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.
"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 Business Innovation.
"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 in Canada.
SOURCE Conference Board of Canada