The federal government is launching an $80-million program to support Canada’s cybersecurity sector, in a bid to foster R&D, commercialization and a skilled workforce. 

Innovation Minister François-Philippe Champagne will formally unveil the Cyber Security Innovation Network initiative on Wednesday morning. Ottawa will invite applications from non-profit groups built on partnerships between academic institutions, businesses and other levels of government. The launch comes after a series of major financings for domestic firms in the space, and a wave of high-profile cybersecurity breaches. 

The Liberal government first announced the program in the 2019 federal budget, citing the potential for the development of new technology. On Wednesday, Champagne will announce the start of a process to select who’ll get the money, with funding to be allocated over four years starting in fiscal 2021–2022. 

The chosen non-profit will need to raise matching funding from members and partners, a government source told The Logic, requesting anonymity because they were not authorized to speak publicly about the program. It must include at least three cybersecurity centres linked to a college or university and have links with small- and mid-sized firms; large companies; incubators, accelerators or skills-development groups; and provincial, territorial or municipal governments. Ottawa is also seeking a geographically dispersed consortium, with participants from across the country.

The 2019 budget listed a number of potential candidate centres, including institutes at the University of New Brunswick, University of Calgary, Concordia University and Ryerson University. 

Ottawa has previously signalled it wants to collaborate more on cybersecurity with academia and industry, to help domestic firms scale and to train workers with relevant skills. The federal government’s National Cyber Security Strategy, unveiled in May 2019, pledges a greater role for researchers and businesses in the country’s digital defences, in part to generate employment. For example, the Communications Security Establishment’s Canadian Centre for Cyber Security has launched a program to certify IT products that meet cryptographic and processing standards for federal procurement. 

“The need for broad networks and bridges between government, industry, and researchers [is becoming] all the more important,” said Sam Andrey, director of policy and research at the Ryerson Leadership Lab, citing the growing amount of industrial espionage conducted by state-backed actors. The lab contributes to the RBC-funded Cybersecure Policy Exchange, along with the Rogers Cybersecure Catalyst. 

Andrey said it’s appropriate for Ottawa to fund collaboration between researchers, companies and governments. “It fills a gap,” he said. “The [academic] granting councils aren’t going to fund that [and] industry is not going to fund it directly.” There’s a clear public benefit to improved cyber security, he noted.

Canadian cybersecurity firms have expressed concern that it’s difficult to sell to Ottawa and to find domestic investors, pushing many to accept foreign—mostly U.S.—funding and rely on international clients. 

Companies in the sector took in US$398 million in venture capital across 19 rounds in 2019, up from US$54 million over 13 deals the previous year, according to a PwC Canada-CB Insights MoneyTree report; Toronto-based 1Password’s US$200-million raise from Accel in November 2019 accounted for half the total. (The firms have not published more recent figures). Meanwhile, Waterloo, Ont.-based eSentire raised US$47 million from majority backer Warburg Pincus as well as Toronto-based Georgian Partners and others in March 2019.