Startup funding sources – Precarn

My previous article on start-up funding sources covered the National Angel Capital Organization. For the next article in this series, I will cover Precarn. I recently met with Gary Gudbranson, VP operations at Precarn.

Craig: Thanks for taking the time today to speak with the StartupNorth readership. To start, can you give the ’30 second elevator pitch’ on Precarn
Gary: Precarn is a non-profit organization that supports the intelligent systems industry in Canada through funding of projects that seek to advance research into commercial applications. We fund R&D initiatives for Canadian companies doing research in areas of artificial intelligence, machine vision, sensors, and robotics. We are funded by federal government departments such as Industry Canada and provincial government ministries such as the Ontario Ministry of Research and Innovation.

Craig: What are some of the things that companies in this space are working on?
Gary: The intelligent systems field is quite broad and there are many exciting companies doing interesting work across a variety of industries. Precarn has funded a project by Braintech to further develop its software for industrial robots so they can intelligently pick out the correct part required in a manufacturing process out of a bin of random parts. Another Precarn funded project by Apstat technologies developed data mining software to allow insurance companies to better underwrite insurance risks. iGO Technologies undertook a project funded by Precarn to develop computer assisted surgery solutions. In one of our most well known projects, Precarn supported the research that went into the vision system used on the space shuttle to inspect the space shuttle’s tiles while in space.

Craig: What types of services do you offer to companies and what companies are eligible?
Gary: Our main focus is on funding programs. However, since we know the companies, universities, and researchers in the intelligent systems space, we also help with networking and making connections. We will work with any company in Canada that is in the intelligent systems space that meets the criteria for our funding programs.

Craig: How do your funding programs work?
Gary: Our funding programs are grants that contribute to the costs of a specific project. Precarn will fund a certain percentage of a project and the company must provide matching cash or in-kind funding. Projects must be oriented around advancing research into commercial products. Project proposals must include collaboration with an academic research partner as well as an end user customer. We feel this model best contributes to successful commercialization by having the company to collaborate its research efforts with an academic institution to reduce the technology risk as well as work closely with an end customer to ensure it meets industry needs to reduce the market risk.

Craig: You currently have a program open for applications, can you talk about it?
Gary: The program we currently have active is the Technology Gap Assistance Program (T-GAP) for startup companies. This program is oriented to small companies and funds eligible projects with up to $75,000 or up to 65% of the project’s total costs. Projects need to be in the intelligent systems space and look to further research into technologies that can have commercial applications. Applications are due by Sept 2, 2009 and the program has a total of $1m of available funding.

Craig: How does the application process work?
Gary: Interested companies should reach out to Precarn to start a dialog on what they are looking to accomplish. They can contact Rick Schwartzburg. We can then give feedback if we feel their project is a good fit for what we are looking to fund with the program. Companies should then complete an application form and formally submit prior to the deadline. Once we receive all applications we internally review them to ensure they meet the program criteria. For the applications that meet the criteria, we distribute them to our expert advisory panel to review and rank them. Our expert advisory panel is made up of external industry and academic individuals that are knowledgeable in the intelligent systems space. Based on the ranking, we then award funding starting with the strongest submissions. In order to receive the funding, companies must finalize a contract with Precarn and submit a milestone based plan by which funding will be tranched based on project milestones. As part of the program requirements, Precarn has reporting and audit requirements the company/project must adhere to. From the application cut-off date, a chosen company can typically expect to receive cheques in a period of 3 to 6 months.

Craig: What separates the good applications from the rest of them?
Gary: Our goal is to ensure companies/projects we fund result in successful commercialization and advancement in the intelligent systems field. We look for companies that have a good understanding of their market-space and ability to execute on taking a research initiative to a commercial offering. We like to see initiatives that don’t just do research for the sake of doing research, but do research that will create products that have economic value. We also look for companies that understand the need and have developed good partnerships with academic institutions and industry.

Craig: The T-GAP program was last run last fall. What are some of the companies that received funding?
Gary: Some examples of the 12 funding recipients for the most previous T-Gap round include: Client outlook, Biopeak, Incogna, Nutri-Loc Ingredients, and OneLight.

Craig: In addition to the T-GAP program you also have other larger programs?
Gary: We run larger funding programs that are also open to larger companies to fund projects researching more complex problems. In these programs, the project duration is longer (18-24 months) and funding is larger at up to $500k.

Craig: When do you anticipate opening up new programs?
Gary: Precarn is at the end of its 5 year funding cycle. We are currently sourcing funding for our next cycle so until this is sorted out have not begun to plan out our next programs. We typically will do between 1 to 3 funding programs each year. Each year’s programs can have a different focus to remain relevant with times. We would anticipate that cleantech and energy efficiency would be key areas next year.

Craig: Gary, thanks again for speaking about Precarn with the StartupNorth readership today. It was very interesting to learn more about Precarn and the good work they are doing to support commercialization in Canada.

craig at mapleleafangels.com