Stream 1: Business Scale-up and Productivity guidelines

Scope & Objectives

The Business Scale-up and Productivity Stream aims to accelerate the growth of firms and assist with the adoption and adaptation of new, innovative technologies that support scale-up, productivity, development of and entry into new markets to help companies become globally competitive.

Through this Stream, FedDev Ontario seeks to:

• Assist high-growth firms to scale up and expand.
• Support technology demonstration and the commercialization of new technologies.
• Encourage the early adoption or adaptation of leading-edge technologies and processes to improve productivity.
• Increase businesses' capacity to grow through market diversification and entry into global markets.

FedDev Ontario is targeting investments in innovative and globally-oriented businesses seeking to accelerate their growth.

Expected Results

FedDev Ontario is results oriented. Projects supported through this Stream, and FedDev Ontario's other programming streams, work towards achieving one or more of the following departmental results:

• Businesses in southern Ontario invest in the development and commercialization of innovative technologies.
• Businesses in southern Ontario are innovative and growing.
• Communities are economically diversified in southern Ontario.

Eligibility

I. Eligible Applicants are:

• Canadian or provincially incorporated businesses
• Indigenous organizations such as Indigenous-owned businesses
• Co-operatives

All eligible applicants must be located in southern Ontario in order to apply.

All eligible applicants must be legal entities capable of entering into legally binding agreements.

To be considered eligible for funding, applicants must demonstrate:

• A minimum of 65 percent funding is available for the project.
• A sustainable business model.
• Financial capacity to complete the project and repay the contribution in full.
• Managerial, technical, and operational capacity to achieve the project's stated objectives in a timely manner.
• Normally a minimum of five (5) full time employees.
• Market/industry demand (e.g., how the project addresses a significant gap in the market; global opportunity to be seized within Canada; and evidence that southern Ontario is uniquely positioned to capture market share).
• Potential for market growth, diversification of export markets and/or participation in global value chains.
• A viable project plan with achievable outcomes, supported by verifiable cost estimates.

This Stream is not intended to support smaller start ups and entrepreneurs. Those entities may be eligible for FedDev Ontario funding as part of projects supported under Stream 2 and Stream 3 (e.g., business accelerators and incubators).

II. Eligible Activities

FedDev Ontario is targeting investments in innovative and globally-oriented businesses undertaking a range of activities to accelerate growth.

Examples of eligible project activities could include:

• Demonstration of leading edge technologies and/or processes in an operational setting. Activities would normally fall within (TRL 7-9).
• Late-stage technological development to support new markets and/or new industrial applications of technology.
• Increasing business management capacity by building high-performance teams, adopting best management practices, processes and systems.
• Commercializing/producing new innovative products, processes or services.
• Acquiring, adapting or adopting leading-edge technologies/processes, including digitization and automation, and related skills development for improved productivity and increased capacity. Priority may be given to firms adopting or adapting leading-edge technologies that are:
  • First in the sector, Ontario, Canada or the world.
  • Made or developed in Canada and southern Ontario.
• Customer and market development, expansion or diversification to support business growth and integration in global value chains and an initial sale (e.g., research, diagnostics, tools, promotion).

III. Eligible Costs

Eligible costs for project activities may include:

• Labour
• Expertise
• Non-Capital
• Capital

All costs must be reasonable and directly related to the eligible project activities.

IV. Ineligible and/or Unsupported Costs include:

• Any costs deemed not reasonable and/or not directly related to the eligible project activities.
• Activities in support of regular maintenance and/or ongoing operation costs.
• Regularly scheduled capital expenditures and/or asset replacement.
• Cost incurred prior to the eligibility date as defined in the contribution agreement.
• Costs incurred after the Project completion date listed in the contribution agreement.
• Any cost that is ineligible under the contribution agreement.
• Refinancing of an existing debt.
• Costs of amortization and goodwill.
• Acquisition of land and buildings.
• Basic and applied research and development activities in a lab setting.

V. Ineligible Projects

• Projects that have been approved for funding under Canada's Strategic Innovation Fund will normally not be supported under this Stream.
• Projects that are targeted primarily at retail consumer markets will not be considered.

Priorities

Preference will be given to projects which respond to issues and opportunities identified by FedDev Ontario. These may include priority sectors and strategic clusters, or projects that reinforce Ontario's economic and innovation strengths in areas of comparative advantages at the regional, national or global level.

Projects that support the government's commitment to inclusive growth (i.e., women, Indigenous peoples and LGBTQ2+ communities) and Official Language Minority Communities may be given priority.

Consideration may also be given to projects based on geographic priorities and need.

Funding

Applicants are eligible for a repayable contribution.

The Business Scale-up and Productivity Stream will normally target investments that range from $500,000 up to a maximum of $10 million per project. On an exceptional basis, FedDev Ontario may consider funding amounts outside of this range.

The amount of the awarded contribution will be based on the minimum amount required for the project to proceed, the extent to which other sources of available funding have been leveraged, and the applicant's ability to repay the contribution.

Applicants are eligible to receive up to 35 percent of eligible and supported project costs.

The applicant must have secured funding of at least 65 percent towards the balance of the project's eligible costs. A combination of committed funding from accredited investors (angels, venture capitalists), growth capital, strategic partners, commercial financing, and working capital is acceptable.

Support by FedDev Ontario is not intended to replace available commercial financing. Project costs that could be, in whole, financed by equity, commercial financing, and/or capital markets will not generally be supported.

Normally, applicants will be limited to one project approval under this Stream.

Total government funding (including federal, provincial and municipal) for a project cannot exceed 75 percent of eligible non-capital costs and 50 percent of eligible capital costs.

Financial assistance from government programs may have tax implications for a business. It is recommended that applicants obtain advice from a qualified tax professional.

Disbursement of Funding

If a project receives approval, a contribution agreement will be executed with FedDev Ontario. Funding will be disbursed on a reimbursement basis, calculated based on the percentage of funding approved for eligible costs incurred.

FedDev Ontario will not allow for advance payments under this Stream.

To receive funding, recipients must submit claims forms, on templates provided by FedDev Ontario, that summarize eligible costs incurred and paid within a defined period. Generally, the duration of these periods will be no more than once a month and no less than quarterly.

Repayment

Contributions will be unconditionally repayable.

Repayments of contributions will be expected to commence as soon as reasonably possible, without compromising the success of the project or the organizations receiving the funding. The specific terms of repayment, including date of commencement and length of repayment term, will be determined on a case-by-case basis during the development of the contribution agreement. However, repayment will begin no later than one year following the completion of the project.

Application Process

Applications are accepted on an ongoing basis with no submission deadlines.
FedDev Ontario has a single-phase application process and one Application for Funding that is used across all three Streams of innovation programming.

Refer to the Application Guide for instructions on how to complete FedDev Ontario's Application for Funding. Applicants are encouraged to review the Application Guide in conjunction with these programming guidelines.

Applicants are strongly encouraged to contact FedDev Ontario prior to submitting an application. For more information on FedDev Ontario’s programming Streams, visit the Funding opportunities page or call 1-866-593-5505.

Multiple and concurrent project submissions from the same applicant are discouraged and may not be considered by FedDev Ontario; applicants are encouraged to prioritize project submissions.

FedDev Ontario reserves the right to initiate calls for proposals as deemed necessary to encourage applications in priority areas or sectors. FedDev Ontario also reserves the right to change the application process at its sole discretion.

Application Review

FedDev Ontario will review applications as they are received.

All applications will be screened initially for completeness. Incomplete applications will not be assessed and will be considered ineligible for funding.

All project activities must be completed by the Project completion date listed in the contribution agreement.

Complete applications are those that include all prescribed documentation containing all information needed for FedDev Ontario to complete the review. Information should be accurate, verifiable, relevant and consistent.

Complete applications will undergo a due diligence process where they are assessed against a number of factors. Assessment criteria include, but are not limited to:

• Project's contribution to achieving the objectives of the Business Scale-up and Productivity Stream and government priorities.
• Viability of the applicant. Early-stage companies must provide evidence of market demand and/or market traction, demonstrated by revenue as shown in financial statements, signed sales or distribution agreements, purchase orders, paid pilot or demonstration projects, or regulatory approval if applicable. For greater clarity, companies at earlier stages of development focusing on demonstration and commercialization should be able to demonstrate sustainability within three to five years to be considered under this Stream. More established companies must have a sustainable business model and a track record of profitability for the past three years, as demonstrated in financial statements.
• Demonstrated capacity of the applicant to successfully implement the project, achieve the stated objectives and fulfil its repayment obligation. Factors to be assessed include managerial capacity, technical capacity, operational capacity and financial capacity.
• Demonstrated market opportunity and demand. Impact on the competitive position of applicant.
• Risks (financial, commercial, technical) and mitigation strategies.
• Private sector leverage and risk capital.
• Economic benefits of project.
• Innovation benefits of project.
• Demonstrated need for FedDev Ontario's investment and its incremental impact on the project in terms of scope, location, and timing.

Reporting Requirements & Visibility Requirements

Recipients must submit to FedDev Ontario periodic project reports and annual financial statements. Project reports will provide details on results and completion of deliverables, including achievement of performance indicators and project benefits identified in the contribution agreement.

Recipients must agree that its name, the amount of the Contribution and a description of the general nature of the activities supported under its contribution agreement with FedDev Ontario be made publicly available for reasons of transparency and proactive disclosure.

Other

FedDev Ontario reserves the right to modify these guidelines at any time without notice and may waive certain requirements on an exceptional basis.

Contact Us

Applicants are strongly encouraged to contact FedDev Ontario to discuss their application with a program officer, who will also explore other government programs that may be applicable to the project. For more information on FedDev Ontario’s programming streams, visit the Funding Opportunities Page or call 1-866-593-5505.