Getting the Ball Rolling on Basic Research

We see big scientific breakthroughs go to market, but they'd never get there without basic research. Who's paying to have it happen?

 |  Transcript [PDF]

Investments are a critical component in innovation. Without funding, it would be impossible to carry out the research that leads to the next breakthrough to grow our economy, and it’s government-funded basic research that gets the ball rolling.

“What you don’t see is venture capitalists funding broad-based research,” says John Ruffolo, Chief Executive Officer at OMERS Ventures. “And this is just like infrastructure of a nation and why the government is really the only source of capital that can properly fund it and really bet for the long term.”

“In Canada, we really are a knowledge-based community,” adds Judy Goldring, Executive Vice-President & Chief Operating Officer at AGF Management Limited. “We need to make sure we stay ahead of the curve on that, and the way to do that is to invest in research.”

While venture capital is needed near the final stages of development to help companies scale up and accelerate products to market, the risk/reward ratio is too high at the basic research stage. At the earliest discovery stages, researchers are trying to learn as much as they can, but they usually have no particular commercial goal in mind. But that’s where the greatest unconstrained creativity comes in, seeding the innovations that are so disruptive that no one saw them coming.

“We’re never going to fund basic research in a lab, because who knows where it’s going to go? That’s the beauty of basic science,” says Stefan Larson, Biotechnology Entrepreneur and Venture Partner at Versant Ventures.

Government-funded basic research is the foundation of a nation’s knowledge-based economy. These early investments can give rise to huge economic opportunities even if only a few ideas make it to market.

“Let’s say here in Toronto, we were to create a company that brings a drug to market, and it’s a blockbuster drug,” says Larson. “That would generate literally a billion-plus dollars per year of sales. And that would be one of the biggest companies on the TSX. So even one successful biotech company, the potential economic impact is staggering.”

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