This report focuses on innovation finance for established businesses, from the distinct perspectives of investors and innovative businesses.

In capital markets—where the appetite for risk is currently small—company managers must tell potential investors a compelling story of growth through innovation. Demonstrating spending on R&D is not enough.

Innovators need practical tools to help them explain to investors both their innovative activity (e.g., innovation metrics) and the way it makes money (e.g., the business model and financial projections). Canadian companies also have to do a better job of getting their products into the hands of paying customers. The Conference Board of Canada’s Centre for Business Innovation is developing tools and metrics to help Canadian companies improve their capabilities and address these challenges.

Executive Summary

Chapter 1—Introduction

• About This Report

Chapter 2—The Innovation Finance Challenge

• What Is Innovation?
• Why Innovate?
• Are We Funding Innovation?
• How Is Innovation Valued?
• Role of Intermediaries
• Debt Versus Equity: Contingent Claims
• Build or Buy?
• The State of Financial Markets
• Conclusion

Chapter 3—The Innovator Perspective

• How Many Innovative Businesses?
• Strategic Perspective
• Commercialization: The Weak Link
• Is Financing a Problem?
• Exit Through Acquisition
• Conclusion

Chapter 4—The Investor Perspective

• The Funding Environment
• The Funding Structure
• Pooling
• Conclusion

Chapter 5—Implications

• It Starts With Company Capabilities
• Universities Can Help
• Role for Government Financial Institutions
• Reinforcing a Culture of Innovation and Growth
• Building From Our Strengths
• “I’m From Private Equity, I’m Here to Help”
• Fear Not the Foreigner
• Pension Plans as a Force for Change
• Tools to Help SMEs Access Capital and Expertise for Innovation and Commercialization

Appendix A—Bibliography