As part of the Startup Funding series NRC IRAP Funding program is the topic of this weeks Ask The Startup Coach!
What is NRC IRAP Funding? Well let’s start with the NRC part. The National Research Council of Canada (NRC) is Canada’s largest federal research and development organization. One of the programs they offer is the Industrial Research Assistance Program (IRAP) or together they are referred to as NRC IRAP or just IRAP.
IRAP (Industrial Research Assistance Program) is a funding program designed by the Canadian government to increase innovation and speed of research and development projects. Companies Canada wide are eligible to apply and receive funding and support. If you are doing technology research development in Canada, check out NRC IRAP.
IRAP’s program offers advising, financial support, and industry connections to over 10,000 small to mid-sized enterprises, or SMEs, on an annual basis. Best of all? IRAP isn’t a loan. So long as all requirements are met and fulfilled, participants are not obligated to repay any amount of the funding received.
The Benefits of IRAP
This is one of the most innovative and most highly recognized programs available through the National Research Council, companies who meet the requirements should take advantage of the opportunities available with IRAP. For small businesses where budget matters most, access to funding such as IRAP can be of huge benefit.
IRAP Financial Assistance
resources can be a pitfall for SMEs of all shapes and sizes, but IRAP lightens
the load with access to substantial financial assistance to be used for
IRAP funds are
intended to be used for a specific project or service, not just any expenses
related to ongoing operations, and can include:
- Acquiring or adopting technology
- Marketing and commercialization support
- Research and business development
- Offsetting project costs
- Wages and training
Funding assistance is available under four sub-programs, each with its own unique purpose and funding cap. In general, IRAP funds top out around $150,000, but exceptions are made on a case by case basis. IRAP funding is expected to cover 50% to 80% of total project costs.
IRAP ARP (Accelerated Review Process) Research Grant
This subprogram provides grants of up to $50K in order to help other firms to fund their research and development (R&D) projects or commercializing on technology projects.
IRAP ARP grants focus on solving an internal technical challenge with a focus on adopting technology and processing enhancements. These projects are often focused on early-stage research or development activities, and the exploration of new technology-based market opportunities. Activities include assessment and development of technologies to improve internal processes, feasibility studies and assessments for new services/product ventures, and prototype engineering activities.
- Funding Contribution: Maximum $50k research and development grant (supporting up to 80% of direct labour and 50% sub-contractor costs).
- Eligibility: 1-500 people on payroll and incorporated for at least 2 years.
- Timeline: Additional funding is released April 1 of each year. Applicants must complete projects within one year (spanning April 1 to March 31), applications should be completed in Q1.
IRAP Mid-Size Projects Technology Development Grants
Under this subprogram the funds and grants are larger depending on the nature of the project. This subprogram is great for large projects such as creating new original software and developing new programs, which require a larger sum of money. It also offers funds for internal research and development that a company may require.
IRAP Mid-Size Projects must focus on overcoming technical uncertainties and risks through the development and commercialization of innovative products. These are often projects focused on the development of new products that fills a current market void. Activities include process or product development, commercialization, or customization for particular customers.
- Funding Contribution: Up to $10 million in technology development grants (supporting up to 65-80% of labour costs for employees directly involved in the project).
- Eligibility: 1-500 on payroll, incorporated for at least 2 years, and committed to internal R&D activities.
- Timeline: Additional funding is released April 1 of each year; applications should be completed in Q1. Project completion timelines are negotiable, however most projects in this stream are completed within 36 months.
IRAP YEP (Youth Employment Program) Hiring Grants
IRAP YEP funding is uniquely designed to help businesses hire youth researchers and overcome technical challenges. The program seeks to encourage the hiring and training of youth (ages 15-30) who can provide technical abilities not currently accessible to the company. Canadian college and university graduates with a technical/STEM background should be the focus of candidates.
Funding Contribution: Up to $30,000/graduate for a 12-month work placement. May apply for up to two candidates, candidates must not be an employee at the time of application submission.
Eligibility: Incorporated and financially stable with 1-500 employees. Must have candidate selected, but not hired, at the time of application.
Timeline: Additional funding is released April 1 of each year. Applications should be completed in Q1.
Digital Technology Adoption Pilot Program (DTAPP)
Offers grants up to $100K or 80% of direct labour and 75% of subcontractor costs, designed to speed up the rate at which SMEs adopt digital technology and build digital skills.
Cost, benefits and risk analysis
Training – Technology acquisition
Amount: Up to $100,000
Unfortunately NRC is not accepting DTAPP applications and there is no indication if an when they will be in the future
Eligibility Criteria for NRC IRAP Funding
Some basic criteria must be met before one can be considered for the IRAP Grants:
Be a profit-oriented and incorporated Canadian Small and Medium Enterprise (SME).
Have full time employees, up to a maximum number of 500.
Your goal should consist of growing and generating profits by developing and commercializing innovative, technology-based projects (new or improved), services or processes in Canada.
How Is IRAP Different From SR&ED?
The program differs from SR&ED in two main ways.
IRAP requires a funding proposal before the project starts. SR&ED program qualifies expenses after.
You must work with an ITA Industry Technical Advisor to submit an IRAP funding proposal. While it is recommend to work with a SR&ED advisor to submit your claim, it is not a requirement.
Keep in mind, you still have to contribute a percentage of the overall project cost (typically 50%), and IRAP funding covers the remainder. What most people forget is that IRAP funding can still be claimed for SR&ED if that portion of the claim goes toward technical work. But be careful not to try and double dip.
How do you apply?
Your first step is to contact a local ITA Industry Technology Advisor to ensure you are indeed eligible for the basic criteria. They will determine your eligibility and help you submit your funding proposal.
Here are some questions that we highly recommend going through (and knowing the answers to!) before you meet with your Advisor:
Receiving the green light for funding isn’t as easy as a simple application. To qualify, businesses must undergo a successful consultation with a local Industry Technology Advisor that reviews the organization’s:
1. Overview of the Management Team
- Why are you the right person to see this project to completion and through commercial success
- Current company overview they are looking for consistency and don’t want to see deviation
2. Financial Capability
- You want to show that you can cover the 50% in labour and subcontractor expenditures as well as any other expenditure not covered by IRAP (such as 100% of capital expenditures).
3. Company Skillset
- Does your team (or proposed partnerships, etc.) have most of the skills required to develop and market the product?
4. Technology Overview
- An overview of the technology or product that you are proposing to develop.
- Potential roadblocks and mitigating strategies.
5. Market and Business Opportunities
You need to be able to describe:
- Potential customer
- Problem you are addressing (Potential financial gain (pricing, etc.); Market size and location; Market penetration)
- Cost to penetrate market (cost per user acquisition)
- Strategies to gain the proposed market share
- Potential roadblocks and mitigation strategies
6. High level project plan/timeline
- Detail phases, if more than one
- Timelines for each phase and proposed milestones
- Costs for each milestone
There is no annual deadline to apply, but I recommend working with your ITA before the funding cycle begins on April 1, businesses are encouraged to submit proposals as soon as possible.