Using Government Grants To Finance Your Start-up

By: Shamini Sellvaratnam

When it comes to financing start-ups, many Canadian founders are becoming more attracted to using Government Venture Capital (GVC) as opposed to Private Venture Capital (PVC), as seen in a Pricewaterhousecoopers report, where 50% of startups have tapped into at least one source of government funding. With the decreasing availability of Canadian PVC and the increasing selectivity of VC firms, start-ups are starting to shift their focus to Canadian government grants and funding programs in order to attain additional financial support and close the funding gap.

Due in part to the rising number of governments around the world becoming increasingly involved in providing VC grants to support local entrepreneurs and start-ups in hopes of boosting economic growth, the World Economic Forum sponsored a study to determine the success of start-ups using GVC vs. PVC. The report found that start-ups and businesses using moderate levels of GVC had the strongest performance than those solely relying on PVC and GVC; where businesses relying only on GVC found difficulty in qualifying for all funding. The success in moderate GVC may be attributed to the various free and low-cost support-systems provided by government funding programs, such as one-on-one mentorship, hands-on business training, and other avenues for professional development.

As determined in the World Economic Forum study, with Canada becoming one of the most active countries in promoting GVC activity, entrepreneurs and start-ups will continue to take advantage of the many available funding programs.  The following is a list of programs and grants available both nationally and in Ontario:

National

Ontario

With the recent announcement of the Venture Capital Action Plan, startups can expect to see an increasing number of private sector investments in partnership with the provincial government. Aimed in promoting public-private partnerships, the Venture Capital Action Plan has been developed to provide $400 million to increase private sector investments in early stage start-ups and to create more large-scale PVC funds.

With the number of government programs and grants increasing, Canadian startups can look forward to receiving more financing options along with a stronger commitment to the growth of a thriving innovation ecosystem.

Shamini is completing her final year at the University of Toronto Mississauga and is pursuing an undergraduate specialist degree in Business Administration and a major in Communication, Culture & Information Technology. Shamini is joining the RIC team this summer as a Communications Intern bringing with her a passion in marketing and various experiences in online marketing.

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