Canadian start-ups need launch pads to find new routes for national economic growth

As the global economy experiences its roughest seas in 40 years, Canada needs to chart routes to create sustained growth and advantages in the global innovation economy. The last time we faced the combined threats of high inflation, spiking interest rates, and global recession, there was still growing demand for our natural resources to help Canada rebound. We live in a very different world now. Here is what we know: the Canadian innovation economy has outperformed every other sector by a factor of three, according to the Innovation Economy Council. Thanks to collaboration, venture capital, and a post-secondary education renaissance, Ontario now has a flourishing garden of startup and growth companies solving the big problems of health care, climate change, and productivity. These ventures are creating the high-paying jobs of tomorrow. Yung Wu is CEO of the MaRS Discovery District, one of the world's largest innovation hubs. Photograph courtesy of the MaRS Discovery District At the same time, Canada's GDP per capita growth is projected to be only 0.7 per cent a year between now and 2030, according to the Organization for Economic Co-operation and Development. That puts us dead last among advanced countries. In the face of these stark circumstances, protecting our intellectual property and commercializing Canadian inventions have never been more important. That recipe for success is baked into the work we do at Toronto's MaRS Discovery District, which is North America's largest urban innovation hub, supporting startups that have contributed over $30-billion to GDP and employ over 32,000 workers. Most of that has been generated over the past five years, despite the recent pandemic, and resulted in a compound annual growth rate of 20 per cent—10 times greater than the GDP growth rate of either Canada or Ontario. We must strengthen and expand this kind of innovation infrastructure to keep innovation growing. Here's how. Talent is the fuel for the innovation economy. Its multiplier effects and opportunities flow to the countries that welcome it. Canada needs to continue to aggressively recruit entrepreneurs, engineers, designers, inventors, and business builders, either through immigration, retraining, or post-secondary opportunities. It is the foundational ingredient that fast-tracks getting innovations to market so that Canada can compete with top-tier tech sectors in other countries. Many of us in the innovation ecosystem aspire to "moonshots," like a cure for cancer or a solution to greenhouse gas emissions. But moonshot companies need launch pads, and that's where an innovation hub like MaRS comes in. This is infrastructure that fosters higher rates of startup success, and drastically reduces the rate of failure as we convert our most promising ventures into category-leading anchor companies based in Canada. Tough times like these are when innovation excels. MaRS Discovery District has helped our startups achieve a success rate eight times higher than industry benchmarks in maturing into firms approaching $100-million in revenue. These are more than startups or lab experiments. These are companies with a full inventory of products and services that are geared to rapid growth and global exports. It took 22 years to build the MaRS ecosystem that transformed Toronto into a global centre for innovation. We must take this playbook and deploy it nationally to enable regional innovation clusters across Canada to build their own tech ecosystems. The final piece of the puzzle is generating a sustainable cash runway through procurement. Venture capital has been the backbone of startup growth, but the global response to inflation—dramatic interest-rate hikes—is drawing capital away from the venture asset class. Government procurement and customer adoption opportunities can replace venture capital. Canada's public institutions must provide more procurement opportunities to smaller innovation firms that are more agile and transformational than legacy solutions suppliers. For example, during the pandemic, Canadian health networks largely geared their procurement calls for critical equipment to large foreign suppliers out of habit, even though small- to mid-size homegrown suppliers were more than capable of filling these orders. CAN Health Network (short for co-ordinated, accessible, national) has done an outstanding job building partnerships to break down these procurement barriers. It connects health-care providers with appropriate Canadian vendors while helping those innovation firms find opportunities to scale up their businesses and grow the health science industry. CAN Health Network is an important part of the ecosystem, and can be easily duplicated and applied in other sectors like cleantech. Currently, smaller innovation firms make up a miniscule portion of Canada's $200-billion procurement market. If they could gain access to 7.5 per cent of that market—about $15-billion—it would replace the entire startup venture capital activity in Canada in 2021. These are seamless solutions for building a modern innovation infrastructure, as evidenced by the MaRS experience. They all boast measurable and sustainable returns on investment. None of them require government handouts or grants to legacy industries. But most importantly, they will build a knowledge-based economy that can inoculate and reverse Canada's productivity and growth challenges for decades to come. Yung Wu is CEO of the MaRS Discovery District, one of the world's largest innovation hubs, and Canada's premiere science and technology innovation ecosystem. He is a co-founder of two not-for-profit organizations, the Coalition of Innovation Leaders Against Racism (CILAR) and DifferentIsCool (DiSC). Yung currently serves on the boards of OMERS, the Toronto Region Board of Trade, Antibe Therapeutics Inc. (TSE:ATE) and is a member of Green Shield Canada. He is a governor in council appointee to Canada's Net-Zero Advisory Body. The Hill Times

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Canadian start-ups need launch pads to find new routes for national economic growth

During these tough times, protecting Canadian intellectual property and commercializing our inventions have never been more important.

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