The Industry Innovation (I²) Fund offers repayable growth capital to small and medium-sized enterprises (SMEs) commercializing innovative life science technology-based products, processes or services.

The I² Fund is a concrete step towards bridging the gap between innovation and commercialization in the BC bioeconomy. Life sciences includes any technologies that address human health issues as well as any biological challenges faced in the key economic sectors of Agrifood, Energy, Mining, Environment, Fisheries and Aquaculture, and Forestry.

Funding through the I² Fund is non-dilutive, repayable and has success-oriented service charges. It is allocated to promising technologies at the early stages of commercial development. The I² Fund aims to provide risk capital concurrently matched by other public or private funding sources.

The I² Fund is a Genome BC initiative available to SMEs with operating facilities in BC.

The I² Program is intended to be an ongoing initiative of Genome BC.

A small- and medium-sized enterprise is defined by Industry Canada as a for-profit entity that has less than five hundred employees.

The I² Program aims to:

• Commercialize innovative life science technology-based products, processes, and services;
• Stimulate greater private sector investments in commercialization activities in the bioeconomy;
• Increase the number of jobs for highly qualified personnel in BC;
• Enable company growth.

Through the I² Program, Genome BC is addressing a gap in private sector funding of the bioeconomy and the need to drive innovation, commercial success and economic prosperity in BC. More support is needed beyond the Research and Development phase to bring ideas through to commercially useful innovation.

Attracting early-stage capital for life science technology commercialization has been identified as a key challenge for SMEs in BC. By helping businesses access financing and private investment, as well as supporting technology commercialization, we are harnessing the entrepreneurial spirit of this province, nurturing great ideas and strengthening BC’s economy.

The I² Program’s repayable financing will be available to SMEs that meet the following mandatory criteria:

• SMEs (less than 500 employees) that are incorporated to do business in Canada and have operating facilities in British Columbia;
• Have a viable plan to successfully commercialize (i.e., generate significant revenues from sales and/or licensing activities) an innovative, life science technology-driven, new or improved product, process or service within four years of initial I² Program disbursement;
• Ownership or contractually binding access to the intellectual property rights to carry out the proposed technology development and to commercially exploit the results of the project;
• Have provided a current business plan that details the investment opportunity and recent financial statements;
• Have identified, at the time of application, matching funding from all other sources, including government and non-government as well as existing cash resources (these sources of funding must represent at least 100 percent of the proposed I² Program financing and be secured by the closing date of the I2 funding).

The I² Fund will target sectors where the exploitation of life science based technologies will strongly benefit the province of BC: Agriculture, Energy and Mining, Clean tech and Environment, Fisheries and Aquaculture, Forestry, and Health.

The I² Program launched in 2015 and has been seeded with a $20 million pool of capital. Eligible SMEs may request up to $1.75 million per company (and affiliates) to commercialize the development of their technology-based products, processes and services.

Only applications demonstrating the highest merit that fit with I² Program objectives, will be considered for funding. Many good projects and businesses may not receive support from the I² Program.

All eligible applications will be evaluated on their ability to achieve the objectives of the I² Program and on their strengths in the areas of management, technology readiness, market potential, financial capacity and economic benefits.

Strong projects will demonstrate:

• A complete and viable business plan;
• Qualified, experienced and complete management team;
• Technology readiness for commercialization, strong value proposition and necessary intellectual property;
• Market potential (i.e., strategic or supply chain partnerships in place, potential customers/investors identified, etc.);
• Financial capacity to execute (i.e., non-Genome BC funding in place, existing revenues from other product lines, etc.) and ability to repay; and,
• Measurable economic benefits to BC.

I² Fund supports activities in a variety of sectors; however, the funding is intended to support activities to validate commercial proof of concept and to commercially launch a product, process or service.

Examples of supported commercialization activities include, but are not limited to:

• Introduction of a new product, process or service to new or existing markets;
• Improvement of products, processes or services;
• Technology development/acceleration;
• Product certifications;
• Pilot projects (first user) and technology demonstration projects;
• Validation of market potential and end-user acceptance; and
• Support for marketing, human resources development, productivity, and process or quality improvement directly related to the commercialization of new opportunities.

The I² Program is providing repayable growth capital to SME’s where these proceeds are to be allocated to all necessary activities for the development and commercialization of promising life science-based technologies that have the potential to provide benefits to BC. The company must also commit to using BC based suppliers of goods and services for the technology development program where feasible and to ensure that all or substantially all of its employees or contractors who work on the technology development program are residents of BC if feasible.

Genome BC reserves the right to make the final determination on the value of its support.

I² Program will not support specific costs that can be typically financed through conventional sources, such as land and buildings.

There is not a limit to the number of applications a company may submit.

No. The eligibility requirements are that you must be incorporated at the time of application to the I2 Program.

No. If both the parent and subsidiary have more than 500 FTEs, then Genome BC would not consider the subsidiary as eligible under I² Program. On a related note should there be a controlling interest by an investment firm, such as a venture capitalist, only the FTE count for the company applying will be considered for eligibility purposes and not the FTE count of the venture capitalist.

Yes. However, the company must establish tangible operating facilities in BC (with personnel) at the outset of their I² funding.

A company can use its existing cash or investments only if applied to new activities and costs – i.e. costs that are incurred after the I² Program start date. This is essentially the net working capital at closing. (i.e. current assets less current liabilities.)

Written proof, confirmed or conditional upon other sources of funding, will be considered acceptable. Examples of written proof include binding, term sheets, funding agreements, or current bank statements detailing existing cash balances or the unused portion of lines of credit. These documents will be reviewed in greater detail as part of Genome BC’s due diligence. These financing transactions will need to be completed before Genome BC would be able to complete its financing.

Genome BC does not consider the following as sources of confirmed funding:

• Forecasted revenues from future activities;
• non-binding letters of intent;
• Commitments to raise equity;
• Commitments to obtain future bank financing; and
• Forecast Scientific Research & Experimental Design (SR&ED) credits. (however, accrued SR&ED refunds at closing will be an eligible source of funding if the company has a track record of receiving SR&ED refunds.)

Any changes to funding sources would have to be considered on a case by case basis. Generally speaking as long as the SME continues to be capitalized sufficiently (meeting eligibility requirements) Genome BC will continue to assess the investment opportunity.

Yes. Provided that the SME has the necessary IP rights to carry out the proposed technology development and it is feasible to commercially exploit the results within 4 years, the company would be eligible for financing from the I² Program. “Commercially exploit” includes out-licensing activities.

It is recommended that you access a variety of business plan tools from the BDC and Canada’s major banks to ensure that your plan is complete and contains sufficient information to be assessed as a viable business plan.

Generally, a business plan should include:

• A description of the business and new product, process, or service being commercialized (please include a description of intellectual property and freedom to operate);
• An analysis of the marketplace (including industry factors, competition, and customers);
• Detailed sales and marketing strategy;
• A description of the management team and corporate governance structure;
• Operating/execution plan for commercializing the new product;
• Forecasted income statements, cash flow for the duration of the company’s development work and up to an additional two years (pro-forma statements)

Applicants are strongly encouraged to submit an Executive Summary (max. 5 pages) and/or presentation slide deck (“Pitch Deck”) of their business plan highlighting:

• The company, team and BC-based activity
• The technology/service and value proposition
• The market opportunity
• The commercialization plan
• The financial requirements, prospective co-funders and risks involved

Submissions should be emailed to: Pat Brady, Executive Director, Industry Innovation Programs pbrady@genomebc.ca

Only those applicants with the strongest applications will be invited to submit their full business plan for further consideration.

Applications are accepted at any time. However, the Board of Directors of Genome BC will make the ultimate investment decisions. Board meetings and I² Program investment decisions are made approximately quarterly.

Genome BC staff will not be reviewing nor assisting applicants to prepare their first submission of an Executive Summary or Pitch Deck prior to its submission. However, we will be available to discuss your company’s eligibility for I² funding before your submission.

All applicants will receive an acknowledgement notification, confirming that their application has been received.

All proposals will be assessed and approved in four stages:

There are no fees associated with the application or assessment process. However, an applicant can expect that during the detailed due diligence period, they may be required to fund the costs of Genome BC obtaining third party expert opinions – regardless of whether or not the I² Program makes an investment. Genome BC will obtain prior approval from the applicant before incurring these expenses.

Assessment of the applications will be undertaken by Genome BC. All submitted information will be kept in strict confidence. Confidential commercial information will not be shared without the applicant’s consent. If requested, Genome BC will execute their own standard NDA form.

Genome BC staff may follow-up with clarification questions and may ask for the provision of new information. Genome BC will try to provide individualized support for any applicant. However, applicants must clearly demonstrate the ability to bring innovative ideas from the later stages of research and development to a commercialized product, process or service.

If you are successful in obtaining I² Program funding for your company, Genome BC will normally provide the repayable funding in an upfront disbursement at closing plus potential tranches triggered by the achievement of pre-determined milestones. Milestone events must be significant in nature for the development and commercialization of the technology. Milestone events must be described in a clear and objective fashion to avoid ambiguity whether they have been achieved or not. Ideally they are measurable.

Potential funding recipients are expected to have secured all matching funding (totaling a minimum 100% of the amount of Genome BC funding) before closing of the I² Fund investment.

All successful applicants will sign a standard Loan Agreement with Genome BC. The Agreement outlines the obligations of the funding recipient, including Genome BC’s information rights which will require, at a minimum, quarterly reports including company progress reports, financial statements, budget variance reports and pro forma cash flows. In most circumstances, Genome BC will require Board Observer rights. Genome BC retains visitation rights and the right to audit the loan recipient’s business during the loan repayment period and while any royalty payment obligations are outstanding.

The duration of the commercialization activities may vary, ranging from a few months to multiple years; however, business plans must reasonably demonstrate the ability to fully commercialize the technology within four years of the first disbursement from the I² Program.

Through this initiative, Genome BC will provide ‘repayable funding’ – essentially an interest-free hybrid loan that carries a low-single digit royalty for a limited amount of payments. The loan Principal is repayable.

Genome BC loans will be secured with a General Security Agreement (GSA) granting an interest in all of the company’s and any subsidiary’s present and after acquired property. The GSA includes a double negative pledge on all intellectual property.

I² Fund loans were interest-bearing until July 1, 2024. At that time, the I2 Fund implemented an interest-free policy going forward. Loans are now interest-free for the first four years from disbursement. After this period, during the two-year repayment schedule, interest will be charged at a “below market” rate, usually the RBC Prime Rate at the launch of the repayment schedule. plus 3%. Interest penalties will be incurred if there are loan repayment defaults.

Funding recipients will be required to repay the I² Program loan principal and any accrued interest starting from the earliest of the following typical “Commercialization Triggers”:

• four years from the first disbursement of funds from the I² Fund;
• the company achieves a significant financial milestone such as an IPO or change of ownership control.

Recipients will be required to make quarterly repayments of the principal and accrued interest (if any) amortized at a fixed interest charge over the two years following the occurrence of a Commercialization Trigger. Therefore, the funding recipient will have a maximum of six years to repay Genome BC’s total principal and interest amount from its initial disbursement. There is no prepayment penalty. I² Program loans also carry a limited Royalty obligation.

A royalty obligation is part of the I² Program agreement. The royalty agreement is structured so that Genome BC receives a low, single-digit annual royalty payment if the technology financed results in significant commercialization revenue. The royalty payments usually commence in the year of the Commercialization Trigger. The cumulative royalty payments are capped at 2X the amount of the I² Program loan principal. Full repayment of the loan principal on or before the Commercialization Trigger will reduce the Royalty cap by 50%, i.e., from 2x to 1x the amount of the I² Fund loan principal.

There are no cash fees associated with the application process. The company will need to pay for its own legal expenses.

At closing, Genome BC will receive a 2% Set-up Fee: either in cash (2% of the loan Principal value) or by receipt of Company warrants. These warrants will carry the right to purchase the number of shares of preferred or common stock of the company equal to 2% of the total I² Fund loan divided by the Exercise Price. The Exercise Price will be equal to the per share price of the most recent equity round (common or preferred). The Warrant will have a ten-year maturity and standard anti-dilution protection.

No, grants and subsidies are not provided under the I² Program. I² Program recipients will receive funding that they are responsible to repay (a repayable contribution).

Genome BC expects that I² funding will be repaid. If funds are not repaid, Genome BC will take appropriate measures to collect the amount owing from this loan default condition. The company (borrower) shall also be in default upon the occurrence of a material impairment of the prospect of repayment of the I² Program loan.

Genome BC will not take a role in the operation of your business. Further, Genome BC will not be taking any equity positions in businesses that receive funding under this program other than Warrants.

There is no penalty for early repayment. Repayment of the loan shall not release the company from its royalty obligations as set out in the I² Program royalty obligation. In fact, early repayment may trigger reductions in the Royalty Cap.

No, loan guarantees will not be offered under the I² Program, i.e., the intention is NOT to provide a guarantee to another lender.

Applicants will not be offered a line of credit under the I² Program.

Genome BC will not provide repayable financing based solely upon the assets you have in your business. We base our decisions on a variety of factors that will include: market potential, management strength, technology readiness and financial capacity.

Yes, an applicant does not have to have existing revenues to be eligible to receive I² Program funding. It is required that the business be incorporated and have secured all other sources of non-Genome BC matching funding at the time of disbursement.

It is recommended that you seek independent professional tax and accounting advice to assess and determine the full tax implications of your company being in receipt of an I² Program repayable loan.

If your company has an existing refundable tax credit receivable with the Scientific Research and Experimental Development (SR&ED) program and a valid track record for the receipt of past SR&ED tax credit claims, then the existing SR&ED receivable tax credit will be an eligible amount for the purposes of defining matching funding for I² Program investments. However, future unaccrued SR&ED tax credits will not be considered matching funding. It is also recommended that you seek independent professional tax and accounting advice to assess and determine what costs and activities of your activities might be eligible for federal or provincial tax credits.

Contact Pat Brady, Executive Director, Industry Innovation Programs:
pbrady@genomebc.ca