FAQ

Important Information for Existing and Potential Clients

Existing Contracted TPC Projects
All existing contracted TPC projects will continue.

Outlines and Proposals Already Received
Investment outlines already accepted by TPC will be assessed and duly processed. Proposals that are in the negotiation and due diligence phase of the application process will continue to be processed.

New Project Outlines
The TPC program will be closed to new outlines immediately, except for aerospace and defence (A&D) outlines, which will be accepted pending the outcome of the government's decision on an A&D sector support.

Hydrogen Early Adopters (h2EA) Program
The h2EA program is being wound down, and therefore new project outlines are no longer being accepted. There will be no impact on contracted h2EA projects.

Frequently Asked Questions

• Program Objectives
• Benefits for Canadians
• Assessing Applications
• Payments to Companies
• Repayments of Investments

PROGRAM OBJECTIVES

Q1. What is TPC's investment mandate?

TPC was established in 1996 with a mandate to strategically invest in projects with firms across Canada in support of technological development that fosters innovation, commercialization, sustainable development and increased investment.

These investments have targeted pre-competitive projects across a wide spectrum of technology areas such as environmental and enabling technologies, which includes biotechnology and health-related applications, plus aerospace and defence technologies as well as manufacturing and communications technologies.

Q2. If the projects are so promising, why can't they get private sector financing?

TPC only provides a portion of the financing for each project; the companies must raise the rest from other sources. The majority of projects are undertaken by small and medium-sized companies, and TPC's investments leverage additional funding from other sources. For every dollar invested through TPC, almost four dollars are committed by other investors.

Q3. If others are willing to invest, is TPC's contribution really necessary?

Private investors may hesitate to invest at the early R&D phases of a project since financial returns could take years. TPC investments help attract other investors. TPC helps promote important R&D that might otherwise take place outside Canada or not at all.

BENEFITS FOR CANADIANS

Q1. How do TPC projects benefit Canadians?

TPC invests in R&D projects being undertaken across Canada in diverse areas of technology that promote innovation, for example:

TPC helped Zenon develop their innovative Zee-Weed TM membrane filter technology that is used for water filtration worldwide – from municipal drinking and wastewater facilities to emergency relief and portable water filtration units.

TPC invested in Research in Motion's renowned BlackBerry TM wireless platform, which has become the standard in wireless communications.

TPC supported VisuAide Inc. to help them develop technologies that assist people with visual impairments to access print, electronic and directional resources.

The majority of projects are undertaken by small and medium-sized companies, and TPC investments leverage additional investment from other sources. The projects also provide opportunities for highly skilled employment, which benefits communities and helps retain skilled workers in Canada. For more information on the benefits of TPC investments, please visit the benefits section.

ASSESSING APPLICATIONS

Q1. How does a company get TPC funding?

Investment outlines and proposals from companies are assessed in the context of their relevance to the objectives of TPC, namely the extent to which they demonstrate that:

• the project contributes to the strategic objectives of the government, including technological and net economic benefits to Canada (increasing economic growth, creating jobs and wealth, and supporting sustainable development;
• the project is technologically feasible, and that the applicant possesses, or can reasonably be expected to secure, the requisite technological and managerial capabilities and financial resources to achieve the objectives of the project;
• a contribution under TPC is necessary to ensure that the project proceeds with the desired scope, timing or location; and
• the contribution will be repaid.

For more information on the application process, see the For Industry section.

PAYMENTS TO COMPANIES

Q1. Does TPC provide all the funding for these projects?

TPC only provides a portion of the financing for each project; the companies must raise the rest from other sources. Assistance provided by TPC is in the form of repayable contributions at a level and amount deemed justified in light of the anticipated benefits to Canada. The average sharing ratio of assistance under TPC on a portfolio basis will not exceed 33 percent of eligible costs*, with typical sharing ratios ranging between 25 and 30 percent.

*Eligible costs include direct labour and material costs specifically incurred by the proponent in performance of the project plus a reasonable allocation of indirect or overhead costs. Specialized equipment may be eligible as well. TPC does not support costs for land and buildings.

Q2. How is a “conditionally repayable contribution” different from a loan?

Repayments to TPC are not based on a fixed period of time and an interest rate. Repayment terms are negotiated on a case-by-case basis to reflect the unique nature of each company, its project and risk level. Repayment plans usually take the form of royalties based on gross company revenue, fixed repayments, or -- in rare cases -- warrants. The actual repayments received reflect the level of commercial success that the technology and company eventually attain.

Q3. How are TPC investments paid out?

Companies must regularly submit claims substantiating eligible expenses that they have incurred and paid as the project progresses. TPC validates these claims and only issues payments reflecting its share of the eligible costs incurred.

REPAYMENTS TO TPC

Q1. Are TPC investments all repayable?

Yes, this is a requirement of all contracted projects, but repayments are not the primary focus of TPC. They are intended to help grow the fund over time. Repayment terms are negotiated on a case-by-case basis and usually take the form of royalties based on gross company revenue, fixed repayments, or -- in rare cases -- warrants.

For more information on repayments and on the benefits of TPC investments, please visit the Repayments and Benefits sections.

Q2. How is a “conditionally repayable contribution” different from a loan?

Repayments to TPC are not based on a fixed period of time and an interest rate. Repayment terms are negotiated on a case-by-case basis to reflect the unique nature of each company, its project and risk level. Repayment plans usually take the form of royalties based on gross company revenue, fixed repayments, or -- in rare cases -- warrants. The actual repayments received reflect the level of commercial success that the technology and company eventually attain.

Q3. Why are companies not repaying the money sooner?

TPC invests in research and development projects that, by their nature, are long-term and high-risk. The projects have to progress from the work phase to the benefits phase before repayments can begin. TPC aims to achieve repayments over a multi-year timeframe to reduce the financial burden on companies to supportable levels. If repayments were accelerated, the public policy benefits sought by TPC would be jeopardized. General market and economic conditions will affect a company's ability to make repayments, and some projects may not achieve full commercial success for 20 years or more.

Project Phases

• Work Phase – This is the phase where the R&D is being done and TPC shares the costs. It typically lasts for three to five years, but can be even longer.
  
• Benefits Phase - Once the Work Phase has been successfully completed, companies bring the resulting technology to market and begin to repay the investment. This phase can last from 5 to 20 years. The repayments vary depending on the project's commercial success.

Q4. Where do TPC repayments go?

All TPC repayments are deposited in the Government of Canada Consolidated Revenue Fund in the year collected.