9 Government Grants Every Tech Entrepreneur Should Know About

With funding crucial to business growth, many startups, SaaS companies, and tech consulting firms turn to venture capitalists for financial backing. However, suppose you’re a tech entrepreneur needing funds for research or hiring. In that case, you should know that business grants and tax incentives are a great way to get the financial help you need without giving up equity to an investor.

Government grants are non-repayable funding sources that can help tech companies cover the costs of research and development, hiring, training, and more.

Knowing which grants are available is the first step to taking advantage of the many funding programs that promote innovation in Canada. Here are seven valuable government grants you should know about as a tech entrepreneur.

Government Grants for Tech Research and Innovation

1. Industrial Research Assistance Program (IRAP)

Canada’s IRAP program has been providing financial support to small businesses and medium-sized companies pursuing technology-driven innovation for more than 70 years. 

Two key offerings under the IRAP program include:

• Small Technology Innovation Projects. Offers grants of up to $50,000 to fund the R&D or commercialization of technology projects
• Mid-sized Technology Innovation Projects. Offers larger grants for larger projects involving internal R&D or the creation of original software

You’ll find a comprehensive list of this and similar innovation funding programs on the Government of Canada’s website.

To successfully apply to Canada's Industrial Research Assistance Program (IRAP), consider the following tips:

1. Confirm Eligibility: Ensure your business is a Canadian small or medium-sized enterprise (SME) with under 500 employees and is incorporated and profit-oriented.
2. Develop a Clear Project Proposal: Outline a technology-driven R&D project that leads to new or improved products, services, or processes with strong innovation potential.
3. Demonstrate Market Potential: Show how your project addresses a market need and has viable commercial prospects that could contribute to the Canadian economy.
4. Engage with an NRC Industrial Technology Advisor (ITA): Contact an ITA early to gain insights and guidance on aligning your project with IRAP objectives.
5. Highlight Team Expertise: Showcase your team's technical capabilities and experience to execute the project successfully.
6. Prepare a Detailed Project Plan: Include clear objectives, timelines, milestones, and a realistic budget that outlines how funds will be used.
7. Ensure Financial Stability: Provide evidence of your company's financial health and ability to sustain the project alongside IRAP funding.
8. Address Intellectual Property (IP) Considerations: Outline how IP will be managed, protected, and leveraged for competitive advantage.
9. Follow Application Guidelines Precisely: Complete all required forms accurately, provide supporting documents, and adhere to submission deadlines.
10. Emphasize Economic Benefits: Highlight potential for job creation, skill development, and contributions to Canada's innovation ecosystem.

2. Scientific Research & Experimental Development (SR&ED) Incentive

Rather than a grant, the SR&ED incentive is a tax credit your organization may qualify for if it’s doing a “systematic investigation or search, through experiment or analysis, to advance science or technology.”

Should your tech company meet the eligibility criteria, you can use the SR&ED investment tax credit to reduce your tax payable by deducting anywhere from 15-35% of eligible SR&ED expenditures from your income.

To successfully apply for Canada's Scientific Research & Experimental Development (SR&ED) Incentive, consider these tips:

1. Understand Eligibility Criteria: Ensure your projects involve technological advancement and address scientific or technological uncertainties.
2. Maintain Detailed Documentation: Keep comprehensive records of hypotheses, methodologies, experiments, results, and conclusions throughout the project.
3. Track Eligible Expenses: Accurately record all qualifying expenditures, including salaries, contractor fees, materials, and overhead costs related to SR&ED activities.
4. Separate SR&ED Activities: Distinguish SR&ED projects from regular business operations in your documentation and accounting.
5. Prepare Clear Technical Narratives: Write concise project descriptions that explain the objectives, challenges, and technological advancements achieved.
6. Familiarize Yourself with CRA Guidelines: Review the Canada Revenue Agency's SR&ED policy documents to ensure compliance with reporting requirements.
7. Consult Professionals: Engage with tax advisors who have experience with the program to assist with the application process.

You can learn more about this incentive by accessing our on-demand webinar with SR&ED tax experts from KPMG.

3. Atlantic Innovation Fund (AIF)

Designed to help businesses and research institutions in Atlantic Canada compete at home and abroad through innovative technology, the AIF supports the development of ground-breaking products and services that lead to commercial success.

Your tech company could qualify for up to 75% of eligible project costs in research funding ($3 million maximum) if the technology you’re looking to develop shows a strong R&D component with commercialization potential and creates opportunities for Atlantic Canada’s economic development.

Here are some tips for successfully applying to Canada's Atlantic Innovation Fund (AIF), focusing on the application process:

1. Understand the Program Objectives
   • Ensure your project aligns with the AIF's goal to stimulate economic growth in Atlantic Canada through innovation and commercialization of research and development.
2. Verify Eligibility Criteria
   • Location: Your business must operate in one of the Atlantic provinces—New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island.
   • Project Type: The project should involve technology development, product commercialization, or enhancement of innovation capacity.
3. Prepare a Strong Proposal
   • Clear Objectives: Define the goals and expected outcomes of your project.
   • Innovation Aspect: Highlight the innovative elements and how they differ from existing solutions.
   • Economic Impact: Emphasize potential benefits like job creation, market expansion, and contributions to the regional economy.
4. Develop a Detailed Project Plan
   • Work Plan: Outline tasks, timelines, and responsible parties.
   • Budget Breakdown: Provide a comprehensive budget with justified costs.
   • Milestones and Deliverables: Set measurable targets to track progress.
5. Collaborate with Partners
   • Academic and Industry Partnerships: Strengthen your application by involving universities, research institutions, or industry collaborators.
   • Letters of Support: Include endorsements from partners or stakeholders.
6. Demonstrate Management Capability
   • Team Expertise: Showcase the skills and experience of your management and technical teams.
   • Past Successes: Reference previous projects or achievements that establish credibility.
7. Consult with ACOA Representatives
   • Early Engagement: Contact the Atlantic Canada Opportunities Agency (ACOA) early in the process for guidance.
   • Feedback: Use their input to refine your proposal and ensure alignment with program priorities.
8. Follow Application Guidelines Precisely
   • Required Documents: Complete all forms and include all necessary attachments.
   • Formatting and Submission: Adhere to specified formats and submission procedures.
   • Deadlines: Submit your application before the deadline to avoid disqualification.
9. Address Evaluation Criteria
   • Relevance: Make sure every section addresses the criteria that evaluators will use.
   • Clarity and Conciseness: Present information logically and avoid unnecessary jargon.
10. Plan for Financial Sustainability
    • Funding Sources: Detail all sources of funding and their confirmed status.
    • Revenue Projections: Provide realistic financial forecasts demonstrating viability beyond the funding period.

4. Strategic Innovation Fund (SIF)

The SIF program aims to spur innovation in Canada by contributing financially to large (over $10 million requested contribution), transformative, collaborative projects that:

• Advance Canada’s strategic technological advantage
• Promote clean growth through the use of clean technology
• Encourage long-term competitiveness in our global, knowledge-based economy

Contribution amounts vary on a case-by-case basis. If you qualify, your company could receive funding of up to 50% of eligible project costs through one of five streams of financial assistance.

Streams 1 through 3 are geared toward supporting:

• R&D and commercialization
• Growth and expansion of firms
• Attraction and retention of large-scale investments in Canada

Streams 4 & 5, meanwhile, support industrial R&D and technology demonstration through collaborations between academia, non-profit organizations, and the private sector.

As the most relevant tech options, yours must be a small, medium, or large for-profit corporation doing business in Canada to be eligible for Stream 1, 2, or 3 funding. Non-incorporated organizations like early-stage companies and startups are not eligible.

Tips for Successfully Applying to Canada's Strategic Innovation Fund (SIF):

1. Understand the Program Objectives
   • Alignment: Ensure your project aligns with SIF's goals of stimulating innovation, fostering growth, and enhancing productivity in key sectors.
   • Stream Selection: Choose the appropriate funding stream that best fits your project's scope and objectives.
2. Prepare a Comprehensive Project Proposal
   • Clear Objectives: Define specific, measurable, achievable, relevant, and time-bound (SMART) goals.
   • Innovation Focus: Highlight the innovative aspects and how they contribute to advancements in your industry.
   • Economic Benefits: Demonstrate potential economic impacts, such as job creation, investment attraction, or export growth.
3. Develop a Detailed Business Plan
   • Financial Projections: Include detailed budgets, funding requirements, and financial forecasts.
   • Market Analysis: Provide insights into market needs, competition, and your strategic positioning.
   • Risk Management: Identify potential risks and outline mitigation strategies.
4. Demonstrate Organizational Capacity
   • Experience and Expertise: Showcase your team's qualifications and past successes relevant to the project.
   • Resource Availability: Illustrate that you have the necessary resources, facilities, and partnerships to execute the project effectively.
5. Engage with SIF Program Officers
   • Early Communication: Contact SIF representatives before applying to clarify requirements and receive guidance.
   • Feedback Integration: Be open to feedback and ready to refine your proposal accordingly.
6. Highlight Collaboration and Partnerships
   • Stakeholder Engagement: Include letters of support from partners, suppliers, or customers.
   • Consortium Building: If applicable, demonstrate collaboration with other organizations or institutions to strengthen your proposal.
7. Demonstrate Compliance and Good Standing
   • Regulatory Compliance: Show adherence to all relevant laws, regulations, and industry standards.
   • Financial Integrity: Ensure your financial records are transparent and up-to-date.

Government Grants for Tech Hiring

5. Industrial Research Assistance Program (IRAP)

Another valuable IRAP funding subprogram for tech companies is the Youth Employment Program. This initiative provides funding to support the costs (up to $30,000 per graduate) of hiring up to 2 young (15-30 years of age) post-secondary graduates to work on your R&D, natural sciences and engineering research, or product or process development projects for a period of 6-12 months.

6. Innovator Skills Initiative (ISI) Grant

The Innovate BC ISI Grant offers BC-based tech companies up to $10,000 a year to hire a post-secondary student.

Benefits for your organization include the opportunity to:

• Take on top talent and train future employees
• Access project resources to help your company advance
• Showcase your industry’s challenges to future problem-solvers

Businesses and non-profits hiring for a tech role are also eligible to apply.

7. Digital Skills for Youth (DS4Y) Program

The Digital Skills for Youth (DS4Y) program is another hiring grant funded by the Government of Canada, and delivered by Innovate BC. The program offers companies in BC up to $25,500 to hire an intern (ages 15-30) in a technology-related position for a minimum of four months. 

The program aims to match underemployed youth with small and medium-sized businesses and not-for-profit organizations to provide working experience that would equip them with digital skills to transition into a career in the digital economy successfully. 

8. BC Tech Co-op Grants Program

The BC Tech Co-op Grants program offers tech companies in BC up to $10,800 per year in funding to hire co-op students. This grant is also open to non-tech companies in BC looking to hire a co-op student in a tech role. 

The program allows tech companies to utilize co-op students to fill gaps and also retain talent for future full-time roles. The program also provides small and medium-sized businesses with the incentive to recruit and train co-op students so that these students can acquire digital skills and hands-on experience to integrate smoothly into the workforce. 

Each employer is eligible for a maximum of four $2,700 grants per program year (a total value of $10,800) to recruit and train one to four individual co-op students. The employer is responsible for paying the remaining salary of the student’s co-op term. 

Government Grants for Tech Employee Training

9. Canada Job Grant

To help companies adapt to evolving market requirements, Canada Job Grant funding is available to employers in every province to help cover the costs of skills development training for new or existing employees.

By applying through programs like the BC Employer Training Grant, Canada-Alberta Job Grant, or Canada-Ontario Job Grant, for example, your BC, Alberta, or Ontario business could receive up to $10,000 per employee for eligible skills training expenses. 

It’s important to know that applying for and managing government grants for tech companies can be complicated even when you're eligible.

Many funders, for example, will want to see a grant budget or your current financial statements as part of the application process. So, having an up-to-date set of books is essential for boosting your chances of having a grant approved. 

Whether you need help putting together the financials for a grant application – or someone to properly manage and account for your grant spending – we have experience working with a wide range of tech companies at Enkel.