Building the Start-up Eco-System in Saskatoon

Posted on December 04, 2013

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by Glen Schuler, Lorna Shaw-Lennox and Laurel Reich,
U of S Industry Liaison Office
  

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Critical components of a well-functioning innovation eco-system include the ability to foster technology-based start-up companies through accelerator programs, pre-seed, high-risk funding and business mentoring. The lack of a Saskatchewan accelerator and inadequate pre-seed funding has led to several promising Saskatchewan start-ups moving to other provinces. In short, Saskatchewan is experiencing the loss of highly qualified people as they move their start-ups to other provinces where the innovation ecosystem better supports technology-based firms.

In order to build a better innovation ecosystem in Saskatchewan, the Industry Liaison Office is working with potential investors to develop an early stage, pre-seed fund to help advance technology-based companies. More recently, the ILO, in collaboration with the Brett Wilson School for Entrepreneurial Excellence and Ideas Inc., submitted a proposal to the National Research Council to develop an accelerator program in Saskatoon.

It is important to understand the differences between incubators and accelerators. An incubator provides a facility to  house a start-up during its early developmental stage and includes business mentoring and business skills programing.  The programming is focused on what the entrepreneur needs to effectively run a new business. The start-up is expected to graduate within an agreed upon time period, often two to three years. Accelerators, on the other hand, are focused on more quickly moving the start-up through its business programming – usually within four months. Many accelerators provide funding for the start-up (say $25,000) while in the accelerator and provide introductions to angel investors or venture capitalists. Upon graduation, the start-up most often receives angel investment and in many cases, veteran advisors to continue the company’s advancement. In both acceleration and incubation the business mentors continue to work with and–many take active management roles in–the company (While in the accelerator or incubator, the start-up is charged less for office space).

Nearly every province in Canada has an accelerator program, and larger centers have multiple accelerators; including private-public partnerships. Saskatchewan does not.

Without a technology accelerator and adequate sources of early-stage, pre-seed funding, and in order to obtain these services and funding sources, several start-ups have moved out of the Saskatchewan. Once gone, they are not likely to return.

Here are a couple of examples of start-ups that have relocated recently:

1. Picatic: A Saskatoon-based, on online ticketing company founded in 2009 relocated to Vancouver in May 2013. The founders participated in Extreme Startups, a Toronto accelerator in August of 2012 (and also worked with MaRS, an Innovation Hub in Toronto) to further develop their business model.

The competition to get into this accelerator is fierce. Extreme Startup accepts five companies for each 12-week program. Each start-up receives $50,000 of funding up front and another $150,000 upon completion of the program. The companies must relocate to Toronto for the duration of the program. In addition to the funding, the entrepreneurs get hands-on help from mentors. Previously, Picatic participated in The Canadian Technology Accelerators in San Francisco and New York City. After sampling three of North America’s hottest tech start-up ecosystems, Picatic made the call to go west to Vancouver. According to one of the founders, “Once you get outside of Saskatchewan and Saskatoon, you just realize how big of a world is. It was definitely an experience going to Toronto and seeing the start-up community they have there, and how many people are actively working on start-ups. It’s very fast-paced. It’s inspiring.”

2. iEpi: This company specializes in developing tracking and surveying technology for mobile devices to understand social behaviors relevant in public health. The technology was developed at the University of Saskatchewan by two graduate students and two faculty members. It relocated to Toronto in June 2013 to be closer to MaRS for its broad range of incubation services, such as Extreme Startups and access to pre-seed funding.

Several other start-ups are presently out of the province at incubators or pitching for investment:

1. Farm-at-hand: a Saskatoon-based company that developed a multi-platform, cloud-based farm management program which allows producers to manage production activities and agribusinesses to exchange real-time information with their customers. Farm-at-hand is one of five companies accepted into Growlabs in Vancouver. The owners have recently received a funding commitment which may require that they stay in Vancouver.

2. One Story: a Saskatoon-based company that has developed a crowd-sourced platform to create and share video interviews. A guided interview process collects individual clips  and assembles them into a beautiful compilation video making it easy to share online. One Story participated in an accelerator in San Diego, California as part of one the World’s Best Technologies competition.

3. 7Shifts:  a Regina-based company that has developed an online employee scheduling application designed to schedule shifts, calculate payroll and track vacations, while allowing employees to view and exchange shifts on their smartphone. 7Shifts is currently in San Mateo, California at the Boost; Accelerator,  one of 20 companies accepted–and the only one from Canada.

Entrepreneurs, acknowledging the factors in their relocation decisions, include the lack of availability of incubators, accelerators, and the lack of access to pre-seed, high risk funding or investment. We need to keep as many of these start-ups in the province as possible.

In the Oct. 12, 2013 Economist, the author of the article in the Schumpeter, “Not Open for Business,” states: “Start-ups have always been at the heart of America’s economic success. Companies that are five years old or younger account for all of the country’s net job creation. They also account for the bulk of innovation.” The article goes on to discuss the many reasons why the number of start-ups is decreasing, but the important point of the article is: the economy needs start-ups–they are the backbone of any economy.

Saskatchewan needs to support its start-ups by building on this piece of the innovation eco-system.  We need to work together to ensure we can give our entrepreneurs the best foundation on which to grow their businesses–right here in Saskatchewan

Glen Schuler
Managing Director, U of S Industry Liaison Office