Accelerated: Waterloo’s culture of collaboration
This is the 18th article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.
Throughout this series, we have often referenced startup accelerators and the important role they play in the commercialization ecosystem, as well as where government support fits into the equation. So we thought it was time to take a closer look at these entities by profiling three different ones from Canada, the U.S. and the U.K.
This week, we start with Waterloo's five-year-old Accelerator Centre. We recently spoke with Tim Jackson, COO of the AC, about the role that this kind of organization plays in the process of getting technology to market, what makes it tick, the culture required to support it and how it measures success. What follows is an abridged transcript of our conversation.
How do you describe the role that the AC plays in the commercialization ecosystem? What gaps is it intended to address?
The gap that we really fill is the entrepreneur who's got an idea … and they need help accelerating the revenue …What does that really mean? It means learning from other people's mistakes…
I'm a huge, huge believer in the only way you innovate is by failing. You've got to try different things and that means a lot of mistakes along the way. So if we can eliminate some of them, we can help clients get to market quicker and get them to do it on a more frugal budget.
We have a pretty extensive screening process that identifies entrepreneurs who know what they don't know, so the kind of client who gets in here is someone who wants to learn, is not afraid to hire people who are as talented as they are, is not afraid to ask for help. So it's a case of putting all of these smart people together, collectively they share ideas with one another and we think that having them in here, having access to the mentors, access to the community that is volunteering to help, is going to get them to market faster than if they were doing it on their own.
What was the inspiration for the AC's model and range of services?
When you look at the ecosystem here in Waterloo, it starts with the University of Waterloo. The genesis of the entrepreneurial culture really comes from the university, which has the most liberal intellectual property policy of anywhere in the world. It's very simple - the inventor owns (the IP), full stop. The university has no ownership rights in anything invented at the university. That attracts commercially oriented researchers to this region (from around the world). If you track the history of technology companies for the past 53 years, the university is at the centre of that.
(About seven years ago), there was a feeling in the community that we needed a physical place for early-stage entrepreneurs, we had all this entrepreneurial activity happening, but there wasn't one central location … a physical place where entrepreneurs could come together which the community could use as a focal point for supervising ecosystem resources.
We looked at a lot of incubators and accelerators and the number one lesson we learned … was move people through quickly. Churn is the most important. From day one we have said we will get people in here and we will move them through rapidly … either succeed quickly or fail quickly. When we looked at other accelerators and incubators, those that had struggled tended to be filled with stagnant companies … so we put in place a system of tracking, we measure some very specific metrics in areas such as governance, human resources, sales, marketing, finance and the like and we track how the companies are progressing, and what that allows us to (do it) put some discipline to make sure these companies are progressing and advancing.
Does this put you in the business of picking winners or losers?
It does to some extent. We're in a fortunate situation where demand exceeds supply. We have a wait list. We are to some extent picking folks initially and as I say, we're looking for folks who know what they don't know. But of the dozen or so companies that have left (without graduating), I believe only one is not still in business. So it doesn't mean that a company (that doesn't progress through the program) has a bad business idea. It may just mean that it is not a fit for the type of mentoring and guidance that we're offering.
Sometimes that's just a style thing. There are some entrepreneurs who want to do their own thing, don't want the guidance, don't want the mentoring. Our view is, the clients in here pay about one third of the cost of operating the facility, the other two thirds is public money that is used to provide mentors and the like, so if a company isn't taking advantage of that, we think we're better off putting someone in who will because that is what the taxpayers are subsidizing.
The AC has had about 10 successful graduates so far. Who are some of them?
Miovision Technologies is one, founded by Kurtis McBride. It uses cameras to track traffic patterns. Kurtis had maybe a dozen employees when he graduated from here, he currently employs 50 people, he has 200 customers in 20 countries. You now have this company that is employing 50 Ontarians and it's an exporter generating tax dollars for the local economy.
Another example is Clearpath Robotics, which came out of a program at the University of Waterloo.
Please describe the specific role that government and public money plays in the AC's programs and services.
The tenants pay rent to be here and what they pay covers what I call the real estate costs of the operation, keeping the lights on, the communications infrastructure and the like.
But what government does is provide us funding to support the mentoring, things like our in-house mentors who are the specialists in human resources, sales, marketing and communications, our education programming, our entrepreneurship council, which is the group of volunteers, and the staff support behind that. That is all provided through government funding. Really, that's what makes the difference, that's what turns this place from just being a pure real estate rental operation and is something that adds value.
Where do individuals from the private sector come into the picture?
We have about 40 volunteers who are C-level or vice-president level executives with local technology companies. They range from large operations like Research in Motion, OpenText and Christie Digital to smaller entrepreneurs who have been successful in their own right. They all volunteer their time. Any client in the centre gets assigned one or two of these individuals. They act like a board of directors … for the most part they build relationships with the entrepreneur and they become a regular ongoing advisor.
Also we have service providers, like law firms and accounting firms, who come in and provide pro bono support.
How does the AC measure the results of its efforts and demonstrate a return on the investment of taxpayers' dollars?
One of the requirements to come in here is that the client has to agree to report to us on a quarterly basis both while they're here and after they've graduated around metrics like revenue generated, third-party financings, number of jobs, sales. We're relatively early, being just five years open … but that's how we start to measure things … the economic impacts, that what we talk about when we talk to our government funders, our stakeholders.
Can we have some hard numbers?
Through the end of December, our clients had generated in excess of $20 million collectively in revenue, they'd received $40 million in external funding, the community had provided more than 12,000 hours of mentorship, we've created in excess of 400 permanent jobs in the province. All of the companies have remained in Ontario.
Editor's Note: These results to date are the result of an investment of public money of less than $5 million.
Where do we go from here? Who else in Canada is doing what the AC is doing?
I think there are pockets of things going on. Last week I was in Vancouver at Wavefront, which is an accelerator there dealing with mobile phone applications. There are pockets popping up in Montreal, there's MaRS, obviously, in Toronto.
I think the key is, when we're asked by other municipalities or other governments to help out, is that the biggest thing is the ecosystem. That's the challenge … what does the ecosystem look like, are there post-secondary institutions that are entrepreneurially minded, are there experienced entrepreneurs who can support this, are there law firms, accountants, other service providers that can be accessed?
What is it that makes the Waterloo region such a successful locus for technology and entrepreneurship?
I truly think it goes back to the university. The university is the genesis of the entrepreneurial ecosystem that exists, that intellectual property policy which attracts commercially oriented researchers.
It's just grown from there. This community has always been one that takes care of itself. People have passed off from one generation to the other. You have a situation here where we have all the benefits of being close to a large metropolitan area, Toronto, yet it is a community that has become self-sufficient.
I know as COO of the Accelerator Centre that I can phone the CEOs of any of the large public companies in our community and say, "I've got a client that needs a little bit of help, could you or someone in your company help this person?" I know I am going to get a response and they are going to effectively do what others did for them … they've never forgotten that they needed help from a peer-to-peer standpoint and they continue to give back to the community …
As a community we speak with one voice now. Communitech and the AC are connected at the hip. We don't compete with each other. We work collaboratively. I think in too many places across Canada it's fractured. There are too many organizations trying to do the same thing and it becomes sometimes confusing for entrepreneurs.