Archived Frequently Asked Questions (FAQs) for the TPC Program
- Program Objectives
- Benefits for Canadians
- Assessing Applications
- Payments to Companies
- Repayments of Investments
PROGRAM OBJECTIVES
Q1. What was TPC's investment mandate?
TPC was established in 1996 with a mandate to strategically invest inprojects with firms across Canada in support of technological development thatfosters innovation, commercialization, sustainable development and increasedinvestment.
These investments have targeted pre-competitive projects across a widespectrum of technology areas such as environmental and enabling technologies,which includes biotechnology and health related applications, plus aerospaceand defence technologies as well as manufacturing and communicationstechnologies.
Q2. If the projects were so promising, why couldn't they get private sector financing?
TPC only provided a portion of the financing for each project; thecompanies were required to raise the rest from other sources. The majority ofprojects were undertaken by small and medium-sized companies, and TPC'sinvestments leveraged additional funding from other sources. For every dollarinvested through TPC, almost four dollars were committed by otherinvestors.
Q3. If others were willing to invest, was TPC's contribution really necessary?
Private investors may hesitate to invest at the early R&D phases of aproject since financial returns could take years. TPC investments helpedattract other investors. TPC helped promote important R&D that mightotherwise have taken place outside Canada or not at all.
BENEFITS FOR CANADIANS
Q1. How do TPC projects benefit Canadians?
TPC invested in R&D projects being undertaken across Canada indiverse areas of technology that promote innovation, for example:
- TPC helped Zenon develop their innovative Zee-Weed™ membrane filter technology that is used for water filtration worldwide - from municipal drinking and wastewater facilities to emergency relief and portable water filtration units.
- TPC invested in Research in Motion's renowned BlackBerry™ wireless platform, which has become the standard in wireless communications.
- TPC supported VisuAide Inc. to help them develop technologies that assist people with visual impairments to access print, electronic and directional resources.
The majority of projects were undertaken by small and medium sizedcompanies, and TPC investments leveraged additional investment from othersources. The projects also provided opportunities for highly skilledemployment, which benefits communities and helps retain skilled workers inCanada. For more information on the benefits of TPC investments, please visitthe benefits section.
ASSESSING APPLICATIONS
Q1. How did companies get TPC funding?
Investment outlines and proposals from companies were assessedin the context of their relevance to the objectives of the TPCprogram, namely the extent to which they demonstrated that:
- the project would contribute to the strategic objectives of the government, including technological and net economic benefits to Canada (increasing economic growth, creating jobs and wealth, and supporting sustainable development);
- the project was technologically feasible, and that the applicant possessed, or could reasonably be expected to secure, the requisite technological and managerial capabilities and financial resources to achieve the objectives of the project;
- a contribution under TPC was necessary to ensure that the project proceeded with the desired scope, timing or location; and
- the contribution would be repaid.
PAYMENTS TO COMPANIES
Q1. Did TPC provide all the funding for these projects?
TPC only provided a portion of the financing for each project; thecompanies were required to raise the rest from other sources. Assistanceprovided by TPC was in the form of repayable contributions at a level andamount deemed justified in light of the anticipated benefits to Canada. Theaverage sharing ratio of assistance under TPC on a portfolio basis was not toexceed 33 percent of eligible costs*, with typical sharing ratios rangingbetween 25 and 30 percent.
*Eligible costs included direct labour and material costsspecifically incurred by the proponent in performance of the project plus areasonable allocation of indirect or overhead costs. Specialized equipment maybe eligible as well. TPC did not support costs for land and buildings.
Q2. How is a "conditionally repayable contribution" different from a loan?
Repayments to the TPC program are not based on a fixed period of time andan interest rate. Repayment terms were negotiated on a case-by-case basis toreflect the unique nature of each company, its project and risk level.Repayment plans took the form of one of the following: royalties based ongross company revenues, product or divisional sales, or in some instancesfixed repayments or warrants. The actual repayments received reflect the levelof commercial success that the technology and company eventually attain.
Q3. How are TPC investments paid out?
Companies must regularly submit claims substantiating eligible expensesthat they have incurred and paid as the project progresses. The IndustrialTechnologies Office (ITO) validates these claims and only issues paymentsreflecting its share of the eligible costs incurred.
REPAYMENTS OF INVESTMENTS
Q1. Are TPC investments all repayable?
Yes, this was a requirement of all contracted projects, but repayments werenot the primary focus. They were intended to help grow the fund over time.Repayment plans took the form of one of the following: royalties based ongross company revenues, product or divisional sales, or in some instancesfixed repayments or warrants.
Q2. How is a "conditionally repayable contribution" different from a loan?
Repayments to the TPC program are not based on a fixed period of time andan interest rate. Repayment terms were negotiated on a case-by-case basis toreflect the unique nature of each company, its project and risk level.Repayment plans took the form of one of the following: royalties based ongross company revenues, product or divisional sales, or in some instancesfixed repayments or warrants. The actual repayments received reflect the levelof commercial success that the technology and company eventually attain.
Q3. Why are companies not repaying the money sooner?
TPC invested in research and development projects that, by theirnature, are long-term and high-risk. The projects have to progressfrom the work phase to the benefits phase before repayments canbegin. Achieving repayments over a multi-year timeframe reducesthe financial burden on companies to supportable levels. Ifrepayments were accelerated, the public policy benefits sought byTPC would be jeopardized. General market and economicconditions will affect a company's ability to make repayments, andsome projects may not achieve full commercial success for 20years or more.
Project Phases
Work Phase - This is the phase where the R&D is being done andthe TPC program shares the costs. It typically lasts for three to five years,but can be even longer.
Benefits Phase - Once the Work Phase has been successfullycompleted, companies bring the resulting technology to market and begin torepay the investment. This phase can last from 5 to 20 years. The repaymentsvary depending on the project's commercial success.
Q4. Where do TPC repayments go?
All TPC repayments are deposited in the Government of Canada ConsolidatedRevenue Fund in the year collected.