One of the best ways for startups and scaleups to extend their runway is to secure non-dilutive capital like grants, debt and tax credits. Kristina Komarek from our Funding Catalyst team weighs in on where she thinks funding bodies will focus their attention in 2024.
Artificial Intelligence has been a hot topic for a while, but Kristina thinks that funding bodies will focus on AI in 2024 now more than ever.
“The government wants to make Canada a global leader in artificial intelligence which is why funding the development and implementation of innovative AI technologies is so important,” explains Kristina. “Things like using AI to analyze data and inform clinical decision making, or to make farming faster and more efficient.”
“There are five federally funded Global Innovation Clusters, of which two have had an AI focus. In 2023, Digital focused on funding the development and commercialization of AI technologies in areas like health, environment and customer service,” says Kristina. “Scale AI, another supercluster, is solely focused on funding AI technologies that improve efficiency in supply chains”
“We have also seen IRAP invest more into AI,” Kristina explains. “Both through project support and through partnerships like the one they have with the Alberta Machine Intelligence Institute (Amii) to fund feasibility assessments looking to incorporate AI into their products.”
Emissions Reductions & Sustainability
Clean technology has been a funding priority in 2023, and we expect it will continue to be in 2024. And this year, we expect funding bodies to create even more opportunities to support sustainability.
“Funding bodies who offer sector agnostic programming are shifting their strategic priorities,” explains Kristina, “to better address growing environmental concerns.”
For example, agencies such as Prairies Economic Development Canada (PrairiesCAN) and Federal Economic Development Agency for Southern Ontario (FedDEV) (or their regional equivalents) provide funding that focuses on scaling businesses and improving productivity across sectors, but also prioritize applications in CleanTech or with a sustainability focus as one of their strategic priorities. Meanwhile, funding agencies like Sustainable Development Technology Canada, SDTC, focus on funding innovative companies that are going to have a direct environmental impact through the generation of intellectual property and emissions reductions.
Kristina believes that Digital health is going to be a big trend for 2024, as our health system continues to become increasingly digitized.
“In 2023, we saw a surge in the adoption of digital health solutions into our health system,” says Kristina, “so funding bodies are acknowledging this need by creating new programs or allocating parts of other programs toward digital health.”
For example, Alberta Innovates in the past few months has launched three distinct digital health programs. Kristina says she’s confident more programs across the country will be launched in this space in 2024. Specifically, Kristina expects to see a focus in providing support to projects looking to improve integration between different health platforms. Other examples of funding bodies include Circle Innovation and the Ontario Bioscience Innovation Organization (OBIO).
“Federally, Digital will also have programs supporting digital health,” explains Kristina, “it's also a priority for PrairiesCAN and FedDev.“
Food and Agriculture
With growing climate concerns and continued focus on food chain stability, we’ve seen more funding bodies create programs to support innovation that will improve food security in areas like precision agriculture and farming, and Kristina expects this pool of funding will continue to grow well into 2024.
“I expect this funding will be available both at the provincial and federal levels. For example, there are federal funding bodies that support food innovation including the Canadian Food Innovation Network, Agriculture and Agri-Food Canada,” says Kristina, “or Protein Industries Canada.”
Provincial funding bodies also have food and agriculture focused options that are historically undersubscribed, explains Kristina.
Applying for grants can be a lot of work, so why go this route at all? Kristina offers these motivators:
- Grant funding is the least expensive form of capital compared to debt or equity because you're not giving up equity, you're not paying interest, and you don't have to pay it back.
- Grant funding extends your runway, often bridging critical gaps between rounds and potentially leading to a more favourable valuation at your next round.
- Grant funding is a great way to de-risk and accelerate specific projects that might not be possible to prioritize otherwise.
Agencies are already looking at what potential projects to fund through 2024, so the time is now to get investment ready. Because of her extensive experience helping companies apply for grants, Kristina knows funding programs can pop up quickly with a tight turnaround. She encourages startups and scaleups to get ahead of the game, so they’re ready to go after opportunities as they become available. Ultimately, you don’t want to leave money on the table.