{"id":332352,"date":"2025-12-08T12:41:09","date_gmt":"2025-12-08T12:41:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/332352\/"},"modified":"2025-12-08T12:41:09","modified_gmt":"2025-12-08T12:41:09","slug":"as-ai-advances-rapidly-canadian-tech-leaders-say-government-funding-efforts-arent-keeping-up","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/332352\/","title":{"rendered":"As AI advances rapidly, Canadian tech leaders say government funding efforts aren\u2019t keeping up"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

AI Minister Evan Solomon, seen departing a Liberal caucus meeting on Parliament Hill in Ottawa on Wednesday, told The Globe that the $300-million Compute Access Fund would not be able to meet every compute need.Spencer Colby\/The Canadian Press<\/p>\n

When the federal government announced a plan in April, 2024, for Canada to catch up in the artificial intelligence<\/a> race, there was no time to waste. A key element was a $300-million fund to help companies pay for the cost of building and running AI models. <\/p>\n

Ottawa held consultations, published a report,<\/a> and after the fall of one Liberal government and election of another, announced in June 2025<\/a> that the program, dubbed the Compute Access Fund (CAF), was open to applications. Last month, some applicants received rejection notices offering no explanation, while others still in the running to receive between $100,000 and $5-million apiece learned they are moving to another evaluation stage. No funds have been disbursed, and the process could spill into 2026. <\/p>\n

This might be the speed of government but it\u2019s woefully behind the speed of AI, where new developments happen weekly. The disparity has left some Canadian AI entrepreneurs frustrated and concerned that Ottawa is moving too slowly. What\u2019s more, some say the program could now be missing a bigger opportunity for Canada to catch up.<\/p>\n

\u201cWhen you have a program that\u2019s a year-and-a-half in the making, you are a dinosaur by the point funds are released,\u201d said Moody Abdul, co-founder of Klarify in Toronto, which makes AI tools for therapists to handle notes and other tasks. \u201cWe don\u2019t have the time to do business-as-usual.\u201d Klarify applied to CAF, which is targeted at small- and medium-sized businesses (SMEs), but was rejected.<\/p>\n

As AI reshapes hiring, starting pay stagnates at Canada\u2019s consulting firms<\/a><\/p>\n

Expecting government to move as fast as a speeding industry is a tall order. That\u2019s exacerbated by the fact that AI minister Evan Solomon\u2019s department is not only new but has a lot on its plate, including developing a new AI strategy, a quantum strategy and boosting digital sovereignty.<\/a><\/p>\n

\u201cBefore we start criticizing \u2014 oh gosh, who got it and who didn\u2019t \u2014 I completely understand and appreciate SMEs that have spent a lot of time on an application,\u201d Mr. Solomon said in an interview. \u201cBut I will also say that there was absolutely no way that a $300-million compute access fund will be able to satisfy every single compute need.\u201d<\/p>\n

The CAF is part of a $2-billion initiative announced in spring 2024 to stimulate the construction of AI data centres and compute infrastructure in Canada. The government has so far allotted up to $240-million<\/a> to Toronto-based Cohere Inc., which builds large language models for enterprise users, and committed $42.5-million to University of Toronto for compute infrastructure<\/a> for the research community. Many applicants to CAF are still waiting to find out whether they will receive funds. <\/p>\n

\u201cMy initial impression was light, scrappy and fast,\u201d Simon Eskildsen said of the CAF process. Mr. Eskildsen is a co-founder of Turbopuffer in Ottawa, which makes a search engine for companies to connect massive amounts of data to AI models. \u201cNow it\u2019s been months and all we\u2019ve heard is that we\u2019re still in.\u201d<\/p>\n

Some worry that CAF is not only moving slowly, but too focused on the wrong thing. The CAF application guide lists a few AI activities eligible for funding. That includes both building AI models (referred to as training) and using existing models as part of software. Think of it this way: OpenAI has built a model called GPT-5, which helps power ChatGPT, an application that can answer questions.<\/p>\n

The concern some experts have is that while these foundational AI models are important, that is not where the economic gains will be. These models, along with data centres, will likely be commoditized and companies will have to compete on price, said Daniel Wigdor, chief executive of AI venture studio Axl in Toronto. \u201cThey\u2019re all just going to get into a race to the bottom,\u201d he said.<\/p>\n

Instead, companies that make use of this infrastructure to build new applications to solve problems will be the winners, he said. The same was true of the internet era. Software companies such as Alphabet Inc. (Google), Meta Platforms Inc. (Facebook, Instagram) and Shopify Inc. proved to be more successful than telecom carriers and network equipment vendors such as AT&T, Cisco and the defunct Nortel Networks. <\/p>\n

Canada should instead find ways to support AI software companies \u2013 the future Shopifys, not the Nortels. \u201cIt\u2019s like looking at electricity and saying we should build a bunch of hydro dams without saying, wait a minute, what are we using electricity to do?\u201d Mr. Wigdor said. \u201cWe could be the ones building the applications years ahead of anyone.\u201d<\/p>\n

Ottawa launches AI registry showing breadth of tech\u2019s use in public service<\/a><\/p>\n

Scott Stevenson, CEO of AI legal-software company Spellbook, said bureaucrats have an outdated notion of AI. He has been left frustrated after his interactions with some federal programs, including CAF. Government, he said, is too focused on backing companies that say they are doing intense research and development and building their own AI models.<\/p>\n

\u201cThe assumptions that these panels make are really incorrect – and based on how AI worked in 2015,\u201d he said, where \u201cyou need a bunch of researchers, a bunch of hardware, and you need to burn all this cash training models. It\u2019s a terrible waste of money.\u201d<\/p>\n

Spellbook doesn\u2019t need to train models. Mr. Stevenon\u2019s company has secured around 4,000 customers by using existing models from the tech giants to build software that automates tasks for lawyers, such as drafting contracts. Competitors that have built their own models are struggling, dead, or \u201cjust sitting on these completely useless models,\u201d he said.<\/p>\n

Only a handful of large, well-funded companies such as OpenAI, Google and Cohere are capable of building general-purpose AI models and Mr. Stevenson said that custom models will underperform.<\/p>\n

\u201cI don\u2019t think funding training makes a lot of sense,\u201d said Ryan Wilson, founder of legal AI company Walter Software in Vancouver, which does no model training. Doing so may have been a good idea a couple of years ago, but the industry has changed, he said. \u201cThere will only be five or six winners in that game.\u201d <\/p>\n

\u201cNot every application included model training. That is important to note,\u201d said Deloitte Canada partner Brendan Cooper, who worked with companies to submit proposals to the program. \u201cBut it is a pretty prevalent area of focus for a lot of companies.\u201d <\/p>\n

Some AI researchers<\/a> have challenged the industry\u2019s focus on building huge foundational models, arguing that it could be crowding out other approaches and that smaller models still have a role. Vancouver\u2019s Variational AI, for example, is pursuing that route for drug discovery.<\/p>\n

Mr. Solomon said it is premature to draw conclusions about the government\u2019s preferences. \u201cThe idea that we are overindexing on foundation models versus applications, how would anyone have any idea?\u201d he said. \u201cThere\u2019s not been a single announcement. What you probably have is a couple of people who didn\u2019t get it and have complained.\u201d<\/p>\n

Last month\u2019s federal budget also contains \u201csignals,\u201d he said, that the government is moving to support companies building AI applications. That includes changes to speed up the Scientific Research and Experimental Development program<\/a> (SR&ED) and sweeten the tax benefits.<\/p>\n

Mr. Solomon acknowledged CAF has moved slowly, but said that\u2019s because it was deluged with applications. \u201cThe diligence process on each application took much longer than we thought,\u201d he said. \u201cWe want to make sure that these applications are real.\u201d<\/p>\n

Mr. Wigdor said other solutions are needed for Canada to build AI application companies. One idea is to rejig SR&ED so that the funds do not go directly to successful applicants, but instead to their customers to subsidize the purchase of their offerings. That would help startups win orders and let the market pick winners. He has also called for public funding of AI institutes<\/a> focused on commercialization, not just research. <\/p>\n

Adam Keating, CEO of St. John\u2019s-based CoLab<\/a> and a member of the federal government\u2019s AI task force, has also advocated for supporting AI application companies. \u201cThat\u2019s what we can do quickly,\u201d he said, adding the government appears serious about moving faster. \u201cAs much as there may be some folks frustrated about this right now, I do think they are trying to change things,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: AI Minister Evan Solomon, seen departing a Liberal caucus meeting on Parliament Hill…\n","protected":false},"author":2,"featured_media":332353,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,901,276,277,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-332352","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-alberta","tag-artificial-intelligence","tag-artificialintelligence","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/332352","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=332352"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/332352\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/332353"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=332352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=332352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=332352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}