OTTAWA — A new federal program will give selected fast-growing companies priority access to government support in a bid to help them scale. A panel of financiers and founders including Knix CEO Joanna Griffiiths and MDA chair John Risley will choose participants for the Global Hypergrowth Pilot (GHP). 

Private-sector executives and advisors have long recommended Ottawa back fewer firms more heavily, and called for a concierge-like service to help them access support. 

At the panel’s first meeting on Friday, Small Business Minister Mary Ng suggested the government had heard them. “Canada needs more anchor firms like Shopify, like Bombardier, and like Wealthsimple,” she said, setting a target of 30 such companies by 2030.

But scale-ups seeking to sell to government, or to secure regulatory approvals and funding, often have a hard time finding the right office or official, according to John Ruffolo, managing partner of Toronto-based Maverix Private Equity, and co-chair of the selection panel. (See sidebar.) “Trying to navigate each of the departments is a nightmare,” he said. 

The GHP will instead give each of 10 participating companies a point of contact at Innovation, Science and Economic Development Canada (ISED) to help them access government support and deal with regulatory issues.

The program will target firms growing revenue at a compound annual rate of 30 per cent over the last three years, with at least $30 million over the last of those and a 40 per cent gross margin. Companies must be headquartered in Canada, and have at least three-fifths of their workers here.

Small and innovative Canadian companies have long complained that Ottawa buys primarily from large, often foreign, firms, particularly when it’s spending on technology. Procurement is “the single most frustrating [problem] for the scale-ups,” said Ruffolo. The GHP will brief participating firms on the government’s purchasing practices, and promote them to departments that may be able to use their products, said Alice Hansen, a spokesperson for Ng. Previous programs the Liberal government has set up to buy more from startups, such as Innovative Solutions Canada, have failed to meet their targets.

Firms chosen for the GHP will get “fast-track access” to immigration and upskilling programs run by other departments, along with export assistance from the Trade Commissioner Service, said Hansen. While selection doesn’t come with funding, the chosen companies’ designated ISED officials will help them with applications for other federal business-support schemes. 

The GHP will also connect firms with regulators, giving the companies an opportunity to explain “how disruptive technologies will need to be considered in future policy-making,” said Hansen. The program may place companies in regulatory “sandboxes,” allowing them to develop new products and services without immediately adhering to existing rules. Cleantech and healthtech firms in particular face “a long journey” to move through the regulatory system, and would benefit from access to such programs, said Judy Fairburn, co-CEO of Calgary-based venture firm The51.

Ottawa is launching the GHP as venture investment in Canada slows and fears of an economic downturn grow. “This is the time when governments should be helping our scale-ups—not in great times,” said Ruffolo. For example, when demand in the private sector is softening, the public sector can offset the loss of business through the use of procurement.  

Ng was first appointed to cabinet in July 2018 with a mandate to help Canadian small- and medium-sized enterprises (SMEs) scale and export more. 

In a September 2018 report, the Economic Strategy Tables (ESTs) recommended Ottawa provide “focused support” including access to mentors, regulatory pilot schemes and government contracts to “the highest-potential companies” in growth sectors like digital and cleantech. Two members of that group—Fairburn and Ian Crosby, then-CEO of Vancouver fintech Bench—have been appointed to the new GHP advisory panel.

That December, Ng appointed Sheldon Levy, former Toronto Metropolitan University (then Ryerson University) president, as a special advisor on scaling SMEs. As The Logic first reported, his July 2019 report called for governments to “prioritize support for select high-potential sectors and companies” that can be “boosted past their peers and become future anchor firms and international successes.” He suggested a new federal concierge service that would help chosen businesses navigate government programs and opportunities.

ISED has been working on the program for over a year. Canadian startups don’t tend to scale, noted a departmental presentation about the GHP prepared for a committee of federal deputy ministers in April 2021. But countries like France, Japan and South Korea “help their own firms with global leadership potential access foreign markets.” 

“Everywhere in the world—but particularly the United States and China—governments get behind their scale-ups and try to help them really become globally dominant,” said Ruffolo, citing assistance in areas like IP, standards, procurement and trade-agreement provisions. “Canada has behaved like Boy Scouts or Girl Scouts.” The GHP is a shift from that approach, he said. 

Levy’s report also reiterated longstanding concerns that Canadian startups exit too early, before they’ve become economy-driving anchor firms. The GHP can help ensure firms need not be acquired or move abroad to scale, said Fairburn. “Being able to demonstrate that these companies can stay in Canada [and] grow to be significant global players is pretty critical.”  

ISED won’t directly impose restrictions to discourage or prevent participating firms from selling out, but will “strongly encourage these companies to make continued employment and IP investments in Canada,” Hansen said. They will be subject to repayment conditions around foreign investment for any other federal programs from which they receive funding, she added.

ISED will accept applications for the program through the end of September. Ruffolo said the panel hopes to have judging done by early January.