The Ontario Advantage: A Strategic Guide to Tech Startup Grants & Tax Credits [2025]

For tech founders, Ontario isn't just a location—it's a strategic launchpad for innovation and growth. The province offers one of North America's most supportive ecosystems for startups, powered by a strong mix of federal and provincial government funding.

If you're wondering how to secure funding for your tech startup in Ontario without giving up equity, this guide is for you.This guide provides the answer. We'll explore the full landscape of tech startup grants in Ontario, from the Ontario SR&ED tax credit to FedDev Ontario and NRC IRAP, helping you build a powerful, non-dilutive funding strategy.

Beyond Venture Capital: The Power of Non-Dilutive Funding in Ontario

Non-dilutive funding is capital you receive without giving up equity or taking on debt. For startups in tech hubs like Toronto, Waterloo, and Ottawa, this type of funding is a game-changer.

• Boost Your Valuation: Use government grants to hit key milestones before raising venture capital—command better terms and a higher valuation.

• Hire Top Talent: Secure runway to recruit the engineers, developers, and sales talent your startup needs to scale.

• De-Risk Innovation: R&D tax credits and grants allow you to explore bold innovations with reduced financial risk.

If you're searching for non-dilutive funding in Canada, Ontario offers some of the best programs in the country.

The Pillars of Ontario’s Startup Funding Ecosystem

1. The SR&ED “Ontario Advantage: Federal + Provincial Tax Credits

The Scientific Research & Experimental Development (SR&ED) program is Canada’s most widely used R&D tax credit, but Ontario’s system provides a significant advantage by layering powerful provincial credits on top of the federal program.

This creates a stacked benefit for startups:

• The Federal Foundation: The program starts with a federal credit of up to a 35% refundable tax credit on eligible R&D costs.

• The Ontario Enhancements: Ontario then adds its own valuable credits:

• Ontario Innovation Tax Credit (OITC): This is the primary top-up for most startups. It provides an additional 8% refundable tax credit on eligible Ontario R&D expenditures, worth up to $240,000 annually. The OITC is designed for growing companies and begins to phase out when taxable income exceeds $500,000.

• Ontario Research and Development Tax Credit (ORDTC)For profitable companies looking to reduce their tax burden, Ontario also offers a 3.5% non-refundable credit.

By combining the federal credit with the OITC, Ontario startups can receive a combined refundable tax credit of up to 43% on qualifying salaries. This powerful combination makes the SR&ED program one of the most effective tools for funding tech innovation in Ontario.

2. FedDev Ontario: Scale-Up Support for High-Growth Startups

The Federal Economic Development Agency for Southern Ontario (FedDev Ontario) is the key federal body supporting high-growth companies in the region. Its programs provide significant contributions (often interest-free and repayable) to help businesses scale.

• Who is it for? Established startups with traction who are looking to create jobs, adopt new technologies, increase productivity, or expand into new markets.

• What does it fund? Projects related to commercializing new products, scaling up advanced manufacturing, and improving market reach. This is not for early-stage R&D, but for growth and expansion.

3. NRC-IRAP: Technical and Financial Support for Innovation

The Industrial Research Assistance Program (IRAP) is a federal program that provides both grant funding for R&D projects and expert advisory services from an assigned Industrial Technology Advisor (ITA). This mentorship is invaluable, connecting you to a network of experts and resources at hubs like MaRS and Communitech.

The Art of Stacking: Maximize Non-Dilutive Capital

Smart founders don’t just pick one grant—they stack multiple Canadian startup funding programs for maximum impact.

Example strategy:

• Use NRC IRAP to cover 80% of R&D salaries.

• Apply SR&ED tax credits to the remaining 20%.

• Use FedDev Ontario funding for commercialization and marketing.

This layered approach builds a capital-efficient startup that can delay or avoid early equity dilution.

Program Name	Best For	Funding Type	Key Benefit
SR&ED (Federal + OITC)	R&D tax credits	Refundable Credit	Any startup doing experimental development
FedDev Ontario	Commercial growth	Repayable Contribution	Scaling companies with revenue
NRC IRAP	Product innovation	Grant + Mentorship	Startups with defined R&D projects
Ontario Centre of Innovation (OCI)	Academic partnerships	Grant	Companies co-developing with universities
Ontario Vehicle Innovation Network (OVIN)	Auto & mobility tech	Grant	EV, connected, or autonomous tech startups

Diving Deeper: Sector-Specific Startup Grants in Ontario

Ontario offers targeted support for key industries, connecting startups with specialized funding and resources:

• EV & Mobility: Apply through OVIN (Ontario Vehicle Innovation Network) for funding programs related to electric vehicles, connected and autonomous vehicle (CAV) technology, and smart mobility solutions.

• Life Sciences: Partner with leading hubs like MaRS Discovery District or the Ontario Bioscience Innovation Organization (OBIO) to access specialized capital, mentorship, and support for life science innovation.

• Cleantech, AI, and Advanced Manufacturing: Apply to a wide range of specialized Ontario Centre of Innovation (OCI) programs, which are often designed in collaboration with academic institutions to commercialize cutting-edge research.

What Ontario Funders Want to See: Grant Application Best Practices

To secure government grants for startups in Ontario, your application must clearly address:

1. Job Creation: Show how your startup will create high-quality, full-time jobs in Ontario.

2. Economic Impact: Explain how your innovation will boost local competitiveness or supply chain resilience.

3. Defined Milestones: Include a project timeline, KPIs, and realistic budget.

Use these points to stand out among thousands of applicants seeking tech startup funding in Toronto or Waterloo.

Tapping into Ontario's World-Class Innovation Hubs

Your grant strategy should include engaging with Ontario's major innovation hubs. They provide the network and mentorship that can make or break an application.

• MaRS Discovery District (Toronto): A critical hub for startups in health, cleantech, and SaaS, offering advisory services and connections to capital.

• Communitech (Waterloo): The heart of the Waterloo tech ecosystem, providing deep support for tech companies at every stage.

• Invest Ottawa: The lead economic development agency for the nation's capital, with strong programs for SaaS, life sciences, and deep tech.

Book Your Free Strategy Session

Ready to secure non-dilutive funding for your tech startup in Ontario?

👉 Book a free strategy session with our team today and get a personalized grant roadmap designed to maximize your runway and minimize dilution.

Frequently Asked Questions

Can a pre-revenue startup get funding in Ontario?

Yes. The Ontario Innovation Tax Credit (OITC) under SR&ED is refundable—even for pre-revenue companies. Early-stage grants from OCI and IRAP are also accessible.

What’s the difference between IRAP and SR&ED?

• IRAP: Apply before starting your R&D; funding covers up to 80% of salaries.

• SR&ED: File after the work is done; get a tax credit on eligible expenses.
  Using both is a common and effective strategy.

Are there grants for hiring in Ontario?

Yes. Programs like IRAP, FedDev, and student hiring grants (e.g., SWPP, Co-op Tax Credit) help cover wage costs for technical and business roles.

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