OTTAWA, Jan. 30, 2013 /CNW/ - Canadian firms say lack of financing is
the key barrier to innovation, even though Canada has one of the
best-developed financial markets in the world. The first report of The Conference Board of Canada's Centre for Business Innovation (CBI) suggests that investors will be more willing to finance innovation if
innovators get better at explaining how their new or improved products
or services will make money.
A quarter of respondents to the CBI's Innovator Survey on Innovation
Metrics and Management identified finance as their number one
challenge. Respondents to the nation-wide survey of more than 1,000
Canadian firms who are seeking financial support cited finance about
four times more than any other issue. The respondents to the survey
were firms of all sizes and across industrial sectors.
The detailed survey findings will be presented at the Business Innovation Summit 2013: Innovation for the Corporation on Tuesday, Feb. 19 and Wednesday, Feb. 20 in Toronto.
Access to financing is the number-one barrier to successful
commercialization of innovative ideas.
Canada's financial markets are not generally risk averse, but Canadians
are reluctant to assume risks that they do not understand.
Innovators need practical tools to help them better explain to investors
how their innovations will make money.
"The Canadian innovation challenge boils down to great people and great
ideas, but many entrepreneurs are poor at commercialization. Although
small firms are often more innovative than larger firms, they are also
the ones that are most likely to lack the internal cash flow to fund
innovation projects. But they need to add commercialization skills to
their technical innovation skills if they are to attract capital," said
Michael Grant, Director of Research, Capital Markets, Centre for
"When innovating companies are able to communicate the financial value
of their innovation and their business model, and execute a convincing
commercialization plan, Canadian financiers will support them."
The report discusses a range of other actions by businesses, governments
and academia that could improve access to financing for innovation:
Canadian innovators should look at capital markets both inside and
outside the country.
Canadian subsidiaries of multinational firms need to make the case that
Canada should be a global hub.
Canada's large funded pension plans must make active investments in
private equity and other asset classes.
Universities could develop programs that give students both specialized
financial analysis skills and expertise in managing commercialization.
Business culture needs to change to focus more on growth through
innovation and less on selling early.
Finance techniques used in resource industries such as mining and oil
and gas development need to be considered in newer sectors such as
biotechnology and clean energy.
The report, Financing Innovation by Established Businesses in Canada, is published for the CBI, a five-year initiative launched in 2012 to
help bring about major improvements in firm-level business innovation
SOURCE: Conference Board of Canada
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