A distinct part of Canada’s innovation challenge is in the commercialization of inventions. We invent but we often fail to commercialize our own inventions, preferring to license the technology to others instead. This Impact Brief examined how the lack of appropriate government programs contributes to this problem specifically in the area of Physical Technology.

Physical technology, an area not often focused on, arises from academic research in faculties of engineering and departments of chemistry, physics, earth sciences, and space sciences. This area includes advances in medical devices and assistive devices, two areas of prime interest for an ageing population.

While this sector receives little attention, it contributes almost eight times as much to Canada’s GDP as does the combined effort of the Information communications technology (ICT) and biotechnology industries.

Physical technologies are distinct from other types of technology because of their long and complex commercialization path. Whereas in IT and biotechnology, the market can be identified very early in the path to commercialization, in physical technologies one must reduce the technological risk to some extent by the creation of a prototype before testing for market acceptance.

While there is a complex commercialization path, there are no government programs that support the early-stage physical technology commercialization without requiring some external matching of funding. And yet, due to the risks associated with physical technologies, the probability of securing external funding is very low, particularly without the ability to obtain market validation until product development has reached a stage where customers can understand its potential applicability. Without market validation, venture capitalists and other investors will not support a company. However, without their support, no matching funds are available so it is often easier just to license the technology to a third party who can afford the investment.

Given the contributions of physical technologies to the Canadian economy, governments at all levels should examine whether this is an area that should be supported more broadly and whether the practice of requiring matching funding needs to be revaluated.

You can get a full copy of the report here.