Canada doesn’t have an innovation shortage—it has a commercialization failure
Commercialization in the United States goes back more than 250 years and is embedded in the country’s founding philosophy. The U.S. Constitution explicitly empowers Congress to protect inventors and authors in order to promote scientific and technological progress.
America’s modern innovation infrastructure is more recent, but it still reflects nearly 75 years of accumulated experience. The Small Business Administration (SBA), established under then-president Dwight Eisenhower in 1953, became a central institution supporting small-business formation, financing, and access to federal procurement.
Canada, on the other hand, does not have an innovation shortage; it has a commercialization failure. Our universities, hospitals, researchers, and entrepreneurs produce promising science and technology. Where we consistently fall short is converting those ideas into scalable domestic companies, sustained revenue, procurement, successful exits, and an adequate return on public investment.
So, what are we up against?
Beyond intellectual property, three parts of the American commercialization system have matured over decades: explicit federal funding mechanisms, strategic procurement, and favourable taxation policies.
The best-known federal innovation programs in the U.S. are Small Business Innovation Research and Small Business Technology Transfer. These are not simply research grants. They are staged programs intended to move technologies progressively toward commercialization.
The first phase of both programs typically establishes technical feasibility and commercial potential. Phase two provides greater funding to continue development and demonstrate viability.
The third phase is the commercialization stage, when the innovation is expected to attract private investment, generate sales, or secure government procurement.
Commercialization is not considered only after the research has been completed. Commercial potential is part of the evaluation, and phase-two applications generally require a commercialization plan addressing the market, customers, competition, intellectual property, financing, and pathway to adoption.
Participating federal agencies establish priorities and fund technologies that address defined needs. Multiple companies can be supported to solve the same problem, allowing the government to compare competing approaches rather than attempting to predict the winner at the outset.
Then comes procurement.
The U.S. government can purchase technologies it helped fund, creating a pathway from public investment to a government reference customer. It also establishes annual small-business contracting goals for eligible federal procurement spending. The government-wide statutory goal for prime contracts awarded to small businesses is at least 23 per cent.
The SBA negotiates agency-level goals and publishes annual scorecards measuring performance. Procurement from small and medium-sized enterprises (SME) is, therefore, not merely encouraged—it is measured.
Large prime contractors—as in those working directly with the government—pursuing significant federal awards may also be required to submit small-business subcontracting plans. This allows government to rely on a larger enterprise’s capacity while innovative SMEs participate as subcontractors.
The SME gains revenue, validation, and access to major programs. The large company gains specialized technology. The government gains a single point of accountability. These relationships can eventually produce licensing arrangements, strategic investments, or acquisitions.
Taxation completes the structure.
American innovators can choose a limited liability company format, which may provide pass-through taxation, or a C corporation, which is generally more compatible with venture investment. An 83(b) election can provide important tax treatment for founders receiving restricted shares. The Qualified Small Business Stock tax benefit may exclude a substantial portion—and, in qualifying circumstances, all—of an eligible shareholder’s capital gain upon exit.
Canada has incentives of its own, including the Scientific Research and Experimental Development tax credit, and the Lifetime Capital Gains Exemption. What it lacks is an equally integrated system connecting commercialization-focused funding, procurement, and taxation.
Our nation cannot simply copy the U.S. But we must stop assuming that scientific achievement automatically produces commercial success.
A practical starting point would be a controlled federal pilot that independently evaluates a defined cohort of publicly funded innovations. Each would receive a standardized commercialization assessment, its gaps would be identified, and targeted support could then address those gaps. The strongest companies could be connected to procurement opportunities, and strategic partners and investors, with their progress measured before and after intervention.
Canada does not need another conference discussing innovation. It needs a measurable commercialization process that turns public investment into Canadian economic outcomes.
Dan Wasserman is the founder and CEO of Mammoth Health Innovation Inc., creator of the C.H.I.E.F.S.™ commercialization assessment framework, and an adjunct professor in the Graduate Program in Biomedical Innovation at the Icahn School of Medicine at Mount Sinai in New York City.
The Hill Times