What FedDev Ontario is
FedDev Ontario is the Federal Economic Development Agency for Southern Ontario — one of six regional development agencies that collectively cover the country. Its mandate is economic growth in the region, which means it funds companies that create jobs, develop technology, and build revenue in Southern Ontario.
For AI companies, FedDev is relevant because its priority sectors explicitly include AI, cybersecurity, digital health, and advanced manufacturing. Unlike SR&ED or IRAP, which fund R&D activity, FedDev funds scale-up — commercializing technology, expanding a team, building out infrastructure, entering new markets. It's designed for companies that have something working and need capital to grow it.
BSP vs RTRI — the two active streams
Business Scale-up & Productivity
Regional Tariff Response Initiative
Who qualifies — the key criteria
Both streams share a core set of eligibility requirements:
- Southern Ontario location: Your business must operate in Southern Ontario — roughly everything south of North Bay and Sudbury. Toronto, Waterloo, Hamilton, London, Ottawa, Kingston, and the broader GTA all qualify. If you're unsure whether your location is in scope, call FedDev at 1-866-593-5505.
- Incorporated for-profit entity: Sole proprietors, partnerships, and non-profits don't qualify.
- Commercial output: Projects must have a scalable commercial output — a product, service, or process that generates or will generate revenue. Pure R&D without a commercialization path doesn't fit FedDev's mandate.
- Co-investment capacity: You must be able to fund at least 50% of total eligible project costs from private sources. FedDev conducts financial due diligence — undercapitalized applicants don't progress.
For BSP specifically, externally reviewed or audited financials for the last two years are strongly preferred. A review engagement from a CPA is significantly cheaper than an audit and substantially improves the credibility of a BSP application.
What FedDev funds — and what it doesn't
| Cost category | BSP eligible? | RTRI eligible? |
|---|---|---|
| Salaries for scale-up activities | Yes | Yes |
| Capital equipment and infrastructure | Yes | Yes |
| Marketing and market expansion | Yes | Limited |
| Technology adoption and integration | Yes | Yes |
| Pure R&D labour with no commercial output | No | No |
| Working capital and general operations | No | No |
| Land and buildings | No | No |
The key distinction from SR&ED and IRAP: FedDev is not an R&D program. It funds the commercialization and scaling of technology, not the research that produced it. A company building an AI product would use SR&ED and IRAP for the R&D phase and FedDev for the scale-up phase — the programs cover different stages of the same business.
The Southern Ontario boundary
FedDev's jurisdiction is Southern Ontario — distinct from FedNor (Northern Ontario) and from the other regional agencies covering the rest of Canada. The boundary runs roughly along the French River and Lake Nipissing. Cities clearly in scope include Toronto, Ottawa, Hamilton, London, Kitchener-Waterloo, Kingston, Windsor, Barrie, and Peterborough.
If your company is headquartered outside Southern Ontario but has substantial operations there, it's worth calling FedDev directly — the boundary has some flexibility depending on where economic activity is occurring. The number is 1-866-593-5505.
Programs that work alongside FedDev
SR&ED + Ontario OITC
The most common FedDev stack. FedDev covers scale-up costs; SR&ED covers R&D tax treatment on the technical work. Different cost categories, no conflict.
NRC IRAP
IRAP covers R&D labour during development. FedDev covers commercialization. Sequential rather than simultaneous — they often fund different phases of the same product journey.
Scale AI
For manufacturers adopting AI in Southern Ontario, Scale AI and FedDev have been successfully combined. Requires careful cost allocation to avoid overlap.