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CBN Nano Technologies, a division of Canadian Bank Note, will use the money to develop new manufacturing technology that can be used for security features like embedding nanomaterials in bills to make it easier to spot counterfeits. The company is putting up $180 million for the project, and will add 469 new recruits to its workforce of 1,600. It currently designs and manufactures bills for the Bank of Canada. (Ottawa Citizen)

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Talking point: Canadian consumers used cash for 19 per cent fewer transactions in 2017 than in 2012, according to Payments Canada. But Canadian Bank Note is the only domestic currency printer, and has built up a large export business with contracts in 30 foreign countries, including New Zealand. CBN Nano Technologies—which has eight patents for advanced chemical manufacturing—could also apply the new features it develops to its parent company’s other businesses, like making passports and national identity cards for governments. Other Canadian financial-instrument companies have struggled to adapt to find new revenue sources as traditional ones decline. Toronto-headquartered D+H, which printed and processed cheques for banks, spent more than $2.4 billion to buy payment-technology companies between 2006 and 2015. But it was acquired by Vista Equity Partners, a U.S. private equity firm, for $4.8 billion in March 2017, after its stock price halved on poor earnings and high debt in the last six months of 2016.

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The industry group will establish a “national aerospace innovation ecosystem” that will help big firms, small businesses and researchers form partnerships and commercialize new products. The funding comes from the flagship program’s new fifth stream for such collaborations, announced in early June. Meanwhile, the Canadian Commercial Corporation has agreed to help Montreal-based NorthStar Earth & Space sign agreements in the U.S., the U.K. and other countries for its proposed space debris-monitoring satellite system. (The Logic, Reuters)

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Talking point: Part of the Strategic Innovation Fund (SIF)’s $2.51-billion budget came from two aerospace and defence programs, which the federal government rolled into its sector-agnostic flagship fund in its 2017 budget. In December 2018, the Quebec government criticized Ottawa for not allocating dedicated funds to aerospace, while in March, the Aerospace Industries Association of Canada called for a specific economic strategy for the industry. Monday’s announcement could address those concerns. But the sector has not suffered under the SIF, according to The Logic’s analysis. Aerospace projects have been awarded $287.7 million from the fund so far, or 21.3 per cent of the total. That’s more than biotech and cleantech—identified as high-potential sectors by Finance Minister Bill Morneau’s Advisory Council on Economic Growth—combined. North Star was one of the beneficiaries. In November 2018, the federal government awarded it $13 million to improve its imaging and tracking technology.

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Ottawa-based MindBridge Analytics, an artificial intelligence (AI) company for accountants auditing financial data, will receive $14.5 million from the federal government’s flagship Strategic Innovation Fund (SIF).

The Logic reporter Murad Hemmadi spoke with Innovation Minister Navdeep Bains—an accountant by training—about the investment in MindBridge, and the future of the $2.51-billion SIF, which is supposed to help cutting-edge Canadian companies compete globally.

What the money is for: Expanding the technology to financial services organizations in banking and insurance over the next 12 to 18 months. The company has already signed up some clients in the industry, including the Bank of England and Payments Canada, according to MindBridge CEO Eli Fathi. It is also looking at sectors like energy.

What MindBridge is promising: A $140.8-million investment over seven years, and 200 new jobs by 2030.

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Why MindBridge matters (to Canada): The company is one of a small number of AI firms who have been out of the research phase for years and selling their products to large firms. MindBridge launched its auditing tool in November 2016. Some of Canada’s best-funded AI firms, like Montreal’s Element AI ($137.5-million Series A in 2017) are only just announcing their first products.

What MindBridge said: “This investment … enables us to become stronger before the Americans are going to come in and take the company out,” said Fathi.

Who else is providing funding: MindBridge also announced a $15.1-million investment round led by New York-based PeakSpan Capital, with contributions from existing domestic backers Real Ventures, the National Bank of Canada and The Group Ventures.

What’s happened with the SIF so far: The government has awarded $1.3 billion from the $2.51-billion SIF. It originally allocated $1.26 billion over five years in the 2017 federal budget but has added an additional $1.25 billion, as the program has rolled out funding faster than originally announced.

What’s next for the SIF: More funding will be allocated between now and the start of the campaign for the scheduled October election. “You will see more announcements from our government in the coming weeks and months,” Bains told The Logic at MindBridge’s Ottawa office. He said the government’s strategy for SIF hasn’t changed, despite the fact it suspended a $24-million SIF award to Kitchener, Ont.-based North in February, after the wearables company laid off 150 employees. “Our approach is very much the same: do our homework, do our due diligence, examine all the relevant information and make smart co-investments,” he said. “And we’re confident that model will continue to yield strong economic benefits.”

Why MindBridge matters (in Ottawa): The company has grown its headcount from 47 employees to more than 100 over the last year. Fathi is also a member of the federal government’s Advisory Council on Artificial Intelligence.

How MindBridge is different from BlackBerry: In February, BlackBerry received $40 million from the SIF for its QNX connected car software, developed in Ottawa. At the time, CEO John Chen said the funding was not necessary to make its R&D investment. Fathi said that’s not the case for MindBridge, because Silicon Valley competitors have access to larger amounts of venture capital. “Mr. Chen has $2 billion, probably in his bank account, so he doesn’t need $20 million,” he said. “But for us, it’s very important.”

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The new allocation from the federal government’s flagship innovation fund will give money to projects that are fund collaborations between big firms, small businesses, academic institutions and non-profits, and accelerators and incubators. The government is not allocating any new funding for this stream. (The Logic)

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Talking point: This is the first SIF stream for collaborations that does not have industry or subject-area restrictions; it also has no deadline. It’s similar to the SIF’s Stream 4, which allocated large sums of money to specific industries. Based on that precedent, successful Stream 5 projects are likely to receive big allocations from the fund. In May, Innovation Minister Navdeep Bains announced two $49-million awards for digital health projects under Stream 4: a Canada-wide data platform and a group working on image-guided therapies. That puts the projects tied in eighth place in terms of how much money they received among the fund’s 46 projects to date.