Corporate Canada giants vie for Ottawa supercluster funds

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Ottawa's flagship innovation initiative – a pledge to fund up to five so-called "superclusters" - has drawn a strong response, with dozens of hastily gathered consortia led by some of Canada's largest companies vying for $950-million in federal funds.

Royal Bank of Canada, Magna International Inc., Telus Corp., Teck Resources Ltd., Loblaw Cos. Ltd. Shoppers Drug Mart unit and Open Text Corp. are among the more than 200 companies that have joined with 20 post-secondary institutions – some of which are supporting more than one bid - to create "superclusters" in such wide-ranging fields as agriculture, advanced manufacturing, cryptocurrency, big data, medical technology and artificial intelligence. They have been joined by some of Canada's most prominent startups and "scaleups," including Stemcell Technologies Inc., Thalmic Labs Inc, Miovision Technologies and Don Tapscott's Blockchain Research Institute.

Government sources say about 50 consortia submitted letters of intent by the July 24 deadline to establish superclusters, or groupings of large and small companies and post-secondary institutions and other organizations that work collaboratively to create skilled jobs and technologically-driven competitive advantages in established and emerging sectors. Bidding groups had to include at least two industry-leading "anchor" companies, smaller companies and at least one post-secondary institution, and to commit at least $1 in cash or in-kind contributions for every $1 requested from government.

The government expects to release a shortlist of 12 groups by summer's end and announce as many as five winners by early 2018.

The government officials said the bidders asked for a combined $10-billion in federal funds and pledged to invest $17-billion themselves. For example, a group comprised of southern Ontario auto parts giants including Magna, along with several Waterloo tech companies and the University of Waterloo has pledged $700 million in cash and in-kind services to develop a supercluster centred around advanced manufacturing and internet-of-things technology. Individual projects can receive up to $250 million from Ottawa.

"We do believe this has triggered and been a catalyst for private sector investment and will go to create high quality jobs for Canadians," said one government official. The strong response "is extremely positive and validated our approach."

Some critics have questioned the program, saying government shouldn't pick industry winners and losers. Many observers are unclear how a supercluster - which must be administered by a non-profit organization - is supposed to function. "Innovation thrives when businesses and entrepreneurs are free from excessive taxes, regulation, and interference," said Conservative innovation critic Diane Finley. "Unfortunately, the Liberals have taken the opposite approach and are picking winners and leaving other businesses to fend for themselves….Why is the government giving away taxpayer dollars without any reassurances that these projects will benefit Canadians?"

But healthcare software entrepreneur Mike Monteith, who co-led a bid to create a medical software and device industries supercluster, praised the initiative for spurring on his firm, ThoughtWire Corp. to work with dozens of other enterprises from startups to emerging healthcare software success PointClickCare and giant Shoppers Drug Mart in a way they haven't before.

"We really have the community talking about innovation" and thinking about leveraging Canadian healthcare spending to create a "powerful economic engine that can drive benefits" for taxpayers and companies in the space, Mr. Monteith said. "We've changed the nature of the discussion that's happening" in the course of putting the bid together. "The program has created a catalyzing effect" for a sector where startups often struggle to commercialize their medical technology products.

Several of the bids represent a who's-who of leading Canada's tech centres: a Vancouver data supercluster proposal includes Telus, Microsoft, Sierra Wireless, Teck and Boeing as well as regional technology and university umbrella associations. A clean mining cluster proposal led by the Canadian Mining Innovation Council and the Centre for Excellence in Mining Innovation (CEMI) is backed by giants Glencore, Teck, Vale, Godlcorp and Agnico-Eagle. "There wasn't a lot of time" to assemble the application, said CEMI CEO Douglas Morrison. "We knuckled down and did what we had to." The University of Toronto's groundbreaking Creative Destruction Lab startup assistance program is working with four supercluster proposals, including a consortium to develop "smart airport technologies" led by airports operators in southern Ontario.

Canada's strength in AI is reflected in several bids. A bid co-led by Quebec City's Optel Group is seeking funding for an AI-powered supply chain supercluster. A bid backed by by Royal Bank and Bank of Nova Scotia seeks to develop an "applied AI" super cluster, while Winnipeg-based non-profit Enterprise Machine Intelligence and Learning Inititiative is looking to bring AI to agriculture. The EMILI plan, backed by 18 companies, "aims to establish the most advanced agriculture economy in the world here in Canada," according to summary notes obtained by The Globe and Mail.