Learn how Mike Lazaridis built Research in Motion (BlackBerry) with crucial IRAP funding and government support, creating a $20 billion company that revolutionized mobile communication and put Canadian tech on the global map.
In 1984, Mike Lazaridis was a 23-year-old University of Waterloo dropout with $15,000 in savings and a vision that seemed absurd to most investors: a pocket-sized device that could send and receive emails wirelessly. Working from a small office above a bagel shop in Waterloo, Ontario, Lazaridis and his partner Douglas Fregin founded Research in Motion (RIM) with little more than ambition and engineering talent.
What transformed this modest startup into BlackBerry—at its peak, a $20 billion company that controlled 50% of the U.S. smartphone market—wasn't just brilliant engineering. It was strategic government funding at critical moments that allowed RIM to survive its lean early years, develop breakthrough technology, and ultimately revolutionize global mobile communication.
The story of how Canadian government programs, particularly the Industrial Research Assistance Program (IRAP), nurtured RIM from a struggling startup to a global technology leader offers powerful lessons about the role of public investment in building innovation ecosystems—and why such support often succeeds where private capital fails.
The mid-1980s were a challenging time to start a technology company in Canada. Silicon Valley dominated the tech landscape, Canadian venture capital was virtually non-existent, and the idea of wireless email seemed like science fiction. Lazaridis, the son of Greek immigrants who came to Canada with just $200, understood the value of every dollar.
RIM's first years were precarious. The company initially survived by taking on consulting contracts—designing LED signs for General Motors and developing film barcode readers. By 1990, six years after founding, RIM had grown to just 12 employees and was generating roughly $500,000 in annual revenue—respectable, but hardly the trajectory of a future tech giant.
The pivotal moment came when Lazaridis realized that emerging wireless networks could enable something revolutionary: continuous, two-way wireless data communication. But developing this technology would require significant R&D investment that the company simply couldn't afford. Banks wouldn't lend to a hardware startup with no collateral. Venture capitalists weren't interested in a Canadian company building enterprise communication devices.
This is where government support became transformative.
In 1990, RIM connected with an Industrial Research Assistance Program (IRAP) advisor—a moment Lazaridis would later describe as "the breakthrough" for the company. IRAP provided something more valuable than just funding: expert technical advice that fundamentally changed RIM's trajectory.
The IRAP advisor urged RIM to adopt surface-mount technology (SMT) for their electronics manufacturing—a cutting-edge approach that would allow them to build smaller, more reliable devices. IRAP provided:
This initial $30,000 investment had an immediate impact. The SMT capability helped RIM win a crucial contract with Sutherland-Schultz worth $250,000, pushing the company over $1 million in revenue for the first time. But this was just the beginning of government support that would prove instrumental to RIM's success.
Over the next decade, various Canadian government programs provided crucial support at key moments:
SR&ED Tax Credits (1990-2000s): The Scientific Research and Experimental Development program provided RIM with millions in tax credits, effectively refunding up to 35% of their R&D expenses. For a hardware company spending heavily on engineering, these credits often meant the difference between profitability and bankruptcy.
Technology Partnerships Canada (1996): When RIM needed to develop its breakthrough two-way pager, TPC provided a $23 million repayable contribution. This wasn't a grant—it was patient capital that allowed RIM to pursue ambitious R&D without diluting equity or taking on high-interest debt.
Export Development Canada: As RIM began selling internationally, EDC provided export financing and insurance that allowed the company to compete for large international contracts without taking on excessive risk.
The nature of government support offered unique advantages that private funding couldn't match:
Patient Capital with Aligned Interests: Unlike venture capitalists pushing for quick exits, government funding allowed RIM to focus on long-term technology development. The famous BlackBerry didn't generate significant revenue until 2001—a 17-year journey that few private investors would have supported.
Technical Expertise Beyond Money: IRAP advisors weren't just bureaucrats writing checks. They were engineers and scientists who understood RIM's technology and could provide genuine technical guidance. The advice to adopt SMT manufacturing, for instance, gave RIM a competitive advantage that lasted years.
De-risking Innovation: Government support helped RIM pursue high-risk research that private investors avoided. The idea of wireless email in the 1990s seemed far-fetched, but government programs designed to support innovation could tolerate this uncertainty.
Maintaining Canadian Control: While U.S. venture capital might have forced RIM to relocate to Silicon Valley, Canadian government support allowed the company to remain in Waterloo, building a local ecosystem that would spawn hundreds of other tech companies.
Bridge Funding During Crises: When the tech bubble burst in 2000-2001, many startups collapsed as private funding evaporated. Government programs provided stability that helped RIM weather the storm and emerge stronger.
By 1999, after years of development supported by various government programs, RIM launched the BlackBerry 850—the device that would transform mobile communication. The name, suggested by a marketing company because the keyboard looked like blackberry seeds, would become synonymous with mobile email.
The timing was perfect. The device launched just as businesses were becoming frustrated with the limitations of pagers and PDAs. BlackBerry offered something revolutionary: push email that arrived instantly, just like a phone call. Within two years, BlackBerry had become essential equipment for executives, lawyers, and government officials worldwide.
The growth was explosive:
The return on government investment in RIM/BlackBerry was extraordinary by any measure:
Direct Financial Returns:
Employment Impact:
Ecosystem Development: The "BlackBerry diaspora" after the company's decline seeded hundreds of new companies:
Global Technology Leadership:
The government's investment in RIM created ripple effects throughout the Canadian economy:
Supplier Development: RIM's growth created a sophisticated supply chain of Canadian component manufacturers, software developers, and service providers. Companies like Celestica and Redknee expanded significantly due to RIM contracts.
Talent Development: RIM hired thousands of co-op students from Canadian universities, providing them with world-class experience. These engineers went on to found or join other Canadian tech companies, perpetuating innovation.
Research Infrastructure: RIM invested hundreds of millions in R&D facilities in Waterloo, Ottawa, and other Canadian cities. These facilities and the expertise within them remained in Canada even after BlackBerry's decline.
Venture Capital Ecosystem: RIM's success attracted international venture capital to Canada. Funds that would never have considered Canadian investments established offices in Toronto and Waterloo to access the talent pool RIM had developed.
The RIM story offers crucial insights for contemporary government funding programs:
While BlackBerry eventually lost the smartphone war to Apple and Android, the company's rise and the ecosystem it created continue to benefit Canada. Today's Waterloo tech corridor includes:
The approximately $60 million in government support didn't just create a successful company—it transformed a mid-sized Ontario city into a global technology hub that continues to generate billions in economic activity annually.
For today's entrepreneurs facing the same "valley of death" that nearly killed RIM, the BlackBerry story offers hope and direction. Government programs like IRAP, SR&ED, and their modern successors exist precisely because private markets often fail to support transformative innovation in its crucial early stages.
Mike Lazaridis himself became one of Canada's greatest innovation philanthropists, donating over $300 million to establish the Perimeter Institute and Quantum Valley initiatives—investments that might create the next RIM. In testimony to the government, he stated unequivocally: "IRAP was the breakthrough. Without IRAP, there would be no RIM."
The story of BlackBerry reminds us that government investment in innovation isn't corporate welfare—it's strategic nation-building that can transform small startups into global champions, create entire industries, and generate returns that repay the initial investment thousands of times over. For a country seeking to compete in the global innovation economy, the lesson is clear: strategic public investment in promising technology companies can yield extraordinary returns, both financial and societal, that extend far beyond the original recipient.
