We should not beat ourselves up about the state of Canadian innovation at the fundamental level – it is extremely healthy, and there is no shortage of it. Incubators, accelerators, university labs and startups from coast to coast are brimming with raw ideas. If Canada has an innovation problem, it is a relatively positive one – too little Canadian innovation is finding its path to market.
From a corporate perspective, plugging into that universe presents extraordinary opportunity. To that end, the Business Development Bank of Canada’s BDC Capital division is launching a new program aimed at connecting innovators and large corporates – essentially a “concierge service”.
Corporates will be able to come to us and say, “We are interested in this and that – so what is out there?” And we can help as a matchmaker, connecting companies with accelerators, universities and startups.
BDC Capital is tasked in part with identifying and plugging holes in Canada’s venture capital ecosystem. Filling the gap between innovators and Canadian companies is one of our big projects.
Earlier this year, the federal government’s Advisory Council on Economic Growth praised Canada’s network of large firms, high-growth small and medium-sized enterprises and research infrastructure, which includes one of the healthiest concentrations of high-quality university research in the world. But it also identified a lack of collaboration with the corporate world as the main challenge.
As a former managing director of a Boston-based venture capital arm as well as a three-time startup founder, I am a serious innovation evangelist. When a company explores externally, the first thing they see is better leverage from their own internal R&D, and down the line it is simple – companies see new product opportunities sooner, and develop to get them to market faster.
It is especially critical for companies to move past the bias that keeps them looking within their own walls for new ideas. Once businesses start to see what is out there in the big wide world, they realise how much more there might be, and they can start developing those ideas internally as well.
That message was reflected in a recent report by Boston Consulting Group, which concluded that “corporate venturing does not supplant internal R&D, but complements and encourages it”.
Canadian corporates are used to hearing that they are less active than their global counterparts in domestic entrepreneurship and innovation. Corporate spending on R&D in Canada is equal to only 1.7% of GDP, compared with an Organisation for Economic Cooperation and Development average of 2.4%. There are approximately 1,600 corporate venture capital arms around the world. In Canada there are only 15, according to Global Corporate Venturing.
But those numbers also highlight the opportunity in an underexploited sector. Canada’s corporate sector is ripe for innovation, with a few culture changes. One thing holding companies back is that it is rare for a company to go out and find a ready-made solution for its particular need.
But that is not the point of going out to foster relationships with innovators. More important is the ability to scout for potential, to develop good ideas and to search for solutions that could meet needs in five years, 10 years and beyond.
Canada-based telecoms company Telus is a great example of that. They are doing an unbelievable number of things, internally and externally, where they have a whole internal venture capital fund and have identified e-health as an external focus. Their view is that the e-health space, the interaction of communications and healthcare, will be one of the biggest drivers of the future need for telecoms. So they will learn it, know it and be there first.
That may be the best takeaway of all: truly embracing innovation means engaging with the future, and with opportunities you cannot even see coming yet, as much as it is about the here and now. By engaging as customers, partners and investors with the national innovation ecosystem, Canada’s corporate sector will reap more and better ideas, products and services, not just next quarter or next year, but for years to come.
This is an edited version of an article that first appeared in Canadian newspaper Globe and Mail.