Part 1: Startup Funding 101 with Mentor Works
At Elevate, it’s our mission to foster the growth of the tech and innovation ecosystem in Canada. Mentor Works shares that goal and is helping Canadian companies navigate pathways to government funding for their projects. In this three part series, Mentor Works will break down some of the ways entrepreneurs can get their ideas funded and scale their business.
Government Funding for Innovative Software and Digital Media Projects
Canada’s software sector is a critical component of our national economy. With more than 33,000 companies, over $61 billion in annual revenues, and nearly 400,000 employees, it is one of the largest sectors of Canada’s information and communications technology (ICT) industry. It’s also a leading innovator that invests over $2 billion in research and development each year. But despite this commitment to innovation, Canadian companies often lack the financing needed to scale at a pace that meets or exceeds that of global competitors. As a result, these firms miss potential growth opportunities and have slower development/commercialization cycles.
Fortunately, the Canada Media Fund: Experimental Stream – Innovation Program supports software prototyping, production, and marketing projects. Through the program, software developers can turn ideas into functional products and repay project costs once the project’s results can be commercialized. By offsetting a portion of upfront costs, companies can advance their platform’s commercial readiness, launch their product, then repay the balance of Canada Media Fund’s investment as product revenues are generated.
The Canada Media Fund: Experimental Stream – Innovation Program offers up to $250k to $1M per project phase to develop software innovations from concept to commercialization.
To access CMF funding for software projects, software developers must qualify for the program and submit a comprehensive application package during one of the program’s intake periods. Prior to applying, applicants should have a firm understanding of how products will be commercialized and how the Canada Media Fund will be repaid for its original investment.
Canada Media Fund: Experimental Stream – Innovation Program Overview
The Canada Media Fund: Experimental Stream – Innovation Program is a Canadian government funding program directed towards software developers who produce cutting- edge interactive digital media products. It helps offset initial investment costs required to develop and market innovative software products; this helps developers release products more quickly and improve the commercial success of such products.
Through the program, interactive digital media developers may access up to $250,000 to $1 million per project phase, or up to $1.2 million per product.
CMF Experimental’s Innovation Program offers support to three types of projects, including:
1. Media Prototyping Projects
Projects in the conceptual or prototyping phases may receive Canadian government funding to conduct feasibility or market assessments, create storyboards, and prepare the final version of scripts. These early project stages should result in companies being ready to start production when complete.
Through the Media Prototyping Projects category, software developers may receive up to 75% of eligible project expenses to a maximum $250,000 in interactive digital media funding.
Prototyping projects are awarded funding as a repayable advance. If no further funding is requested from CMF for future project stages, the advance can be repaid or (through formal request) converted into a recoupable investment and applied to a production project. If more funding is sought directly through CMF’s Media Production Projects stream, the advance is automatically converted into a recoupable investment and combined with Production funding.
2. Media Production Projects
Projects that have been conceptualized and can prove market demand may receive Canadian government funding to develop market-ready media and conduct early-stage marketing activities.
Through the Media Production Projects category, interactive digital media developers may receive up to 75% of expenses to a maximum $1,000,000 in software funding.
Production projects are awarded funding as a recoupable investment. Recoupable investments require repayment from exploited software products until the amount received has been repaid; this can take up to seven years from the product’s original commercialization. Once CMF has recouped 100% of its investment, it participates in further profits, with the only change being a 25% reduction in the amount of profits shared with CMF (or 50% if the original investment is recouped within two years).
3. Media Marketing and Promotion Projects
Completed media projects can also access the Canada Media Fund for projects that focus on creating and distributing national/international marketing campaigns. This is used to clear final hurdles in the commercialization process and reach potential buyers of the product.
Through the Media Marketing and Promotion Projects category, software developers may receive up to 75% of eligible expenses to a maximum $400,000 in small business funding.
Marketing and promotion projects are awarded funding as a recoupable advance. Recoupable advances are repaid from revenue generated by exploitation of the project in a manner no less favourable than other financial participants who are providing recoupable financing. Payments are only made until the full amount of the CMF’s advance is recouped.
Businesses Eligible for CMF Experimental – Innovation Program Funding
Eligible CMF Experimental Stream – Innovation Program applicants must be either:
- A for-profit company which is Canadian-controlled and has a head office in Canada; or
- A public or private Canadian broadcaster that is licensed by the Canadian Radio-
television and Telecommunications Commission (CRTC).
CMF Experimental Stream – Innovation Program: Project Eligibility
The Canada Media Fund: Experimental Stream – Innovation Program seeks Canadian
interactive digital media content and software that is innovative and leading-edge. Eligible
- Contain digital media content and/or application software that is innovative,
interactive, and is connected to the Canadian cultural sector;
- Be produced in Canada, with at least 50-75% of project costs incurred in Canada; and
- Remain under Canadian ownership.
Examples of Eligible Project Types
CMF funding can be extended to the following innovative project types:
- Video games (PC, console, handheld console, mobile, or other platforms
- Software applications with a connection to the Canadian cultural sector
- Web 2.0 or higher applications
- Mobile applications
- Projects containing audio-visual content and significant user interactivity
Successful Canada Media Fund Experimental Projects
The Canada Media Fund regularly announces its support for new, innovative digital media projects. Some of the most recent recipients of funding include:
- Canada Media Fund’s Innovation Program Awards ~$6.2M in Funding: 27
prototyping and marketing/promotion projects were announced as successful
recipients in February 2018. Learn more about some of these projects.
- Canada Media Fund Awards $10.3 Million to Digital Production Projects: Virtual
reality and interactive games/software has become a major emphasis for the Canada
Media Fund. Discover what types of projects are receiving support through their
- $6.2M Awarded in Canada Media Fund Experimental Stream: 28 projects received
funding through CMF Development and Marketing streams. Learn about what types of
projects are receiving funding, including immersive games, software, and mobile
How to Apply for the Canada Media Fund: Experimental Stream – Innovation Program
To get started with the Canada Media Fund: Experimental Stream – Innovation Program, eligible companies should build a budget of rough costs and timelines for project spends. This will help select the optimal stream of support and help companies understand which program deadline to accommodate.
All applicants must develop a detailed application and submit it by an upcoming stream- specific deadline. Application forms can be found online via CMF’s website; completed applications typically range in length from 25-35 pages, depending on the funding request and complexity of the project. This does not include supporting documents, such as the project budget and any supplemental information.
To discuss your project’s suitability for CMF funding and explore ways to optimize the application process, please contact Mentor Works or let us know if you will be at ElevateTO and we would be happy to connect at the conference.