INNOVATION SUPERCLUSTERS. Information Session

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1 INNOVATION SUPERCLUSTERS Information Session

2 INTRODUCTION Budget 2017 made $950 million available over five years, starting in , to support a small number of business-led innovation superclusters that have the greatest potential to accelerate economic growth. Innovation superclusters will build a better Canada by creating goodquality jobs for Canadians, helping businesses succeed in the marketplace, and fostering stronger collaboration between the private, academic and public sectors. On May 24, 2017, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, opened the application process for the Innovation Superclusters Initiative. 2

3 WHAT IS THE INNOVATION SUPERCLUSTERS INITIATIVE? The Initiative will provide non-repayable contributions to a small number of industry-led not for profits, supporting the development of superclusters with the greatest potential to build world-leading regional innovation ecosystems. It is expected that the ISI will support up to five major, at-scale investments. To achieve the desired critical mass and scale of impact, federal investments are normally expected to be in the order of $ million. 3

4 SUPERCLUSTER APPLICANTS AND RECIPIENTS Applications must come from industry-led consortia; consortia consist of a lead applicant and partner applicants. The recipient of the program contribution will be a not for profit industry-led Entity that includes Canadian firms of all sizes as well as post secondary institutions. Applications should be bold in scope and position the cluster for global leadership by focusing on large-scale partnerships, collaboration, and transformative results. 4

5 WHO IS ELIGIBLE TO APPLY? Industry-led consortia, with a minimum number of participants. At Letter of Intent phase, at very least: 2 Large Enterprises (500+ employees) 1 Small Enterprise (1-99 employees) 1 Medium Enterprise ( employees) 1 Post-secondary Institution At Full Application phase, at very least: 10 private-sector enterprises, including a minimum of: 2 Large Enterprises (500+ employees) 4 Small Enterprise (1-99 employees) 1 Medium Enterprise ( employees) 1 SME (1-499 employees) 1 Post-secondary Institution 5

6 Each application is expected to have a mix of activities which best address the needs of the innovation ecosystem. Activities should fall under the following five themes: 1. Technology leadership* (mandatory) 2. Partnerships for scale 3. Diverse and skilled talent pools 4. Access to innovation 5. Global advantage ELIGIBLE ACTIVITIES: SUPERCLUSTER STRATEGY Each strategy must also explain how Intellectual Property will be managed. 6

7 FUNDING AND INDUSTRY MATCH REQUIREMENTS The amount of industry financial contributions toward eligible costs must at least match that of the Innovation Superclusters Initiative. The Industry matching funding can be up to 25% in-kind contributions, with the remainder coming from cash contributions. There is flexibility built into the program design to allow industry to determine where matching funds are spent. 7

8 COSTS ELIGIBLE COSTS Eligible Funded Costs ISI Program funds can reimburse these costs. Fall into 2 categories: Administration /Operating Costs and Project Costs. Counts towards the industry matching requirement. Eligible Unfunded Costs ISI Program funds cannot reimburse these costs. Limited costs types such as infrastructure costs, payments to federal entities. Counts towards industry matching requirement. INELIGIBLE COSTS ISI Program funds cannot reimburse these costs. Does not count towards industry Matching requirement. 8

9 APPLICATION PROCESS Phase 1: Letter of Intent See Applicant Guide for specific requirements and ISI website for deadlines. The Minister of ISED will invite selected applications to proceed to the full application process. Phase 2: Invitation Only Full Application Online submission due Fall

10 LETTER OF INTENT REQUIREMENTS The proposal set out in the Letter of Intent must be in alignment with ISI program objectives and contain a vision and strategy for the supercluster. A complete proposal must contain: Letter of Intent Application Form submitted online with all required appendices by the program due date. Commitment to financial contribution by industry. A minimum of four (4) Letters of Commitment from private sector firms and one (1) Letter of Support from a post-secondary institution. 10

11 LETTER OF INTENT ASSESSMENT PROCESS Central to applications, and consideration for funding, will be the expression of a strong value proposition focused on robust outcomes for cluster, sector, technology and network. Building on a strong industry-led regional cluster with the capacity for world-leading performance; Strengthening competitiveness of key sectors of a regional economy by involving leading firms representing those sectors; Building an innovation advantage and commercializing a strategic area of technology; Extending the cluster-based strengths to a broader network with innovation partners across Canada. Assessment of the proposal and value proposition at the Letter of Intent phase will focus on: Vision and Mission for Supercluster Economic Growth and Industrial Benefits Capabilities and Assets Budget and Financial Commitment 11

12 NEXT STEPS AND CONTACT INFORMATION Updates may be made to the program guide and other material without further notice. Please check the program website on a regular basis. ISED will communicate the results of Letter of Intent assessment in writing to all eligible applicants. For more information: Telephone (toll-free in Canada): Telephone (Ottawa): Fax: TTY (for hearing-impaired): Business hours: 8:30 a.m. to 5:00 p.m. (Eastern Time). 12

13 13

14 WHAT ARE THE PROGRAM OBJECTIVES? Funding will be delivered to industry-led consortia with strategic plans to: Build a shared competitive advantage for their cluster that attracts cutting-edge research, investment and talent by addressing gaps, aligning strengths, enhancing attributes, and positioning it as a world-leading innovation hotbed; Increase business expenditures on research and development (R&D) and advance a range of business-led innovation and technology leadership activities that will address important industrial challenges, boost productivity, performance and competiveness for Canada's sectors of economic strength; Generate new companies, and commercialize new products, processes and services that position firms to scale, connect to global supply chains, transition to high-value activities and become global market leaders; and Foster a critical mass of growth-oriented firms, and strengthen collaborations between private, academic and public sector organizations pursuing private-sector led innovation and commercial opportunities to enhance the cluster's pool of resources, capabilities and knowledge. 14

15 WHO WILL BENEFIT FROM FUNDING? Members of the supercluster Build a shared competitive advantage for the cluster that attracts cuttingedge research, investment and talent by addressing gaps, aligning strengths, enhancing attributes, and positioning it as a world-leading innovation hotbed. Other firms in the ecosystem Benefits expected to extend throughout the cluster, including to firms that are not part of the original application. To build and strengthen networks of innovators, it is expected that participation in ISI-funded activities will be open to interested organizations throughout Canada. Canadians Benefit from economic growth, more and better jobs, new products and processes in the market. 15

16 WHO WILL ADMINISTER ACTIVITIES & THE PROGRAM? Supercluster Not for Profit Organization (Entity): Act as central organizing body to execute the forward-looking strategic plans proposed by industry-led consortia. Board of Directors will be responsible for the Entity s management, strategic direction, financial accountability, reporting etc. Innovation, Science and Economic Development: Officials will administer the ISI and liaise with selected superclusters according to the terms of a Contribution Agreement. 16

17 ACTIVITY THEMES THEME 1 TECHNOLOGY LEADERSHIP* Collaborative projects that directly enhance the productivity, performance and competitiveness of Member firms, such as: collaborative R&D projects demonstration or prototype development projects with benefits for multiple firms development of production methods and processes involving industry and academic partners private-sector led commercialization projects * MANDATORY 17

18 ACTIVITY THEMES THEME 2 PARTNERSHIPS FOR SCALE Activities serving a target group of cluster firms to enable their growth, including by increasing domestic demand for cluster products and services or by facilitating expansion, such as: linking start-ups with strategic partners (e.g., pitch days ) offering business mentoring, consulting and coaching supply chain development or integration efforts for cluster SMEs with local anchor firms partnering with a public stakeholder/organization that provides access to capital and financing 18

19 ACTIVITY THEMES THEME 3 DIVERSE AND SKILLED TALENT POOLS Activities enhancing regional labour force skills and capabilities or initiatives addressing industry needs for talent, such as: a recruitment campaign to repatriate Canadian talent to the cluster; development of curricula linked to industry s needs and workforce integration programs for student development and promotion of specialized certifications in areas of technology leadership; re-training programs (e.g., digital skills) for existing workforce assessment of industry s current or anticipated workforce needs; or building awareness of industry demand for skilled talent across stakeholder groups (e.g., students, workers, firms, universities and vocational colleges, policymakers) 19

20 ACTIVITY THEMES THEME 4 ACCESS TO INNOVATION Investing in and providing access to assets, services or resources that benefit a range of cluster firms over a period of time, such as: support for access to specialized technical services installation of and access to dedicated laboratory or cutting-edge equipment acquisition and assertion of jointly held intellectual property 20

21 ACTIVITY THEMES THEME 5 GLOBAL ADVANTAGE Activities and initiatives that position the cluster and its strengths as worldleading, enable firms to seize market opportunities, and attract international investments and partnerships, such as: cluster promotion investment attraction to cluster region; studies to identify new global markets for cluster products and services participation in or leadership of trade missions to key geographic markets development of regulatory or policy proposals to enhance domestic technology advantage development and promotion of new international standards that embed Canadian approaches 21

22 COSTS COST ELIGIBILITY Funded Eligible Administration and Operating Unfunded Ineligible Ineligible costs should not be included in proposals. Section 2.3 of the Program Guide explains the criteria for eligible costs. Project 22

23 COSTS ELIGIBLE FUNDED COSTS OPERATING AND ADMINISTRATION Funded Those costs that support the day-to-day operation of the Entities in support of agreement objectives. Such expenses could include: Salaries for Entity staff (this does not include salary costs for Board Members); Communication and marketing costs; Travel costs in accordance with the National Joint Council Travel Directive; Networking costs related to the administration of the funded Entity, such as membership recruitment activities and Members meetings; and Operating costs (e.g., maintenance and operations, materials and supplies, liability insurance for Members of the Board of Directors, accounting and legal fees, incorporation costs, etc.). The ISI will contribute up to 75% of the eligible Administration and Operating Costs, provided industry still meets the overall ISI to industry matching. The remaining eligible Administration and Operating Costs (minimum 25%) can be met by industry, other levels of government, and/or not-for-profit contributions. Eligible Administration and Operating Costs shall not exceed 15% of the total ISI contribution. 23

24 COSTS ELIGIBLE FUNDED COSTS PROJECT Funded Eligible Project Costs relate to the activities undertaken to execute a Supercluster Strategy, subject to the approved Contribution Agreement. These could include: Portion of gross wage, salaries or contracts incurred which can be specifically identified and measured as having been performed or to be performed on carrying out the Eligible Activities Equipment, facility and supplies, including purchase, rental, operation and maintenance costs, and user fees Room or facility rental for projects Materials Capital expenditures Travel costs in accordance with the National Joint Council Travel Directive 24

25 COSTS ELIGIBLE COSTS UNFUNDED COSTS Unfunded Costs incurred that are not reimbursable through ISI contributions. However, if these costs are covered by industry, are reasonable, and are directly related to the achievement of the objectives in the Contribution Agreement, they can be counted toward the mandatory industry matching funds requirement Such expenses could include: Eligible Costs incurred between notice of conditional approval of the full application, and the execution of the Contribution Agreement; Infrastructure costs (construction, repair and maintenance) that are directly related to the objectives and Eligible Activities of the Contribution Agreement; and Payments to federal Entities (e.g., the National Research Council). 25

26 COSTS INELIGIBLE COSTS (1 OF 2) Ineligible Not all costs incurred under the ISI will be for activities that meet the program objectives. These costs are ineligible for ISI funding and include: Retroactive costs (i.e., those incurred before notice of approval of the application) Projects where, in the opinion of the Minister, there is no buy-in from membership, no collaborative aspect Activities where benefits accrue to a single firm or organization Capital, infrastructure or equipment costs that are unrelated to the RD&D, commercialization, or objectives of the Contribution Agreement The purchase of land or buildings is generally not considered an eligible cost. Exceptions may be negotiated with ISED in order to include these purchases in the Unfunded Eligible Costs category Fines and penalties Contingency costs Losses on investments, other projects, contracts, bad debts, and collection charges 26

27 COSTS INELIGIBLE COSTS (2 OF 2) Ineligible Federal and provincial income taxes, goods and services taxes, excess profit taxes or surtaxes and/or special expenses in connection with those taxes Expenses and depreciation of excess facilities Amortization of unrealized appreciation of assets Depreciation of assets paid for by the ISI Honoraria, gifts, donations, entertainment expenses and alcoholic beverages Dues or other memberships other than regular trade and professional associations Extraordinary or abnormal fees for professional advice unless approval is obtained from ISED before incurring the cost Life insurance premiums where proceeds accrue to the Entity Discretionary severance and separation packages Costs related to the routine administration and operation of member organizations, except the reimbursement of salary costs related to ISI objectives and Eligible Activities Salary of members of the Board of Directors for that role. 27

28 INTELLECTUAL PROPERTY STRATEGY The Entity is required to establish and submit to ISED an Intellectual Property (IP) Strategy setting out the Entity's role in achieving program objectives through IPrelated activities. Preliminary details on the IP Strategy will be required for the Full Application. The IP Strategy activities should facilitate and incentivize increased technical collaboration and provide an opportunity for Members to realize a material benefit to their membership. The IP Strategy must: describe how the ownership and management structures further the Entity's objectives, incentivize ongoing commitment and cluster participation, facilitate collaboration, and how the strategy will benefit the economic development of Canada. identify substantive policies which provide Members with frictionless access to Entity supported intellectual property set out how all Members will be supported and mentored in regard to their intellectual property needs. 28

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