FAQs

Archived Frequently Asked Questions (FAQs) for the TPC Program

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

PROGRAM OBJECTIVES

Q1. What was 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 were so promising, why couldn't they get private sector financing?

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

Q3. If others were willing to invest, was 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 helped attract other investors. TPC helped promote important R&D that might otherwise have taken place outside Canada or not at all.

BENEFITS FOR CANADIANS

Q1. How do TPC projects benefit Canadians?

TPC invested 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™ 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™ 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 were undertaken by small and medium sized companies, and TPC investments leveraged additional investment from other sources. The projects also provided 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 did companies get TPC funding?

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

• the project would contribute 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 was technologically feasible, and that the applicant possessed, or could 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 was necessary to ensure that the project proceeded with the desired scope, timing or location; and
• the contribution would be repaid.

PAYMENTS TO COMPANIES

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

TPC only provided a portion of the financing for each project; the companies were required to raise the rest from other sources. Assistance provided by TPC was 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 was not to exceed 33 percent of eligible costs*, with typical sharing ratios ranging between 25 and 30 percent.

^*Eligible costs included 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 did not support costs for land and buildings.

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

Repayments to the TPC program are not based on a fixed period of time and an interest rate. Repayment terms were negotiated on a case-by-case basis to reflect the unique nature of each company, its project and risk level. Repayment plans took the form of one of the following: royalties based on gross company revenues, product or divisional sales, or in some instances fixed repayments or 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. The Industrial Technologies Office (ITO) validates these claims and only issues payments reflecting its share of the eligible costs incurred.

REPAYMENTS OF INVESTMENTS

Q1. Are TPC investments all repayable?

Yes, this was a requirement of all contracted projects, but repayments were not the primary focus. They were intended to help grow the fund over time. Repayment plans took the form of one of the following: royalties based on gross company revenues, product or divisional sales, or in some instances fixed repayments or warrants.

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

Repayments to the TPC program are not based on a fixed period of time and an interest rate. Repayment terms were negotiated on a case-by-case basis to reflect the unique nature of each company, its project and risk level. Repayment plans took the form of one of the following: royalties based on gross company revenues, product or divisional sales, or in some instances fixed repayments or 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 invested 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. Achieving repayments over a multi-year timeframe reduces 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 the TPC program 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.