The Telegraph-Journal reported this morning that tech entrepreneurs Gururaj Deshpande and Gerry Pond have made a multi-million-dollar donation to finance the Pond-Deshpande Centre for Innovation and Entrepreneurship at UNB.

This is only the latest nugget of good news for the startup ecosystem in New Brunswick and the region.  The recent exits have boosted capital for investment and there are new accelerators being launched. New Brunswick has a competitive tax regime and is developing an admirable swagger.

So what’s needed now to ensure the region spawns a few more Radian6’s?

My answer: 1) human capital and 2) more investment in commercial-based R&D.

The problem with a lack of human capital is fairly obvious. We need to train or attract more skilled people, especially in IT.  

The second hurdle is a bit more complicated: New Brunswick and UNB recently have been economic marvels when you consider how little is spent on R&D in the province.  This is a regional problem, and we need more R&D if we’re going to continue or expand the success New Brunswick is now enjoying.

Canada generally spends about 2 percent of its GDP on R&D, a ratio that is pathetically low by international standards. In Sweden, the figure is about 8 percent.  Atlantic Canada fails even to keep up to the Canadian levels.

In 2008, according to the most recent StatsCan figures available, the proportion of provincial GDP devoted to R&D was: Newfoundland and Labrador 0.88%; New Brunswick 1.10 percent; Prince Edward Island 1.38 percent; and Nova Scotia 1.51 percent.

The most important component in Atlantic Canadian R&D is research carried out at universities, which is great, as long as it is commercialized. (Yes, there are good arguments for pure scientific research. But the Maritimes’ economic challenges are such that we must focus most strongly on applied development of our research.)

In New Brunswick in 2008, precisely $300 million was spent on R&D and precisely half of it, $150 million, was carried out in higher education institutions. For Canada overall, the figure is closer to one-third.

So my hope is that the Pond-Deshpande Centre has two impacts at UNB: first that it will result in a greater portion of the research at the university being commercialized; and second that the absolute value of R&D in New Brunswick rises.

This doesn’t mean that New Brunswick has to grab R&D dollars from other regional universities. It could mean the region’s universities in total receive more government, individual and institutional money for commercial R&D. Certainly the people controlling the funding will be more interested in contributing now that Pond and Deshpande are opening their new innovation centre.