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File: 02 — ResearchStatus: LiveFunder: ISEDYear: 2026
ISED Research Report

Innovation Support in a Changing World

Global Insights for Canadian Accelerators and Incubators

Funded by Innovation, Science and Economic Development Canada (ISED) under the Small Business and Entrepreneurship Development Platform (SBEDP). A field study of how Canada’s business accelerators and incubators must evolve.

27

Expert interviews

7

Countries studied

7

Themes for action

~700

Coded extracts

↓ Download full report (EN)↓ Télécharger le rapport (FR)

This study examines how Canadian BAIs can better enable national innovation competitiveness. Led by CAIN and funded by ISED, it combines secondary research with 27 expert interviews across 7 countries to identify system-level insights and practical recommendations.

01

Converting Startups to Scale-ups

Canada performs well on innovation inputs but underperforms on outputs. The Global Innovation Index ranks Canada 13th on inputs but 20th on outputs. The Conference Board awards a "B" in capacity but "D-" in results.

  • Only 32.4% of high-potential startups remain HQ'd in Canada (down from 67% in 2015–2019)
  • Target was 28,000 high-growth firms by 2025 — actual count: 10,700
  • 2/3 of Canadian tech entrepreneurs expect to be acquired, only 6% plan an IPO
  • More patents are now invented in Canada than owned in Canada
  • Canada's advanced industry output is 42% below the size-adjusted global average
02

Canadian Adoption of Canadian Innovation

Canada excels at generating technologies but struggles to embed them in its own economy. Only 12.2% of Canadian businesses use AI despite Canada's foundational role in AI research.

  • Only 12.2% of Canadian businesses use AI (up from 6.1% previous year)
  • 2/3 of businesses report no plans to adopt AI in the coming year
  • Investment per worker in 2022 was nearly 20% below 2014 levels
  • Canada ranks 101st in labour productivity growth globally
  • Canada produces 3% of global AI publications but converts only 0.6% to patents (US: 14-15%)
03

Fragmented Innovation Support System

The dispersion of responsibilities across federal, provincial, and municipal jurisdictions limits the system's collective effectiveness. Programs are scattered across ISED, NRC-IRAP, 7 regional development agencies, provincial ministries, and dozens of other bodies.

  • Of 21 Advisory Panel recommendations, only 1 completed, 8 in progress, 12 unresolved
  • Council of Canadian Academies: "without coordinated overhaul, Canada will continue to underperform"
  • Canada's strong input performance not translating to output — consistent with poor integration
  • BAIs navigate overlapping funding sources, competing programs, and siloed mandates daily

Theme 01 / 07· 18 of 27 interviewees

Ambition Headwinds

Pushing Founders to Think Bigger, Earlier

Canadian founders consistently default to modest growth ambitions rather than pursuing globally dominant scale — a cultural disposition identified by 18 of 27 interviewees.

Why it matters

Every other ecosystem intervention underperforms when applied to ventures that aren't aiming high enough. BAIs sit at the earliest inflection point in a founder's journey.

International signal · Ginserv (Bangalore)

Conducts "fundability mapping" in the first week — investors lead workshops forcing founders to confront the gap between their ambitions and what scale-up requires, often resetting ambition upward.

“I'm perfectly happy building a $30-$40 million business. I don't need to be a billionaire.”

Recommendations for BAIs

  1. 01Challenge founders on market size at intake
  2. 02Make "go global" the default playbook, not the advanced track
  3. 03Connect founders directly with people who have built at scale

Theme 02 / 07· 20 of 27 interviewees

The Gravitational Pull

Navigating Structural Market Disadvantages

Canadian ventures face structural disadvantages: a domestic market 1/10th the size of the US, persistent talent/capital/customer pull southward, and geographic dispersal across 5,000 km.

Why it matters

Programming that assumes a domestic-first scaling path works against economic reality. BAIs must design support around international markets while creating enough value to anchor ventures in Canada.

International signal · Basel Area Business & Innovation (Switzerland)

Requires companies to incorporate in Switzerland as a condition of participation. Leverages the density of pharma HQs to attract ventures inward rather than defending against departure.

“When you've got that big of a gravity well of capital, people and market right next to you, to try to move past that is just hard.”

Recommendations for BAIs

  1. 01Build structured market-entry support for target jurisdictions
  2. 02Help founders design structures that keep companies anchored in Canada
  3. 03Facilitate connectivity between adjacent Canadian regions to "manufacture" density

Theme 03 / 07· 18 of 27 interviewees

The Capital Chasm

Capital that's too Cautious Early and too Absent Late

Canada's VC ecosystem is systemically misaligned with scaling needs — characterized by investor risk aversion, early-stage underfunding, and insufficient growth-stage capital.

Why it matters

Early-stage underfunding triggers a cascade: founders lose equity, lose control, relocate to where capital resides. Without a domestic continuum from seed to growth, Canada invests in formation but captures returns elsewhere.

International signal · Silicon Valley (historical)

Early VCs syndicated out of necessity — couldn't fund companies alone, so they leaned on each other. This created a stage-based flywheel where successful exits increased capital pools and investor count organically.

“We approached 40 Canadian VCs and nobody would touch us. Then we went to the US market and got funded within two months.”

Recommendations for BAIs

  1. 01Prioritize customer traction even over fundraising
  2. 02Build direct, curated relationships with investors
  3. 03Use collective data to advocate loudly for capital ecosystem reform

Theme 04 / 07· 8 of 27 interviewees

The Missing Middle

Closing the Commercial Talent and Growth Capability Gap

Canada's innovation conversation is dominated by technical talent while systematically undervaluing commercial, operational, and financial talent needed to convert innovation into scaled businesses.

Why it matters

Without commercial talent, technically excellent ventures plateau. When ventures recruit senior talent from abroad, it triggers a relocation chain that pulls the entire company out of Canada.

International signal · IIM Bangalore (India)

Carefully screens mentors for significant scaling experience. The IIM-B brand carries such weight that prospective buyers are more likely to meet with portfolio companies because a mentor is associated with the institute.

“We spend a lot of time talking about engineering talent and PhDs. But what we don't talk about is that we don't have leaders of growth.”

Recommendations for BAIs

  1. 01Build dedicated commercial capability programming with the same rigour as technical programming
  2. 02Recruit mentors and advisors who have scaled companies commercially, not just technically
  3. 03Advocate for policy changes to incentivize global talent to come to Canada

Theme 05 / 07· 23 of 27 interviewees

From Innovation Supply to Market Demand

Anchoring Support in Authentic Market Demand

Canada's core challenge is not innovation supply but adoption. Domestic corporations and government are unwilling or unable to adopt Canadian innovations. BAIs must shift from supply-side supporters to demand-side brokers.

Why it matters

Without authentic customer adoption, ventures lack traction for capital, talent, and scale. BAIs that focus only on supply produce ventures that are pitch-ready but market-orphaned.

International signal · Plug and Play (Silicon Valley)

"We see 30,000 startups a year. We don't touch their cap table. We let 500+ large global companies decide which startup offerings make sense. A funnel of 3,000 gets big traction. We invest in 200-300."

“Canada doesn't have an innovation problem. We've got a lot of innovative entrepreneurs. What we have is an adoption problem.”

Recommendations for BAIs

  1. 01Run more industry problem-led innovation challenges
  2. 02Facilitate structured paid pilot programs with corporate partners

Theme 06 / 07· 22 of 27 interviewees

Beyond Generic

Redesigning BAI Operations for Specialization & Quality

BAIs require operational redesign — moving from fragmented generalist hubs toward specialized nodes with clear identities, outcome-driven accountability, and modern technology infrastructure. BAIs have dramatically underinvested in their own AI adoption.

Why it matters

Without distinctiveness, BAIs duplicate effort and compete for funding rather than collaborating. Without outcome metrics, they lack feedback loops. Without a technology backbone, their claims are "a bucket of hearsay."

International signal · BioInnovation Institute (Denmark)

Consolidated from 7 programs to 2, housed in a single facility with 500 seats and 3 floors of labs. "Instead of creating disparate things, make one that's substantial and do it excellently."

“The hub-and-spoke approach is done. Be a node. What are you a node of? Everyone in our ecosystem should know what they're the node of.”

Recommendations for BAIs

  1. 01Declare what your BAI is a "node of"
  2. 02Replace activity metrics with market-driven outcome measures
  3. 03Invest in a technology and data backbone as foundational infrastructure

Theme 07 / 07· 19 of 27 interviewees

Rooted Locally, Reaching Globally

Anchoring in Regional Strengths & International Networks

Canada's innovation ecosystem lacks relational density both domestically and internationally. BAIs are more interested in collaborating with international colleagues than with each other.

Why it matters

Without intentional connectivity, founders navigate alone. Canada's geography will never produce density organically — it must be manufactured deliberately.

International signal · Ginserv (Bangalore)

Routes startups to specific international partner organizations based on target markets: Toronto Business Development Center for Canadian markets, Tech Ireland for Irish markets. Collaborates with embassies for bilateral exchanges.

“Every time I go to an event, I talk to folks who say they don't get outside enough. We are, as a nation, more isolated than is healthy for us.”

Recommendations for BAIs

  1. 01Create intentional peer communities for growth-oriented founders
  2. 02Establish structured international market pipelines with specific partners
  3. 03Convene sector-specific multistakeholder coalitions around genuine regional strengths

Capacity Spotlight · AI Imperative

BAIs have dramatically underinvested in their own AI technology infrastructure

Only 12.2% of Canadian businesses have integrated AI into programs or services

93% of business leaders use or pilot AI, but only 2% see measurable returns

Canada ranks 42nd of 47 countries in AI trust and literacy

Four domains for AI integration

Operational efficiencyMatchmakingProgram deliveryPerformance measurement
🇰🇷

South Korea TIPS

Operator-led model where private accelerators select and mentor startups with government co-investment.

4,400+ startups, $15B follow-on capital

What Canada can learn: Trust operators. Let BAIs select winners and back them with automatic co-investment rather than bureaucratic adjudication.

🇩🇪

Germany SPRIND

Statutorily independent federal agency for breakthrough innovation. Can fund in days, not months.

Statutory independence from procurement rules

What Canada can learn: Speed kills bureaucracy. An independent agency free from Treasury Board rules could fund frontier innovation at the pace the market demands.

🇫🇷

France: Integrated Ecosystem

Station F + La French Tech + Bpifrance create a seamless pipeline from incubation to scale-up with unified branding.

30 unicorns produced

What Canada can learn: Integration matters. A unified national brand and coordinated pipeline from incubation through scale-up beats fragmented regional programs.

🇺🇸

US SBIR Program

Mandatory 3.2% set-aside from federal R&D budgets for small business innovation. Every agency participates.

$4.73B annually (60× Canada's ISC)

What Canada can learn: Mandatory set-asides work. A Canadian SBIR-equivalent with required agency participation would dwarf the current discretionary approach.

  • JD

    Jennifer Davis

    Project Lead / Strategic Director

  • DM

    Dr. Matt Mayer

    Research Lead

  • DH

    Dan Herman, PhD

    Strategic Advisor

  • JL

    Johanna Lau

    Administrative Support & Research Assistant

  • SC

    Savina Caporali

    Webinar & Engagement Coordination

Matt Mayer · August 2023 · Mitacs / University of Calgary

Categorizing Business Accelerators and Incubators

The foundation for understanding Canada’s BAI ecosystem. Four types of BAIs, two axes of distinction, and practical implications for coordination.

Explore the typology →
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