What IRAP is — and why most AI startups don't apply
The Industrial Research Assistance Program is run by the National Research Council and has been funding Canadian SME R&D since 1962. It provides non-repayable grants covering up to 75% of eligible labour costs for qualifying technical work. No equity. No repayment. No revenue requirement.
The reason most AI startups miss it has nothing to do with eligibility — the vast majority qualify. The issue is how the program works. There's no open call, no portal you cold-apply through, and no deadline to hit. IRAP is relationship-driven. Every application flows through an Industrial Technology Advisor (ITA) — a government-employed technical expert who assesses your project, advocates for your funding internally, and stays engaged throughout the grant period. You can't get IRAP funding without one, and most founders don't know they exist.
Eligibility — who qualifies
IRAP's eligibility criteria are deliberately broad. The program is designed to reach a wide range of Canadian SMEs, not a narrow technical category.
| Criterion | Requirement |
|---|---|
| Legal structure | Incorporated, for-profit Canadian company (federal or provincial) |
| Size | Under 500 full-time employees |
| Revenue | No minimum — pre-revenue qualifies |
| Technical work | Genuine technological uncertainty — not routine engineering or standard software development |
| Commercialization | Clear Canadian commercialization pathway — the benefit to Canada must be articulated |
| Project status | Work must be in progress, not already completed |
| Cost share | Company must fund the portion not covered by IRAP (25%+ of eligible costs) |
What disqualifies most applications isn't company type — it's how the project is described. Projects that fail to articulate genuine technological uncertainty, or that present as product development rather than R&D, get declined. The framing matters as much as the underlying work.
The AI Assist sub-stream
IRAP runs a dedicated sub-stream specifically for SMEs adopting or building AI. The AI Assist stream doesn't require a company to be an "AI company" — a manufacturer implementing computer vision quality control, a healthcare company building a diagnostic tool, or a logistics operator automating route planning all qualify if the technical challenge is genuine.
The practical difference: ITAs assessing AI Assist applications understand that data scarcity, model uncertainty, and domain adaptation are real technical obstacles — not engineering tasks. This is a meaningful advantage over the general stream for companies doing novel AI work that might not sound like traditional R&D to a non-technical reviewer.
How much you can actually expect
IRAP's official maximum is $10M, but that number is misleading for most first-time applicants. In practice, funding follows a track record — ITA relationships are built over time, and initial awards reflect that.
The 75% labour coverage rate applies to eligible costs — primarily Canadian employee salaries working on the R&D project, and up to 50% of eligible contractor costs. Cloud infrastructure, equipment, and overhead are not directly eligible but are captured if you stack IRAP with SR&ED (more on this below).
Other programs that work alongside IRAP
SR&ED
The most common IRAP stack. SR&ED covers the non-IRAP portion of eligible R&D labour at 35%. Ontario adds a further 8% OITC on top.
Scale AI
For companies doing applied AI projects with a consortium partner. IRAP can cover internal labour; Scale AI covers the broader project costs — different buckets, no conflict.
FedDev Ontario
Southern Ontario companies can layer FedDev's BSP stream alongside IRAP for scale-up activities. Different cost categories apply — check with your ITA.