Canadian businesses today are struggling to find means of survival during this COVID-19 crisis. There have been appeals from all industries such as aviation, energy, agriculture, small businesses etc. for additional assistance given the current circumstances. This appeal has attracted any Canadian venture with a payroll to meet for a business they have poured their heart and soul into, not to mention their funds, trying to help survive.
Within this, Canadian innovation hubs and start-ups are some of the worst hit businesses. Public investment in these start-ups, however, is also a provider of a high return relative to the prosperity of Canada’s economic future.
The fundamentals of operating a start-up do not allow for any back-up plans or safety nets. The projects that these businesses work towards come at an expensive price tag and raising funds is always a continuous effort. They are heavily reliant on innovation grants as a means of nurturing provided for by the government. Start-ups are also subject to foregoing profits in return for business growth. These practices allow no room for saving funds for a rainy day. In fact, under the best of economic conditions, start-ups still require incubators and funding. Therefore, given current circumstances, they are now in need more than ever. In addition to their granted innovation funding, they now require additional financial support but also require time in order to make decisions and shift their operations to maximize their potential.
All start-ups exist and persist through start-up company grants with the goal of becoming a large and profitable corporation in the future. This goal cannot be met without nurturing even after which only a few survive. It is now, in a moment of crisis, that their survival should be assured the most.
In the city of Toronto alone, 10,000 jobs were added in the tech sector fueled by a record $3.1 billion investment in venture capital. Compelled by an industry that pays 51% more than the average private sector job, across Canada, over 60,000 employees are joining the same industry on an annual basis.
With their projects and innovation, these individual start-ups then contribute their technology to advanced industries which rely on their efforts to improve their processes such as energy, health, manufacturing etc. Cohesively, these industries contribute to 17% of Canada’s GDP and 11% of employment. This significant portion of the Canadian economy is threatened without providing start-ups with the support they require.
Start-ups are in high gear to secure as many deals as possible to keep their operations running and as many people on payroll as they can. Support right now is more critical than ever. This is the same topic that was addressed by more than 600 tech chiefs when they wrote to the federal and provincial governments advising them on the best practices to protect this industry.
Together, they were able to create the following suggestions to encourage increased support from the government.
- The first suggestion was to fast-track any procedures and processes carried out by federal governing agencies as an attempt to get cash moving as soon as possible. For start-ups that are deemed fit, it was also suggested that low-interest loans by offered with the possibility to defer payments.
- As an additional step to maximizing the current amounts of funding available, programs should be expediting payments and work on abolishing “stacking limits” which prohibit ventures from combining their funding from multiple programs.
- During this time, governments should also be working towards allowing qualified start-ups to defer their employee income taxes, corporate taxes and rents to provide maximum liquidity to start-ups with their current assets
- It was also recommended for governments to prioritize producing goods and services from domestic companies first such as enterprise technology providers, infrastructure companies, manufacturing firms and health tech firms in addition to other industries.
- Lastly, it was suggested that provinces retain their innovation tax credits such as the Ontario Innovation Tax Credit, the Alberta Innovation Tax Credit etc. while encouraging Ottawa to provide reimbursements through the federal SR&ED program.
It is the start-up companies that thrive in disruption to provide products and services that help get the rest of the economy get above the curve. It will once again, be the strongest of the start-ups that survive and provide solutions to this catastrophic pandemic. For the same, the government should look to protect the start-up industry now more than ever. These are some of the contributions start-ups have already made to help fight COVID-19.