Startup Funding 101: Technology Readiness Levels 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.
The significance of TRLs as they relate to government funding
The path to technology commercialization has many stages. To organize this process and provide a streamlined view of how ideas are turned into products and services, Canadian innovators often refer to a nine-point scale, also known as Technology Readiness Levels (TRL). TRL help define project scope, progress, and resource requirements, thus making projects easier to manage.
Canadian government funding programs also use Technology Readiness Levels to indicate the stage of innovation where grants and loans are meant to support. Many government funding programs seek to enhance exploratory early-stage projects, while others are meant to help develop prototypes, test the innovation, and find first customers.
Understanding and defining projects by TRL stages can help speed projects and secure additional financing.
If your business conducts innovative research and development projects, consider what stage it’s currently in. By determining the TRL of your project, it becomes easier to match it with government funding programs and reduce the impact of R&D projects on company cash flows.
What is Your Project’s Technology Readiness Level?
Most Canadian government funding programs are reserved for technology developers who already have a tangible innovation that is in the initial stages of development. At this phase, innovators have moved past proof-of-concept and are working to create or refine prototypes.
Research grants are quite limited for projects with a TRL less than 4; this is because most R&D costs are incurred through phases 4-9.
To help you understand how TRLs can help you identify your funding opportunities, please compare your TRL from above with the categories below:
Assess Your Project’s TRL
So – what’s your technology readiness level? Use the guide below to match your research and development project to the most appropriate TRL:
- Concept Evaluation: The translation of scientific research into applied research. This is mostly exploration of a technology’s basic properties.
- Technology Evaluation: The study of how technologies could be applied in the market. This is the point where the project’s direction takes form.
- Proof-of-Concept Research: At this phase, active R&D begins and a technological solution is developed. This stage looks at the critical function of the technology and asks, “what is required for this technology to meet the application’s requirements?”.
- Early-Stage Prototype Development: The integration and testing of basic components in a laboratory environment. This can be done multiple times during technology development to ensure that the technology is progressing toward its desired purpose.
- Late-Stage Prototype Development: The integration and testing of basic components in a simulated environment. This is done following lab testing and usually involves accessing better testing equipment to identify potential issues.
- Simulated Environment Pilot: Upon completion of the technology’s design, final testing can commence. This will provide data critical to the commercialization phase where the technology is applied.
- Operational Environment Demonstration: Using the prototype in an operational environment to understand how it performs in non-simulated testing. Further development may be required to address performance issues.
- Final Testing and Evaluation: Upon further testing, the technology has proven itself to be successful under normal operating conditions.
- Successful Deployment: The application of a technology, in its final form, in real-life conditions.
Canadian Government Funding for Research and Development
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).
TRL 1-3 Early Stage Development Funding
Projects with a TRL of 1-3 typically represent projects that are in consideration or early stage
development. Some funding programs that are useful at this part of the process include:
- Canadian International Innovation Program (CIIP): Collaborating with international
technology developers can significantly enhance end products. By leveraging R&D
partnerships, companies can accelerate projects and access new ideas, talents, and
capabilities. Canadian government grants can even reduce project expenses by up to
50% to a maximum $600,000.
- Going Global Innovation (GGI): Seeks to reduce communication barriers with
international commercialization partners who may eventually sell the technology in
foreign markets. Exporters can recover up to 75% of project expenses to a maximum
$75,000 for travel and meetings required to solidify the collaboration.
TRL 4-7 Research and Development Funding
Projects with a TRL of 4-7 typically represent projects that are in early to mid-stage
development. Some funding programs that are useful at this part of the process include:
- IRAP Grants: The Industrial Research Assistance Program (IRAP) helps manufacturers
to overcome technical challenges by reducing the payroll cost of employees and
contractors. Canadian research grants support commercially-viable innovations that
lead to new manufacturing products and capabilities. There are two streams for
technical IRAP projects, including the Accelerated Review Process (ARP)providing up
to $50,000, and the Mid-Size Projects stream, which provides up to $500,000 in
- NSERC Engage: Supports the collaboration of small and mid-sized businesses and
academic institutions. Engage grants support research partnerships, lasting up to 6
months, where a research professor and their team of post-secondary researchers can
contribute to project deliverables. Each 4-6 month project may receive up to $25,000
in research grants and project length can be extended if necessary.
- NSERC Collaborative Research and Development (CRD): Likewise, NSERC CRD
grants provide the capacity to support long-term collaborative research and
development projects with a Canadian academic institution. Through the program,
businesses may perform R&D projects for a period of 1-5 years. This research can be
compensated with government grants worth up to 50% of eligible expenses to a
maximum $200,000 per year.
TRL 7-9 Technology Commercialization Funding
Projects with a TRL of 7-9 typically represent projects that are in late-stage development or
early-stage commercialization. Some funding programs that are useful at this part of the
- Sustainable Development Technology Fund (SD Tech): Supports collaborations that
identify technical weaknesses, or elements that must be changed before disruptive
clean technologies can be integrated. Manufacturers can use the funding to accelerate
the final development and testing of a technology, ultimately bringing it to market
faster. SD Tech provides grants of up to 33% of project expenses to a maximum $15
- Build in Canada Innovation Program (BCIP): BCIP is an opportunity for Canadian
innovators to test and sell their pre-commercial technologies to Government of
Canada. Its purpose is to reduce the commercialization gap commonly faced by
technology developers, and support future sales to both government and non-
government customers. Up to $500,000 can be awarded for most innovations, while
up to $1 million can be awarded for technologies with a military application.
Funding Programs that Integrate Multiple TRLs
Some other popular funding programs support projects through multiple stages of
technology development. Because of less focus on a particular stage of development, these
programs offer a wider range of support. Popular technology R&D programs include:
- Canada Media Fund (CMF) Experimental Stream – Innovation Program: Supports software prototyping, production, and marketing projects. Through the program, innovators can turn ideas into functional products and repay project costs once the project’s results are commercialized. There are the three streams of funding support, including Prototyping (up to $250,000 repayable advance), Production (up to $1 million recoupable investment) and Marketing and Promotion (up to $400,000 recoupable advance).
- Interactive Digital Media Fund (IDMF): Offsets a portion of costs directly related to software and interactive digital media concept definition and production projects. Streams include Concept Definition (up to $50,000 grant) and Production (up to $250,000 grant).
- Innovative Solutions Canada (ISC): Supports startups and small businesses researching and developing novel products and services. Through the program, companies propose ways they could solve federal government departmental challenges by developing innovative technologies. Funding is awarded for proof of concept projects (up to $150,000 in grants) prototype development (up to $1 million in grants) and commercialization (federal procurement contracts).
Access Canadian Government Funding for R&D Projects
As noted above, most stages of the research and development process can receive government funding. Developing a strategic approach to leverage funding (including the use of Technology Readiness Levels) will help your company understand the range of incentives available. Support options are also available for companies who would rather leave the funding process to experienced government funding planners.
If you’re developing technologies that could have an impact within your organization or across the country and want to explore funding options, please contact Mentor Works or let us know if you will be at Elevate and we can connect there.