Government funding offers numerous opportunities for businesses to receive compensation for different purposes, including salaries, capital equipment, research and training, innovation and development, and commercialization.

Part one of the Government Funding Basics series focused on types of funding available and how to apply. The next two posts will address how to find, qualify for, and apply to funding geared towards specific types of companies, beginning with startups.   

What is a startup?

Startups are early-stage businesses which have identified a specific problem and have developed a product or service as a solution. Small in size and without revenue in the earlier stages, most startups will fail, with lack of funding cited as a common cause of failure. However, given proper resources and funding, startups with good product/market fit can make great impacts on their sector.   

How are startups funded?  

The Government of Canada offers loans, grants, and tax credits, some specifically geared to early-stage companies, to support the growth of new businesses. However, in order to obtain funding, you need to provide proof of matching funds. You can choose to obtain this funding from any number of ways. Raising capital through a seed (or pre-seed) round can provide funding through personal assets, angel investors, venture capitalists, and sometimes friends or relatives. Ensure that all funding received is well documented and be prepared to provide proof of matching funding when applying for different programs.

Alternatively, you can investigate whether you are interested in startup incubators, such as DMZ, Communitech, and Creative Destruction Lab, which assist startups during the early development stage. Many incubators also offer accelerator programs, which promote company growth through access to seed funding, training, and networking once you have established your business.

Other ways to obtain funding include taking out bank loans or crowdfunding. 

Once you have raised funding to establish the company and begin work on projects, you will be in a position to apply for government funding such as NRC Industrial Research Assistance Program (IRAP), Sustainable Development Technology Canada (SDTC), and NPC Proof of Concept.

How can I ensure my application is successful?

Government programs typically do not cover 100% of project costs, and funding programs are based on expenditures, meaning that you will need to have employees on payroll, and be able to provide proof of labour and project costs. While certain programs will not cover all types of expenses, keeping track of spending will speed up application processes and ensure accuracy. 

Additionally, you will need a concrete business plan detailing the projects you have worked on or intend to take on, and a prototype or proof of concept to demonstrate that you will utilize funding to further advance your company (and the sector). In short, you will need to prove that your business has value within the industry and the funding you receive will go towards projects which improve a specific area.

How can NorthBridge help?

At Northbridge, we provide consulting on how to prepare your business for funding opportunities, with advice tailored specifically for startups. We can assist you throughout the different stages of your business, point you towards resources to help you get initial funding, help ensure that you qualify for the programs you’re interested in, frame your projects in a way that meets program objectives, and guide you through application processes as you grow from a startup to a scaleup.