INNOVATION July-August 2017

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We can conclude, therefore, that at the concept phase support is relatively low, with minimal tax-credit and government- assistance opportunities. Support at the Startup Phase As the company evolves to the startup phase, we observe appreciable growth in total available funding. Expenditures rise in lockstep with operating activities and are dedicated almost exclusively to technological development, resulting in the concurrent growth of tax credits. In fact, you can think of the transition period between the concept and startup phases of the business as roughly corresponding to TRL levels 1 to 3 of the R&D cycle. Risk is lowered substantially by alternative financing or advance sales secured in this phase, which encourages funding agencies to offer a preliminary suite of government assistance options in comparison to the concept phase. Growth is also sufficient to support limited human resources and/or equipment expansion, thereby enabling small Hiring and Capital Expenditure grants to supplement the R&D grants. We can conclude, therefore, that at the startup phase, support is relatively moderate, with an appreciable rise in tax credits and with government assistance making up a more appealing proportion of the funding mix. Support at the Growth Phase Transition into the growth phase is where we observe the most dramatic effects on available funding. While overall tax credits rise alongside continued technological development, expenditures diversify to include substantial increases in operating expenses such as labour and business development, and in capital investments such as fixed assets. Furthermore, strong sales temper or reverse prior losses and mitigate a significant degree of business risk in the process. These trends converge in the growth phase to produce an optimized funding environment in which the organization can simultaneously leverage: (1) eligible expenditures and low business risk to secure tax credits and R&D grants, respectively; (2) operating expenses to secure Hiring & Training and Business Development grants, and; (3) investments to secure Capital Expenditure grants. In fact, you can think of the transition period between the start and growth phases of the business as roughly corresponding to TRL levels 4 to 6 of the R&D cycle.

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