contribute the rest.
Ongoing reporting. Often, your responsibility doesn't end once you receive the grant. Some organizations may ask you to provide regular progress reports to track how you're using the funding.
Carefully read and understand the terms and conditions before you start the application process. Each grant program may have unique criteria, requirements, and expectations, so it's crucial to align your application with the specific grant you're pursuing.
10 Funding Sources for Startup Fundraising in Canada
Canada offers a wealth of funding avenues to support your startup's growth. Let’s explore the most promising sources.
Futurpreneur Canada is a non-profit organization that provides financing, mentoring, and support to aspiring young entrepreneurs in Canada.
What: collateral-free loans and 2-year mentorship
Financing: $60,000 per business — $20,000 from Futurpreneur Canada and $40,000 from Business Development Bank of Canada (BDC)
Terms: up to 5 years, interest-only payments for the first year
Audience: 18-39-year-old entrepreneurs, Indigenous entrepreneurs, side hustle entrepreneurs
Business Development Bank of Canada (BDC)
BDC is a federal crown corporation and a financial institution that provides financing, advisory services, and capital to Canadian businesses.
What: funding, loans, advisory services
Financing: up to $15,000 in grants and up to $100,000 in loans at 0%
Grant options: venture capital, growth & transition capital, growth equity capital, IP-backend financing
Terms: 5-year term + 12 months capital postponement (total of 6 years) for loans
Audience: a professional, an Indigenous entrepreneur, a young entrepreneur, a newcomer entrepreneur, a technology entrepreneur, a supplier
Community Futures Peterborough
Community Futures Peterborough is part of a network of community-based organizations in Canada, helping with economic development and job creation.
What: loans, Scale Up grants, personalized guidance
Financing: up to $25,000 in Scale Up program, up to $10,000 for inventory loan, up to $20,000 for microloan, and up to $300,000 for expansion loan
Terms: up to 10 years, as low as prime + 2%
Audience: tech startups located in the Peterborough and Kawarthas region
Canada Small Business Financing Program (CSBFP)
CSBFP is a government program that helps small businesses access loans to finance the purchase or improvement of assets, such as equipment or real estate.
Financing: up to $1.15 million
Terms: up to 15 years, the lender's prime lending rate + 3-5%
Audience: small companies or startups with gross annual revenues of $10 million or less
FedDev Ontario is a government agency that supports economic development and innovation in southern Ontario.
Financing: repayable contributions from $125,000 up to $10 million
Terms: no-interest, 1-3 years
Audience: companies with a minimum of 5 full-time employees and 3 years of business operations in green economy, industrial, and cutting-edge sectors (artificial intelligence, life sciences, and digital technologies)
National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP)
NRC-IRAP is a government program that provides financial and technical support to innovative Canadian companies.
What: advice, connections, and funding
Financing: up to $10 million for larger research and development projects
Audience: profit-oriented small or medium-sized businesses with 500 or fewer full-time equivalent employees
Kawartha Lakes Community Futures Development Corporation (CFDC)
Kawartha Lakes CFDC is a regional organization in Canada that supports the economic development and growth of businesses in the Kawartha Lakes region.
Financing: up to $300,000 for local companies
Terms: application fee of 0.5% of the approved loan amount
Audience: local new and expanding companies
Innovative Solutions Canada
Innovative Solutions Canada is a government program that connects small businesses with federal departments and agencies to help them develop and test innovative products.
What: government grants and procurement contracts
Financing: up to $150k for proof of concept projects and up to $2M for prototype development
Audience: startups and small/medium-sized businesses with <500 employees and less than $100 million in annual revenue
Sustainable Development Technology Canada (SDTC)
SDTC is a government foundation that provides funding and support to Canadian companies developing clean technologies and solutions for a more sustainable future.
What: government funding
Financing: up to 40% of eligible costs for any given project
Audience: sustainable small and medium-sized companies that have the potential to transform the economic and environmental outcomes of all sectors
CanExport is a government program that provides financial support to Canadian businesses looking to enter new international markets or expand their existing global presence.
What: grants and scholarships
Financing: up to $75,000 in funding R&D collaborations
Audience: growth-oriented businesses, technology accelerators, creative industries, Indigenous persons or communities, faculty and students
Canada's startup funding landscape offers diverse opportunities for entrepreneurs with innovative ideas and a drive to succeed. Loans, angel investors, venture capital firms, and, finally, startup grants in Canada will give you the required resources and support. The last option is the highest priority, as it allows you to get financing without the need to return money and maintain equity or ownership.
However, proving that your tech startup is worth it is crucial. So, if you are looking for a technology partner to help with research or prototyping, Integrio’s dedicated team is at your service. We often cooperate with startups, providing a full cycle of outsourcing support — from testing an idea to scaling an MVP into a finished product. Contact us to learn more.