Objective

The objective of the Idea to Innovation (I2I) grants is to accelerate the pre-competitive development of promising technology originating from the university and college sector and promote its transfer to a new or established Canadian company. The I2I grants provide funding to college and university faculty members to support research and development projects with recognized technology transfer potential. This is achieved through defined phases by providing crucial assistance in the early stages of technology validation and market connection.

Description

Four distinct funding options are proposed, which are characterized by the maturity of the technology or the involvement of an early-stage investment entity or an industrial partner (see Partner eligibility for definitions). In the market assessment, NSERC will share costs of an independent and professional market study with the institutions (including the industry liaison office [ILO] or its equivalent). In phase I, the direct costs of research will be entirely supported by NSERC; in phase II, they will be shared with a private partner. The technology development may begin with a phase I project (reduction-to-practice stage), followed by a phase II project (technology enhancement) or, if the development is at a later stage, it can start directly with a phase II project. In any case, the combination of phase I and phase II will be limited to a maximum of three years of funding for any given project.

Eligible research and development activities include (but are not limited to):

• Refining and implementing designs;
• verifying application;
• conducting field studies;
• preparing demonstrations;
• building prototypes; and
• performing beta trials.

Certain expenditures related to project management are now eligible as a direct cost of research in phase IIb projects, up to a maximum of ten percent of the total direct costs (see the Guidelines for Research Partnerships Programs Project Management Expenses).

The discoveries must be disclosed by the investigators according to institution policy and the IP must be managed by the ILO or its equivalent. The ILO must work on each new proposal (see below). To comply with the I2I program requirements, which includes matching cash contributions, IP protection, market promotion, etc., the assignment of IP rights to the institution/ILO is expected. The ILO will be in a position to fulfill its commercialization mandate.

For all phases except the market assessment, the projects must describe the strategy to protect the commercial value of the technology and relate it to the commercialization strategy. In consideration of an intellectual property (IP) strategy, it will be beneficial to demonstrate how the IP strategy and execution will contribute to the technology transfer or future business the technology may support. For more information on developing an IP strategy, consider the following resources:

• The Centre for International Governance Innovation (CIGI) massive open online course “  Foundations of IP Strategy” outlines the basic principles relating to the protection and strategic uses of intellectual property for competitive advantage.
• Canadian Intellectual Patent Office (CIPO) offers  IP for Business advice, via their IP Advisors.
• Business Development Bank of Canada (BDC) in partnership with CIPO offers a free IP assessment tool.
•  IP Handbook offers several detailed chapters and sub-chapters on topics that may be relevant to your IP strategy.

All proposals must include a technology transfer plan, appropriate to the maturity of the technology, that describes how the work will proceed through the next stages in the validation process up to eventual market entry. The ILO or its equivalent works with the applicant(s) in evaluating and protecting the new technology, service or process; developing proposals; preparing a technology transfer approach; making business contacts; and negotiating licensing or other such arrangements with potential partners. A portion of the award may be used to co-support some of the activities undertaken by the ILO or its equivalent.

Eligible technology transfer activities include (but are not limited to):

• Consulting fees to develop the strategy to protect the technology’s commercial value;
• market investigations;
• consulting fees for business plan, market survey, etc.;
• business mentoring by experienced entrepreneurs;
• sharing of patenting expenses; and
• expenses associated with creating a partnership (such as travel, etc.).

The institution must justify these technology transfer activities expenses and commit itself to bear at least half of their cost. NSERC may provide support up to a maximum of ten percent of the total requested amount (i.e., the NSERC contribution will be no more than $12,500 for a $125,000 requested budget). Staff activities are not considered an eligible expense and cannot be used to leverage NSERC funds. Technology transfer expenses related to the proposed technology and incurred previously will not be considered in the cost-sharing of proposed activities.

Market assessment

Market assessment projects are designed to enable institutions to do a market study for a product, process or technology they plan to develop. Understanding market potential is crucial when developing a new technology. The market assessment funding option is a tool to help gain impartial market opportunity information and validate important business elements before embarking the team in the development process of a technology. It can be used to better position a proposed technology in an I2I application (providing the reviewers with a better understanding of the market for a given technology) or identify the appropriate NSERC program.

The market assessment should precede a phase I proposal, if the applicant and ILO or its equivalent have not yet developed an understanding of the potential market. In certain instances, like development of a platform technology, requests for a market assessment can be submitted as a standalone proposal at the same time as a phase I application.

The market assessment should objectively establish the size of addressable market segments and present a clear portrait of the competitive landscape.

The market assessment proposed should focus on  primary research used to enter in a discussion with potential customers and/or partners (identified with the researcher and ILO) to flesh out their thoughts about the new technology. Essential questions such as the following can be addressed: What would be the required specific features a potential customer would need? How is the technology substantially different (better) than existing solutions? What do they currently pay to meet the same need? As potential customers, would they buy the technology? What is the approximate number they might need? What is the estimated value of the technology for the buyers?  What barriers exist? Why will someone choose the proposed solution? Applicants may wish to consider other relevant questions and can outline these in the proposal.

The application should demonstrate what approach, activities and tools (i.e., interviews, surveys, SWOT analysis, PEST) are planned to address the above questions. These studies are to be conducted by an experienced professional such as an outside consulting firm. A tender of service from the consultant listing the scope, deliverables and other relevant elements is required.

NSERC will co-support up to three-quarters of the costs of the project contracted out to a consultant, with the institution providing the balance in cash (a person employed part-time or full-time at an ILO or its equivalent cannot act as an external consultant on an I2I market assessment project). Funding is available for up to 12 months, with a maximum contribution from NSERC of $15,000.

Funding is non-renewable.

Phase I – reduction-to-practice stage

Phase I reduction-to-practice projects are designed to advance promising technologies in order to attract early-stage investment and/or to build valuable intellectual property (e.g., strengthening the commercial value of the technology, broadening patent claims or strengthening licensing opportunities) in anticipation of transferring the technology to a new or established company.

One of the main reasons why phase I proposals are rejected is that the technology is at too early a stage to be eligible for the I2I grants. Phase I proposals must be based on strong scientific evidence and present the following elements:

• The technology must be sufficiently mature. The basic parameters of the concept must have already been explored, and sufficient testing should have been done to assess the potential of the innovation to work in a “product” environment or for its intended purpose.
• There must be a clearly identified and well-described potential market. Meaningful letters of support from potential receptors, end-users/clients and industrial value-chain players may be very useful.
• The content of the technology transfer section should address the essential questions asked through the market assessment portion.
• Involvement of experienced business mentors is recommended when the team is planning to spin off a new company.

A company may be involved as a testing bed for the technology (i.e., potential client). However, when a collaborating company is the intended receptor for the technology (i.e., the company that will market the end product), the cost of the project should be shared with this partner and the application submitted as a phase IIb proposal.

Funding is available for up to 12 months, at a maximum of $125,000, and is non-renewable. NSERC will assume 100 percent of the direct costs of research for phase I projects.

Each project is expected to have a “go/no-go” decision point, representing the achievement of a predefined scientific or engineering milestone, at the end of phase I when either seed funding will be provided by an early-stage investment entity or the technology will be further developed with an established or start-up company.

All phase I proposals require a plan describing how a partnership will be established with a Canadian company that has the capacity to commercialize the research results. Although a business partner is not a prerequisite for phase I applications, a demonstration of interest may strengthen the proposal. It is expected that technologies, implicitly or explicitly committed to a specific receptor organization or industrial partner, will be submitted as phase II applications. This may not apply if the intention is to create a spin-off company.

NSERC offers an I2I phase Ib supplement. This funding, up to $60,000 for six months, can be made available for successfully completed phase I projects with high promise to secure an investor or a licensing company. ILOs or their equivalent should contact their NSERC staff for more information.

Phase II – technology enhancement

Phase II projects are designed to provide scientific or engineering evidence establishing the technical feasibility and market definition of the technology, process or product. Phase II projects require an early-stage investment entity (phase IIa) or a company (phase IIb) to share the costs of the project. The supporting organization is expected to participate actively in the planning of the project. The proposals fall into two categories according to the partner involved as described below.

Phase IIa – early-stage investment partner

Proposals with an early-stage investment entity must be designed with a “go/no-go” decision point, after 6 to 18 months, representing the achievement of a predefined scientific or engineering milestone that justifies moving forward by further developing the technology either through a new (i.e., start-up) or established company. NSERC can support up to two-thirds of the costs of the project with the early-stage investment entity providing the balance in cash. Funding requested from NSERC should not exceed an average of $125,000 per year.

• The partnering firm must lead the preparation of the technology transfer plan and contribute at least a third of the funds required for the project.
• It is expected that the collaborator has the financial strength to carry the project into phase IIb or directly to market. If this seed funding will support a spin-off or entrepreneurial start-up, the financial standing of the firm will be closely scrutinized in the evaluation.
• The technology transfer terms must be disclosed.
• The science has to be substantiated to the point that its end product is easily identifiable.
• Thorough market research is required and potential buyers/markets must be specified. Meaningful letters of support from potential receptors, end-users/clients, industrial value-chain players are very useful.
• Well-justified budgets are a prerequisite, and indications of future financial requirements, as well as the plan to secure these funds, should be provided.
• Involvement of experienced business mentors is required when the team is planning to spin off a new company.

Projects that achieve critical milestones may be pursued during another 6- to 24-month period with either the newly created company or an established Canadian company, provided the cost-sharing arrangements for phase IIb projects are met.

Phase IIb – partnership with a Canadian company

Most of the requirements for phase IIa listed above also apply to phase IIb applications. As well, if the development of the technology was supported by a previous I2I phase, proof that the objectives of the earlier project were achieved must be provided, specifically:

• The “prototype” must already be in existence;
• a strong business plan is required;
• involvement of experienced business mentors is required when the team is planning to spin off a new company;
• the receptor capacity to manufacture, distribute, license, etc. must be substantiated;
• adequate budgets are required to show that the product will be at the marketing/manufacturing stage at the end of the phase IIb grant; and
• the “in-kind” contributions should be fully justified as they will be carefully scrutinized.

Phase IIb proposals with a Canadian company are expected to be completed within two years, and funding requested should not exceed $350,000 for the duration of the project. NSERC may fund up to half the cost of the project, with the company providing the other half through a combination of cash and in-kind contributions. Each case will be evaluated on its merits; however, it is expected that the cash component should equal at least 40 percent of the amount requested from NSERC.

The industrial partner must have, or be able to acquire by the end of the project, the technical capability to undertake any further development necessary to take the product or process to market. The company receiving the technology should be prepared to carry out a market study, product/process development, engineering, and sales and marketing planning required to establish that a technology is viable, and to enter the market successfully.

The ILO or its equivalent is expected to work with the applicant(s) and the partner in developing proposals and negotiating licensing or other such arrangements.