Canadian startups need federal help

Canada needs to invest in startups and help them diversify their business strategies, and one way it can do that is by becoming their biggest customer, said one CEO.

With the federal budget set to release next month, Canadian startups in need of government support, are facing a real pivotal point.

“Tomorrow’s problems in Canada cannot be solved by yesterday’s old business models,” said Abdullah Snobar, the CEO of DMZ Ventures in an interview with BNN Bloomberg on Thursday.

“Ottawa needs to think about supporting startups and not just the incumbents.”

What does that look like? Snobar said the government can leverage dual use technology that can be used in defence. It can develop strategies to ‘buy Canadian’ and keep intellectual property within Canada so it’s not sold to global buyers who see “insane value” in it for pennies on the dollar.

Canada committed to spending $63 billion in military spending this year. Snobar said some of it can be used to support innovation while meeting military needs.

He said there are already many great Canadian companies building drone technology for retail sale.

“Can we take that same technology and deploy 10,000 drones to the Arctic to do Arctic surveillance for 24 hours? That’s something that we can consider from a startup perspective,” said Snobar.

Snobar’s firm provides seed funding for startups. He said while there are many ways people can innovate in this country, they struggle with procurement strategies.

“They realize, even if they build a business, the chances of them capturing the biggest single customer in this country, the Canadian government, is almost impossible,” said Snobar.

“If we create an avenue and channels that would actually allow companies, small businesses and startups to realize that when they build, they can actually leverage the Canadian government as a big customer, that would build credibility around the world.”

Canadian auto manufacturing companies are already looking for military contracts to pivot their business models after they were hit hard by tariffs. However, there are many legislative setbacks.

To support them, the federal government announced a $450-million Regional Tariff Response Initiative this summer to help companies transition into the defence sector. The goal is to help companies develop new businesses and machinery that will create auto parts for civilian and defence purposes.

No follow up on research programs

Snobar said Canada has been very supportive of funding research programs in post secondary institutions, but there is not much understanding of what happens post research.

He says the government needs to be more intentional and thoughtful with its strategies.

“Otherwise, as taxpayers, we are enabling the government to continue funding research, but never seeing the actual results, or the fruit of that investment,” said Snobar.