Investing in Business Innovation Guidelines

Background

High-growth businesses and new entrepreneurs are critical to southern Ontario's competitiveness. These entrepreneurs face challenges of raising adequate capital in Canada, developing entrepreneurial skills, and accessing the expertise and connections of the investment community.

Investing in Business Innovation (IBI) will help to create a more competitive southern Ontario economy by focusing on providing business training to new entrepreneurs, helping them to start a new business and attract the private angel and/or venture capital required to grow a business commercializing world-leading innovations.

The potential of these new, early-stage businesses is measured by the investment commitments they can secure from accredited angels and/or venture capital investors. In addition to providing funding, investors can offer valuable advice and foster relationships that can help accelerate the growth of these businesses.

Objectives

  • Provide mentorship and entrepreneurial support to help new businesses grow and succeed;
  • Support the success of new businesses in developing globally-competitive products and services; and
  • Strengthen angel networks and increase availability of investment capital.

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) will provide funding to eligible projects under three funding streams:

  1. Not-for-profit organizations
  2. Early-stage businesses
  3. Angel networks

A. Not-for-profit Organizations

Eligibility

I. Eligible Applicants

Incorporated not-for-profit organizations such as Regional Innovation Centres, incubators, accelerators, angel networks and Community Futures Development Corporations (CFDCs) located in southern Ontario are eligible to apply for projects related to providing skills development, education, and seed financing to new entrepreneurs and businesses to help them to be investment ready.

To be considered for funding, Applicants must demonstrate:

  • The project will support the development of entrepreneurs, helping them to launch new start-up enterprises and supporting them to become investment-ready businesses;
  • Evidence of any other project funding;
  • A sustainable business model and a track record of successful delivery of services to entrepreneurs;
  • Appropriate organization and project management and technical skills;
  • Evidence of the project's cost estimates;
  • Compliance with all previous agreements with Government funding agencies; and
  • Capacity to account for and execute the project successfully in a timely manner.

Note: Incomplete applications cannot be considered for funding.

II. Eligible Activities

This initiative will support the activities of eligible organizations delivering services to entrepreneurs to undertake activities related to providing innovative new entrepreneurs with business skills, education and seed financing to prepare them for investment readiness such as:

  • Business and market development skills programs;
  • Early-stage business development programs; and
  • Seed financing programs and support.

III. Eligible Costs

Eligible costs may include:

  • Labour
  • Expertise
  • Non-capital

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

IV. Ineligible and/or Unsupported Costs

  • Any costs determined not reasonable and/or not directly related to the eligible project activities;
  • Costs incurred prior to the eligibility date as defined in the FedDev Ontario Contribution Agreement;
  • Any cost incurred after December 31, 2018;
  • Any cost that is ineligible under the Agency's terms and conditions and program policies; and
  • Capital costs.

Priorities

The Agency may give preference to certain priority sectors or projects that diversify a regional economy.

Funding

Eligible Applicants will be considered for a non-repayable contribution to a maximum of $20 million per project up to 100 percent of eligible costs.

Notes:

  • Funding up to $10,000 per new entrepreneur may be provided for business training.
  • Matching funding to new, start-up entrepreneurs will cover up to 50 percent of eligible costs to start a business up to a maximum of $30,000. Start-up entrepreneurs must provide the other 50 percent in the form of cash.
  • Up to 10 percent of the contribution to the organization can be allocated to support outreach and project administration costs.
  • FedDev Ontario support is not intended to replace or duplicate funding available from other funding sources, including private-sector and/or government programs.
  • All projects must be completed by December 31, 2018.

Disbursement of Funding

If a project receives approval, a contribution agreement will be negotiated and executed. Funding will be disbursed based on the percentage approved funding for eligible costs incurred.

To receive funding, approved recipients must submit claims forms that summarize eligible costs incurred in a period. These periods will be of a duration of no more than once a month and no less than twice a year.

Application Process

This is a continuous intake application process. Eligible organizations must complete and submit a full application to be considered for funding.

Prior to submitting an application, applicants are encouraged to contact the Agency to discuss their project's fit with program criteria and objectives.

To be considered for funding, the application must include:

  • Evidence that confirms the Applicant is a Canadian incorporated not-for-profit organization located in southern Ontario;
  • A summary of the organization's track record of supporting the development of entrepreneurs in southern Ontario;
  • A brief overview the organization, its current business model and services, and value proposition to entrepreneurs;
  • A summary of the proposed project, an implementation plan and schedule and its projected impacts on the organization's business model;
  • How the project will support the development of entrepreneurs, helping them to launch new start-up enterprises and supporting them to become investment-ready businesses;
  • A summary of existing key partnerships with other organizations and government programs;
  • Substantiation of project cost estimates and detailed cash flow requirements (including status of other funding);
  • Detailed information regarding project governance, the proposed delivery model, eligibility and funding criteria, and related processes for application intake, assessment, decision making, contracting, and payments to end recipients;
  • Demonstration of the organization's capacity to implement the project and account for project costs and results in a timely manner;
  • A summary of the reporting processes and formats with respect to projects funded and results achieved;
  • Substantiation of the need for FedDev Ontario funding and its incremental impact on the project in terms of scope, location, and timing; and
  • Compliance with all relevant statutes, regulation and other funding agreements.

Application Review (applicable to all funding streams)

FedDev Ontario will review applications as they are received. Funding will be made available as of April 1, 2014. All project activities must be completed by December 31, 2018. All applications will be screened initially for completeness. Incomplete applications cannot be assessed and considered for funding.

Complete applications are those that include all prescribed documentation containing all information needed to complete the review. Information should be accurate, verifiable, relevant and consistent. Incomplete applications cannot be assessed and considered for funding.

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

Reporting Requirements (applicable to all funding streams)

Recipients must submit to FedDev Ontario, reports of project expenditures and completion of deliverables, including achievement of performance indicators identified in contribution agreements.

Contact Us (applicable to all funding streams)

For more information on FedDev Ontario's Investing in Business Innovation initiative, please email us or call 1-866-593-5505.

B. Early-stage Businesses

Eligibility

I. Eligible Applicants

  • Canadian-incorporated companies;
  • Headquartered in southern Ontario; and
  • Employing less than 50 full-time equivalent (FTE) positions.

To be considered for funding, Applicants must demonstrate:

  • That the project will accelerate the commercialization of new innovative products and services within three to five years;
  • Evidence of eligible investment committed to and available for the project in the form of a term sheet and/or subscription agreement from an accredited angel or venture capital investor;
  • Evidence of a sustainable business model and a working prototype (or minimum viable product) being developed;
  • The potential for high growth;
  • A significant opportunity to create jobs, sales and diversify markets;
  • The rights to use the background intellectual property required for the project;
  • Appropriate management (including advisory or mentoring) and technical skills;
  • Evidence of the project's cost estimates;
  • Compliance with all previous agreements with Government funding agencies;
  • Capacity to account for and execute the project successfully in a timely manner; and
  • To what extent the project has potential to provide economic benefits to southern Ontario.

Notes:

  • Early-stage businesses will be limited to one approval under this initiative.
  • Incomplete applications cannot be considered for funding.
  • All projects must be completed by December 31, 2018

II. Eligible Activities

This initiative will support the activities of eligible early-stage businesses to undertake activities related to late-stage development and early-stage commercialization of innovative, unique products and processes (including business development), for example, activities related to:

  • Business development including building high-performance teams; adopting best management practices, processes and systems; and improving governance and investment readiness.
  • Late-stage product development geared towards market diversification and growth.
  • Customer and market development.
  • Developing and implementing marketing and distribution strategies.

III. Eligible Costs

Eligible costs may include:

  • Labour
  • Expertise
  • Non-capital
  • Capital (to a maximum of 25 percent of eligible costs)

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

IV. Ineligible and/or Unsupported Costs

  • Any costs determined not reasonable and/or not directly related to the eligible project activities;
  • Costs incurred prior to the eligibility date as defined in the FedDev Ontario Contribution Agreement;
  • Any cost incurred after the project completion date;
  • Any cost that is ineligible under the Agency's terms and conditions and program policies;
  • Capital costs in excess of 25 percent of eligible costs;
  • Mass media advertising costs;
  • Acquisition of intellectual property; and
  • Acquisition of land and buildings will not be supported;
  • Companies that cannot demonstrate sustainability and/or commercialization within three to five years will not be considered under this initiative; and
  • Innovations that are targeted primarily at retail consumer markets will not be considered under this initiative.

Priorities

The initiative will normally support early-stage businesses focused on diversifying markets.

The Agency may give preference to companies that received prior angel and/or venture capital investments or projects that diversify a regional economy.

Funding

Eligible Applicants will be considered for a repayable contribution to a maximum of $1 million per project for up to one-third (33.3 percent) of eligible costs.

Notes:

  • The project is normally expected to be completed within two years;
  • Investors must be committed to funding the balance of eligible costs not supported by this funding to at least two-thirds (66.6 percent) cash support towards the balance of eligible costs;
  • Eligible investments are cash commitments from groups of accredited angel investors who are members of southern Ontario angel groups registered with Angel Investors Ontario or from venture capital providers who are members of Canada's Venture Capital and Private Equity Association (CVCA) or Réseau Capital;
  • A group of angel investors is defined normally as at least three investors. Investments from founders who are also eligible angel investors will be considered as eligible investment when their investments do not make up a majority of the total investment from a group of eligible investors;
  • In-kind contributions cannot be considered as part of the eligible investment;
  • FedDev Ontario support is not intended to replace available commercial financing. Costs that could be, in whole, financed by equity, commercial financing, and/or capital markets will not normally be supported; and
  • Total direct government funding (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 your business. It is recommended that advice be obtained from a qualified tax professional.

Disbursement of Funding

If a project receives approval, a contribution agreement (contract) will be negotiated and executed. Funding will be disbursed based on the percentage approved funding for eligible costs incurred.

To receive funding, approved recipients must submit claims forms that summarize eligible costs incurred in a period. These periods will be of a duration of no more than once a month and no less than twice a year.

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 organization 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. Repayments will begin no later then one year following the completion of the project.

Application Process

This is a continuous intake application process. Eligible start-up companies must complete and submit a full application to be considered for funding.

Prior to submitting an application, potential Applicants are strongly encouraged to contact the Agency at 1-866-593-5505 for help with your application and to discuss other Government programs that may be applicable to your opportunity.

To be considered for funding, the application must include:

  • Evidence that the company and project meet the eligibility criteria and objectives of the initiative;
  • Evidence of investment committed to and available for the project in the form of a term sheet and/or subscription agreement, from an eligible venture capital investor and/or group of eligible accredited angel investors, conditional on FedDev Ontario approval;
  • A summary of all related and affiliated parties, ownership (capitalization table) and timing of new investments;
  • A due diligence report or summary from the investors summarizing their rationale for investing in the company;
  • A summary of the project, implementation plan and schedule and its anticipated impacts on the company's business model;
  • A summary of project risks and mitigation strategies;
  • Financial projections and underlying assumptions;
  • Substantiation of project cost estimates and ownership/control of any assets (including intellectual property) required for the project;
  • A summary of the company's potential for high growth and to what extent the project has potential to provide economic benefits to southern Ontario;
  • A demonstration of the company's capacity to implement the project and account for project costs and results in a timely manner;
  • Substantiation of the need for FedDev Ontario funding and its incremental impact on the project in terms of scope, location, and timing; and
  • Evidence of compliance with all relevant statutes, regulation and other funding agreements.

C. Angel Networks

Eligibility

I. Eligible Applicants

Incorporated not-for-profit network organizations representing angel investors in southern Ontario and located in southern Ontario.

To be considered for funding, Applicants must provide/demonstrate:

  • The project will build the capacity of individual angel networks to attract more investors and investments while attracting and fostering more start-up enterprises seeking angel investment;
  • Evidence of any other project funding;
  • A sustainable business model and a track record supporting angel investors in southern Ontario;
  • Appropriate organization and project management and technical skills;
  • Evidence of the project's cost estimates;
  • Compliance with all previous agreements with Government funding agencies;
  • Capacity to account for and execute the project successfully in a timely manner; and
  • To what extent the project will encourage growth of investment funds for southern Ontario start-ups.

Note: Incomplete applications cannot be considered for funding.

II. Eligible Activities

This initiative will support the activities of Eligible Angel Investor Networks to attract more investment and increase the efficiency and effectiveness of investment in innovative, high-growth potential start-up businesses. Areas of focus may include:

  • Outreach;
  • Building capacity;
  • Providing mentorship;
  • Education and resource development; and
  • Coordination and convening.

III. Eligible Costs

Eligible costs may include:

  • Labour
  • Expertise
  • Non-capital

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

IV. Ineligible and/or Unsupported Costs

  • Any costs determined not reasonable and/or not directly related to the eligible project activities;
  • Costs incurred prior to the eligibility date as defined in the FedDev Ontario Contribution Agreement;
  • Any cost incurred after December 31, 2018;
  • Any cost that is ineligible under the Agency's terms and conditions and program policies; and
  • Capital costs.

Priorities

The Agency may give preference to certain priority sectors or projects that diversify a regional economy. Innovations that are targeted primarily at retail consumer markets will not be considered under this initiative.

Funding

Eligible Angel Investor Network Organizations will be considered for a non-repayable contribution to a maximum of $500,000 for up to 100 percent of eligible costs.

Note: FedDev Ontario support is not intended to replace available commercial financing. Costs that could be, in whole, financed by equity, commercial financing, and/or capital markets will not normally be supported.

All projects must be completed by December 31, 2018.

Disbursement of Funding

If a project receives approval, a contribution agreement (contract) will be negotiated and executed. Funding will be disbursed based on the percentage approved funding for eligible costs incurred.

To receive funding, approved recipients must submit claims forms that summarize eligible costs incurred in a period. These periods will be of a duration of no more than once a month and no less than twice a year.

Application Process

This is a continuous intake application process. Eligible Angel Investor Network Organizations must complete and submit a full application to be considered for funding.

Prior to submitting a Statement of Intent, potential Applicants are strongly encouraged to contact the Agency at 1-866-593-5505 for help with your application and to discuss other Government programs that may be applicable to your opportunity.

To be considered for funding, the application must include:

  • Evidence that confirms the Applicant is a Canadian incorporated not-for-profit organization located in southern Ontario;
  • A summary of the organization's track record supporting angel investors in southern Ontario;
  • A brief overview of the organization, its current business model and services, and value proposition to angel investors;
  • A summary of the proposed project, an implementation plan and schedule and its projected impacts on the organization's business model;
  • How the project will build the capacity of angel networks to attract more investors and investments while attracting and fostering more start-up enterprises seeking angel investment;
  • A summary of existing key partnerships with other organizations and government programs;
  • A summary of the proposed costs and all funding (including status of other funding);
  • Substantiation of project cost estimates and detailed cash flow requirements (including status of other funding);
  • Demonstration of the organization's capacity to implement the project and account for project costs and results in a timely manner;
  • A summary of the reporting processes and formats with respect to projects funded and results achieved;
  • Substantiation of the need for FedDev Ontario funding and its incremental impact on the project in terms of scope, location, and timing; and
  • Compliance with all relevant statutes, regulation and other funding agreements
  • Rate
  • Share
Date modified: