Program Guide: Strategic Innovation Fund

From: Innovation, Science and Economic Development Canada

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A) What is the Strategic Innovation Fund?

The Strategic Innovation Fund (SIF) provides major investments in innovative projects that will help grow Canada's economy for the well-being of all Canadians.

About the Strategic Innovation Fund

Managed by Innovation, Science and Economic Development Canada (ISED), the Strategic Innovation Fund (SIF) plays a key role in providing support for innovative projects in Canada through:

  • simplified application processes
  • responsive, results-oriented assistance

The minimum SIF contribution amount is $10 million for projects with total costs of at least $20 million. The amount you request from SIF should be based on your project needs.

Objectives

SIF provides transformative investments in all sectors of the economy to help Canada prosper in a global, knowledge-based economy.

The program helps Canadian businesses and organizations succeed and help Canada grow good jobs for a strong economy.

Key program objectives include:

  • encouraging businesses to invest in research & development (R&D) activities that lead to technology transfer and commercialization of new products, processes and services
  • accelerating the growth and expansion of innovative businesses in Canada
  • attracting and retaining large-scale investments to Canada
  • advancing networks of collaboration between the private sector, research institutions and non-profit organizations in key emerging technology sectors and in industrial R&D and commercialization

Background

SIF was created in 2017. It incorporates several legacy programs already administered by ISED. The various programs administered by ISED are subject to specific terms and conditions. SIF continues to administer the legacy programs according to the terms agreed on with each recipient.

Automotive Innovation Fund (AIF)

With new funding agreements being signed between 2008 and 2021, the Automotive Innovation Fund (AIF) supported strategic, large-scale research and development (R&D) projects in the automotive sector. AIF encouraged innovation in the development of greener and more fuel-efficient vehicles, and helped companies maintain a strong, competitive position in the Canadian automotive industry.

Automotive Supplier Innovation Program (ASIP)

With new funding agreements having been signed between 2016 and 2021, the Automotive Supplier Innovation Program (ASIP) complemented the AIF in helping Canadian automotive suppliers gain a competitive edge through the development of new innovative products and processes.

Strategic Aerospace and Defence Initiative (SADI)

With new funding agreements having been signed between 2007 and 2017, the Strategic Aerospace and Defence Initiative (SADI) provided repayable contributions to support R&D projects in the aerospace, space, defence and security sectors.

Technology Demonstration Program (TDP)

With new funding agreements having been signed between 2013 and 2017, the Technology Demonstration Program (TDP) provided non-repayable contributions to support one or more large-scale R&D projects per year.

Technology Partnerships Canada (TPC)

With new funding agreements having been signed between 1998 and 2006, Technology Partnerships Canada (TPC) was a special operating agency of Industry Canada with a mandate to provide funding support for strategic R&D, and demonstration projects that produced economic, social and environmental benefits to Canadians.

B) Who is eligible to apply?

The Strategic Innovation Fund (SIF) covers all sectors of the economy and is available to for-profit and not-for-profit organizations that aim to support Canadian innovation.

SIF provides funding for 2 categories of projects, each with their own set of requirements:

Who can apply for Business Innovation and Growth projects?

To apply under SIF's Business Innovation and Growth category, your company must be one of the following:

  • a for-profit business or cooperative incorporated in Canada
  • a partnership proposing to carry out business in Canada

If you succeed in receiving SIF funding, you will be responsible for:

  • managing the project
  • carrying out agreed-on terms and benefits of the Contribution Agreement
  • submitting project claims for reimbursement
  • receiving and repaying the government contribution and reporting on results
  • owning or holding sufficient background intellectual property (IP) rights to allow your project's activities to be carried out
    • This includes holding enough rights to allow you to make full use of the benefits from any IP resulting from your project's activities

Who can apply for Collaborations and Networks projects?

To apply to SIF as a lead applicant in the Collaborations and Networks category, your organization must be one of the following:

  • a not-for-profit organization incorporated in Canada
  • a for-profit corporation incorporated in Canada

As the lead applicant, if you are successful in receiving SIF funding, you will be responsible for managing the project for the network according to the terms of the Contribution Agreement. This includes:

  • submitting an application to SIF on behalf of the network
  • receiving and managing the government contribution
  • managing the network's projects
  • submitting claims
  • reporting on results
  • furthering the sustainability of the network

Lead applicants will work in collaboration with Canadian universities, colleges, research institutes, for-profit corporations (including SMEs and large corporations) and/or not-for-profit entities.

C) What is an eligible project?

SIF focuses on funding innovative projects that comply with the following requirements.

Requirements for Business Innovation and Growth projects

R&D and commercialization

These projects must involve activities related to the research and development (R&D) and commercialization of innovative products, processes or services.

These activities support products, processes or services that:

Examples of projects of this type include:

  • R&D to test the commercial potential of early TRL concepts or findings
  • adaptation of research findings for commercial applications that have the potential to disrupt the market
  • development and improvement of current products by implementing new technology that will enhance the company's competitive capability
  • process improvements reducing the environmental footprint of current production by using new technologies

Firm expansion and growth

These projects must support the expansion or material improvement of existing industrial or technological facilities.

Activities for these projects should fall under Technology Readiness Levels (TRLs) 8 to 9, where the new product or technology has either:

  • qualified through tests and demonstrations
  • been proven successful

These projects should result in the company's improved viability through company growth or increased efficiency or output capacity.

Examples of projects of this type include:

  • increasing manufacturing capacity to meet demonstrated market demand
  • improving production efficiency through plant and equipment improvements

Investment attraction and reinvestment

These projects must support new investments in R&D mandates including the hiring of full-time-equivalent employees in Canada.

Activities for these projects should be a minimum of Technology Readiness Level (TRL) 2, where the technology concept or application has been formulated. These projects should support the establishment of new facilities or bring new ventures to Canada.

Examples of projects of this type include:

  • a Canadian company establishing a new production facility that did not previously exist in Canada
  • getting a production mandate for a product previously produced outside Canada or being produced for the first time
  • getting a research and development mandate previously held outside Canada or being established for the first time

Requirements for Collaborations and Networks projects

National innovation networks

Projects related to the development of national networks can support multiple projects.

Resulting network-supported projects may include:

  • Industrial research: This includes activities related to the discovery of new knowledge that aim to support the development of new technology-driven products.
  • Processes or services at early-stage technology readiness levels: This includes fundamental research activities and the research and development (R&D) phases.
  • Technology demonstration: This includes advancing and developing new technologies into product-specific applications at mid- and late-stage technology readiness levels. Projects should have the goal of commercialization in areas where Canada has a proven advantage.

Activities for these projects fall mainly under Technology Readiness Levels (TRLs) 3 to 7 but could cover the whole range of TRLs 1 to 9.

Project activities should:

  • develop technologies with clear paths to commercialization in funding priority areas
  • involve a high degree of collaboration to enhance:
    • supply chains
    • ties between businesses and academia and/or research bodies

Some examples of eligible network project activities include:

  • creating collaboration among key members in the Canadian R&D community. These key members include:
    • industry researchers
    • national and regional research institutes
    • academic institutions
    • Canadian businesses (such as small-and-medium-sized enterprises and large corporations)
  • providing financial support for collaborative projects

Networks are responsible for assessing, approving and managing the project activities they will support.

Collaborative technology development and demonstration

These types of projects are chosen through a competitive intake process only.

Chosen projects must support industrial research, including:

  • activities related to the discovery of new knowledge (that support the development of new technology-driven products, processes or services at early-stage technology readiness levels)
  • large-scale technology demonstration (such as advancing and developing new technologies into product-specific applications at mid- to-late-stage technology readiness levels)

Activities for these projects should fall under Technology Readiness Levels (TRLs) 1 to 7.

These projects should:

  • support the development and demonstration of pre-commercial technologies
  • involve a high degree of collaboration enhancing the supply chain and ties between academia and/or research bodies

A project of this type could, for example:

  • in conjunction with small-and-medium-sized enterprise (SME) suppliers and research councils, develop a leading tier-1 original equipment manufacturing company of a potential new product using academic research findings.

Eligible activities for this type of network project are those that provide financial support for collaborative projects and allow for collaboration among key players in the Canadian R&D community, including:

  • industry researchers
  • national and regional research institutes
  • academic institutions

For network projects, networks are solely responsible for assessing, approving and managing the projects they will support.

D) What are eligible supported costs?

Strategic Innovation Fund (SIF) funding is project-based, with a portion of eligible supported project costs (expenditures) being reimbursed.

Project costs that are supported by SIF include:

  • direct labour costs
  • direct materials and equipment costs
  • other direct costs
  • overhead costs (program limits apply)
  • subcontracts and consultants costs
  • land and building costs, which must:
    • be necessary and reasonable in order to be able to carry out project activities and
    • benefit all network members (for Collaborations and Networks projects)

Additional conditions may apply to applications that include land-related costs.

Other eligible costs for Collaborations and Networks projects

In addition to the above, the following costs are eligible for SIF support in the Collaborations and Networks category:

  • expenditures related to network operations and activities, including:
    • the organization of networking events
    • the operation of regional offices across Canada
    • participation in collaborative research and technology
    • conferences and workshops in support of collaborative research and development (R&D) activities
  • costs related to network operations, including:
    • travel
    • salaries
    • overhead
    • office equipment
    • professional services
    • other operational costs, as appropriate

E) What are examples of ineligible costs?

SIF will not support certain costs, even if they are reasonably and properly incurred in the context of an approved project.

Examples of unsupported costs include:

  • advertising
    • except reasonable advertising of an industrial or institutional character placed in trade, technical or professional journals for the dissemination of information for the industry or institution
  • allowance for interest on invested capital, bonds, debentures, bank or other loans together with related bond discounts and finance charges
  • amortization of unrealized appreciation of assets
  • compensation for officers and employees that is unreasonable
  • depreciation of assets
  • donations
  • dues and other memberships other than regular trade and professional associations
  • entertainment expenses
  • fines and penalties
  • losses on investments, bad debts and expenses for collection charges
  • losses on other projects or contracts
  • premiums for life insurance on the lives of officers and/or directors
  • product development or improvement expenses not associated with the project
  • provisions for contingencies
  • selling and marketing expenses associated with the products or services or both being developed as a part of this project
  • taxes, including:
    • excess profit taxes or surtaxes
    • federal or provincial income taxes
    • goods and services taxes
    • special expenses in connection with those taxes

F) What is the application process?

To apply to SIF you must:

1) Check your eligibility

To see if your project is eligible you can check your eligibility online.

Once you have confirmed your eligibility, you will be able to consult with us.

You must consult an SIF officer for certain types of projects before completing a Statement of Interest form. These projects include:

  • projects requesting SIF funding for over $100 million
  • projects linked to specific government priorities
  • Collaborations and Networks projects

2) Complete the Statement of Interest (SOI) application package

The Statement of Interest (SOI) application provides an overview of your project. In this application form you will help us better understand your project by:

  • describing your project
  • telling us how your project meets the objectives of the Strategic Innovation Fund
  • telling us how your project will benefit Canadians
  • indicating whether your organization has the basic financial and corporate capability to complete the project

3) Receive notification of results and next steps

SIF assesses all application forms based on Government of Canada priorities and the benefits of the project. Each SOI application form is assessed by officials from SIF, the industry sector and from other government departments.

Projects that will not proceed to full application

If your project is not accepted to move forward in the SIF application process, a SIF officer will notify you by an official letter.

Your SIF officer may suggest alternative funding programs that are more aligned with your project. In some cases, SIF may connect you with Accelerated Growth Services (AGS) for further assessment of your project and assign you to an Innovation Advisor, who can further help your business.

Projects that may proceed to full application

If your SOI is accepted to proceed in the SIF application process, you will receive a letter of intent inviting you to submit a full application.

You can only access the full application by invitation from SIF.

For this application, we will ask you for more detailed project information, which will be used to complete a due diligence and benefits assessment of your project. This process may take several months.

G) What is the assessment process?

The Strategic Innovation Fund (SIF) takes the following actions to assess projects for funding:

1) Assess Statements of Interest

SIF assesses Statement of Interest (SOI) application forms based on how projects may benefit Canadians.

We will also assess how your project aligns with the Government of Canada's current investment priorities and review your organization's financial information to determine how ready you are to do the proposed project.

Once the assessment is completed, we will inform you whether you will be invited to the full application stage.

Learn more: The application process

2) Conduct due diligence assessment of the full application

For all projects that have been invited to submit a full application, SIF performs a due diligence assessment. This assessment evaluates your organization's capacity and experience to:

  • implement the proposed project
  • achieve the stated project objective
  • fulfill any repayment obligations

To ensure that proposed Collaborations and Networks projects achieve their stated objectives, SIF will also assess the capacity and experience of:

  • the lead applicant
  • other members in the collaboration or network

Due diligence assessments are full evaluations performed by experts assigned to the project.

During this assessment, these experts will consider the following factors:

  • technical feasibility
  • greenhouse gas impact (if applicable)
  • managerial, technical and workforce capability
  • financial and market risk, including a close analysis of eligible project costs

Organization leaders of Collaborations and Networks projects will need to consider similar assessment criteria in their assessment of individual network project applications requesting support.

3) Work with you to develop the Term Sheet and Contribution Agreement

If your project passes the due diligence assessment, we will work with you to determine the terms and conditions for the agreed-on funding and create the following 2 documents:

  • the Term Sheet
  • the Contribution Agreement

Term Sheet

As the foundation for the Contribution Agreement, the Term Sheet outlines the terms and conditions of Strategic Innovation Fund (SIF) funding.

The terms and conditions include the benefits the project will generate for Canadians, such as:

  • job creation in Canada
  • research and development (R&D)
  • capital investments
  • reduction of greenhouse gas (GHG) emissions
  • gender, diversity and equity targets
  • preservation of intellectual property (IP) ownership in Canada

The Term Sheet is submitted to the Minister of Innovation, Science and Economic Development Canada, who will exercise their discretion as to which projects to fund.

Contribution Agreement

Once the project is approved by the Minister, SIF will prepare a Contribution Agreement to formalize the contribution.

At this stage, you would no longer be referred to as a SIF "applicant" but as a "recipient."

This document outlines both the department's and your legally binding responsibilities and obligations.

For a company incorporated in Canada or a partnership carrying on business in Canada, a Contribution Agreement can span 20 years or more. This includes monitoring the project benefits.

The Contribution Agreement outlines the:

  • reporting requirements
  • schedule of repayments
  • proposed benefits to Canadians
  • funding terms and conditions
  • consequences of the agreement terms not being met
  • obligations of both the recipient and the Government of Canada

H) How does SIF benefit Canadians?

The Strategic Innovation Fund (SIF) benefits Canada by:

  • developing enterprises through research and development, accelerating technology transfer and attracting investments in Canada
  • improving the lives of Canadians through more jobs, diverse workforces, improved health outcomes, enhanced safety and strong security
  • transforming our economic and environmental landscape by reducing greenhouse gases and growing the use of clean, sustainable technologies

SIF reviews the potential for each project to benefit the Canadian economy and Canadians at large when assessing the Statement of Interest.

Economic benefits

SIF assesses projects based on economic benefits, including:

  • growth of Canadian firms, clusters and supply chains
  • expected benefits for Canada's workforce, including:
    • maintaining Canadian jobs
    • creating Canadian jobs
  • ability to commit to further developing technologies for potential commercialization or research purposes (Collaborations and Networks projects only)

We will consider the following factors in assessing the economic benefits of a project:

  • number of jobs the project will create
  • number of high-paying jobs the project will create
  • project-related revenue growth

Public benefits

SIF assesses projects based on their contribution to the public good, including:

  • environmental best practices
  • investment in skills and training
  • inclusive business and hiring practices, such as gender balance

In assessing the public benefits of a project, we will consider how many benefits the project may generate in the following areas:

  • health
  • society
  • security
  • environment
  • other areas that affect the Canadian public including:
    • investment in local communities
    • project-related impact on Indigenous communities

Innovation benefits

SIF assesses projects based on how innovative they are, including how much projects enhance or develop:

  • new industrial processes
  • new technology

We will consider the following factors in assessing innovation benefits:

  • potential spillover benefits
  • creation of intellectual property
  • impact on productivity of the new technology

I) What are the SIF contribution amounts?

If your application is successful, the amount of funding you receive ("contribution amount" Footnote 1 ) from the Strategic Innovation Fund (SIF) will depend on a number of factors, including the:

  • overall cost of your project
  • total level of government assistance you get for your project

The minimum SIF contribution amount is $10 million for a project with at least $20 million in total eligible supported costs. The amount you request from SIF should be based on your project needs.

J) Assistance from other governments

SIF often collaborates with other levels of government (for example, provincial governments) to refer projects or to seek co-funding opportunities. The amount of co-funding for Business Innovation and Growth projects is different from the amount of co-funding for Collaborations and Networks projects.

Business Innovation and Growth projects

Contribution amounts are based on the minimum amount required for the eligible project activities to proceed. Contribution funding is structured to ensure fairness amongst recipients and it is determined on a case-by-case basis.

Contribution funding is typically expressed as a percentage and may be referred to as the sharing ratio. It is equal to the total SIF contribution amount divided by the total eligible supported costs.

If your project is approved for funding, your sharing ratio will be based on the type of activities proposed for your project, with a focus on the eligible activities.

Government assistance co-funding amount

This total amount includes the combined level of assistance from all levels of Canadian government:

  • federal
  • provincial
  • territorial
  • municipal

The combined level of assistance from all levels of Canadian government is taken into consideration when determining contribution funding amounts. However, industry participation is expected.

Collaborations and Networks projects

Contributions are generally non-repayable with certain conditions.

Contribution funding is typically expressed as a percentage and may be referred to as the sharing ratio. It is equal to the total SIF contribution amount divided by the total eligible supported costs.

Activities are grouped into two categories, each with its own sharing ratios:

  • Operational activities such as salaries, office equipment, professional services, overhead, travel, cost related to the further distribution of funds and other operational costs as appropriate. For operational activities, lead recipients may receive contribution funding to cover their eligible supported costs.
  • Project activities such as research and development, platforms, and services. For project activities, recipients may receive contribution funding to cover a portion of their eligible supported costs if they are for-profit, or potentially most or all of their eligible supported costs if they are a not-for-profit organization or academic institution.

Government assistance co-funding amount

This total amount includes the combined level of assistance from all levels of Canadian government:

  • federal
  • provincial
  • territorial
  • municipal

The combined level of assistance from all levels of Canadian government is taken into consideration when determining contribution funding amounts. However, industry participation is anticipated.

K) What are the repayment conditions?

Your Contribution Agreement will specify the type of contribution you will receive.

Repayable contributions

SIF contribution amounts are repayable by default. They are structured to ensure fairness between recipients and are determined individually on a case-by-case basis.

The contribution amount and the terms of repayment will be determined after a due diligence assessment of the full application. They are based on the overall project benefits and risks.

Repayable contributions may take one of the following forms:

  • Unconditional: Recipients will repay no more than the nominal value of the amount paid to them by SIF (i.e., interest-free). The amount will be repaid on a fixed repayment schedule over a predetermined period of time, after an initial grace period. Amounts are therefore typically known or predictable upfront. Repayments are typically made on an annual basis.
  • Conditional: Recipients will make repayments that may or may not exceed the nominal value of the contribution paid to them by SIF. Total repayments will depend on certain verifiable conditions, and they will be made over a predetermined period of time. Although conditional repayments can be estimated, the final amounts are typically unknown until a condition occurs. Repayments are typically made on an annual basis, once the repayment amount is able to be determined.
    • Example: Annual audited gross business revenues are a verifiable figure that may be used as an underlying basis for calculating conditional repayments. If a recipient's business grows in the future, and so do their revenues, repayments would align with the growth.
  • A combination of unconditional and conditional: Recipients will make repayments that may or may not exceed the nominal value of the contribution paid to them by SIF. Repayments will be made over a fixed, predetermined period of time and will be based on the terms and conditions of both unconditional and conditional repayable contributions.
    • Example: A statement of work may contain several project activities. One portion of the contribution might be deemed unconditionally repayable, based on a predetermined repayment schedule with fixed repayments. The other portion of the contribution may be conditionally repayable, based on a verifiable metrics, such as audited gross business revenues.

Non-repayable contributions

Non-repayable contributions will only be considered for eligible costs of activities that will both:

This may include activities that result in:

  • strong environmental benefits related to Canada's climate change goals
  • constructing anchor facilities
  • deepening Canadian supply chains
  • generating significant technology spillover benefits

Each project activity's benefits will be assessed on a case-by-case basis to determine if the criteria has been met.

L) What are the reporting requirements during and after the project?

If your project is selected for funding, you will be required to submit several documents both during and after the project life cycle.

During the project

You will be required to submit:

  • regular claims based on incurred and paid costs
  • regular project status reports
  • regular benefit and risk updates
  • annual cashflow forecasts and project financing updates

Throughout the project life cycle

You will be required to submit:

  • annual consolidated financial statements
  • an Annual Performance Benefits Report (APBR)
  • other plans and reports as required to fulfill specific commitments, including plans for:
    • intellectual property
    • supply chain continuity
    • sustainability
    • equity, diversity and inclusion
  • corporate plan (for Collaborations and Networks projects only)
  • annual report (for Collaborations and Networks projects only)
  • reports of any changes that would affect your:
    • corporate structure
    • any obligation under the Contribution Agreement

After completion of the project

You will be required to submit:

  • annual reports on project benefits including fulfillment of specific commitments
  • repayment forecasts if the contribution is repayable
  • regular royalty statements with every payment

As outlined in the Contribution Agreement, recipients of Strategic Innovation Fund agree to participate in audits of project costs and revenues as necessary.

The Minister of Innovation, Science and Economic Development Canada may also ask you to provide reports as necessary to contribute to the assessment of the Strategic Innovation Fund, including its success stories.

M) Legal considerations

As part of the application process, you are required to provide the following representations:

  • that any person, including any consultant or in-house lobbyist, who lobbies on its behalf to obtain funding under the Strategic Innovation Fund, and who is required to be registered pursuant to the Lobbying Act, is registered pursuant to the Lobbying Act. For more information on lobbying and the Lobbying Act, consult the Office of the Commissioner of Lobbying of Canada
  • that the Applicant has not, and neither has any person on its behalf, engaged or employed any person (other than an employee) for the purposes of obtaining funding from the Strategic Innovation Fund; and paid, or agreed to pay that person, a commission, contingency or success fee or any other consideration (whether monetary or otherwise) that is dependent upon the Applicant receiving program funding
  • that any former public servant, who derives benefit from the Contribution Agreement, will be in compliance with the Values and Ethics Code for the public service, the Values and Ethics Code for the Public Sector, and the Policy on Conflict of Interest and Post-Employment
  • that any former public officer holder, who derives benefit from the Contribution Agreement, will be in compliance with the Conflict of Interest Act
  • that no member of the House of Commons or Senate will benefit from the Contribution Agreement
  • that any contributions from the program is not included in the evaluation of, nor be used for, executive performance pay

N) Intellectual Property

If you apply to SIF, you must ensure that for any intellectual property (IP) your company must either:

  • own the background IP
  • hold sufficient background IP rights to allow your project's activities to be carried out

Your company must also hold enough rights to allow you to make full use of the benefits from any IP resulting from your project's activities.

It is your company's responsibility to protect any IP resulting from SIF-supported activities.

In your application to SIF, you will be required to provide information about your IP strategy as it relates to your project.

O) Security of company information

SIF will handle your information in accordance with the requirements of the Privacy Act, the Access to Information Act and other related legislation.

Unless authorized, SIF will not disclose your project information to any party outside of the federal government, other than external partners retained to review technical aspects of your application.

SIF will not disclose your commercially confidential information, except in the following circumstances:

  • the company authorizes the release
  • the information ceases to be confidential
  • Innovation, Science and Economic Development Canada is required to release the information by law
  • the Minister of Innovation, Science and Economic Development Canada is required to release the information to an international or internal trade panel because of a dispute in which Canada is a party or a third-party intervener

You must mark any information that is commercially confidential as such in your application.

P) International agreements

SIF is administered according to Canada's international agreements. Contributions are not dependent on, in law or in fact, actual or estimated export performance.

Q) Contact us

Telephone (toll-free in Canada): 1-800-328-6189
Telephone (Ottawa): 613-954-5031
Fax: 343-291-1913
TTY (for hearing-impaired): 1-866-694-8389

More contact options

Business hours: 8:30 a.m. to 5:00 p.m. (Eastern Time)
By mail: Strategic Innovation Fund (SIF)
C.D. Howe Building
235 Queen Street, 1st floor, West Tower
Ottawa, ON K1A 0H5
Canada

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