Ottawa s Incubator Scene. May 2014 Edition 1

Transcription

1 Ottawa s Incubator Scene May 2014 Edition 1

2 Table of Contents Acknowledgements 3 Overview 3 Incubate this! 3 Accelerate Me 4 Do They Really Help? 4 What is the future for these programs? 5 Report Findings: 6 Questions/Responses for Incubators/Accelerators: 7 Definitions 24 References 25 TON Incubator Report May

3 Acknowledgements We would like to thank all of our participating incubators and accelerators for agreeing to be part of this report. We plan to make this a living document that will see continuous updates. Overview The Ottawa Network embarked on a journey to look into our startup community to better understand the resources available for entrepreneurs. After identifying an increasing number of startups in our community, we decided that the best way for us to assist would be to prepare a report reviewing our local incubator/accelerator organizations to: outline differences between the two types of organizations identify unique programs and offerings The incubators/accelerators were asked a number of questions ranging from program/service offerings to possible financing /funding options. Their answers and report findings are tabulated below. Both incubators and accelerators have become vital resources for startups but many don t know the difference between the two. Both are often lumped together yet the two concepts have key differentiators. What was rather troubling was the lack of accelerators in our community. While we are seeing an enormous growth in incubators, there is only one accelerator that we were able to identify. We also found that there is an enormous funding gap evident in the startup community. While many startups have been somewhat successful in raising money from friends and family and some with initial angels, very few are able to obtain the follow on funding required to commercialize their products or services resulting in the inability to bring in and solidify the client base needed to sustain growth long-term. Incubate this! According to the National Business Incubator Association (NBIA), an incubator is "a business support process that accelerates the successful development of startup and fledgling companies by providing entrepreneurs with an array of targeted resources and services. (NBIA, 2012). The services are usually developed and/or managed by an incubator management team leveraging a network of local community based contacts. Incubator programs exist to support and improve the success rate of startups and also help build opportunities and strengthen the overall community. TON Incubator Report May

4 The premise is that incubator programs can help improve the odds of success by offering things like office space, professional services and business advice. Typically businesses pay a monthly fee to participate in the program. Fees often range from a few hundred to a few thousand dollars. There is no fixed timeframe for how long a business will spend in the Incubator program. Our research of local Ottawa based Incubators indicated that companies generally spend approximately months. The recent focus in startups (focus in or focus on and by whom?) has led to a broader interest in Incubator programs and there are now some programs focusing on specific vertical markets such as IT Security and Gaming. Accelerate Me While Accelerators are in the same business of improving the odds of success for startups as Incubators, there are key differences in the approach. First, accelerators typically make an investment in the companies enrolled in their programs and take an equity stake. They are very early stage investors, helping them build their company while accelerating the trajectory path of the business. Second, accelerators only take in a limited number of companies that have been screened to identify viable investment candidates. Third, the amount of time companies spend in an accelerator is clearly defined by the investor(s) or accelerator principals. The startup company usually follows a particular program that has a concise timeline attached to it. Do They Really Help? Even though there has been lots of discussion and research regarding the value of incubators and accelerators, the general consensus is that both can help businesses tremendously. This does not necessarily mean that they help businesses grow exponentially. It does however help from a velocity perspective it helps those who can grow to do so quickly and also help those who will fail, to do so faster, essentially creating a more efficient startup marketplace. A structured environment with peer support can provide startups and entrepreneurs with support to tackle some of the biggest challenges. If an entrepreneur wants to test a business model to ensure it is scalable and repeatable, it is far quicker to test it in an accelerator or incubator environment where you will know in months the results versus years of trying to get traction on their own. An accelerator environment that has financing, hands on support and contacts will expedite the business growth process and quickly determine that one is on the right path, needs to pivot, or should call it a day. TON Incubator Report May

5 Incubator and accelerator programs also aid potential investors, in that they act as a screening or vetting tool. Coming out of a reputable accelerator program and/or incubator program arms the entrepreneur with more ammunition (they typically have a well written business plan, have proven their business model is viable, have a few clients) when looking for further investors. What is the future for these programs? We have already seen a huge increase in the number of startups. This is primarily due to the fact that starting a business is far cheaper than 10 years ago. New technologies and tools have created this enormous paradigm shift in the way we innovate. 10 years ago, to build a product may have cost a few $million just to get into the prototype stage while it now may cost only thousands. 3D printing technology, rapid acceleration design techniques in manufacturing automated marketing tools and other services make it incredibly affordable to start a company. These massive changes in how we innovate and the subsequent increase in startups will continue to need support in the form of mentoring, financing, coaching, networking and administrative/back office assistance. We expect to see a continued growth and evolution for incubators and accelerators. The challenge for incubators and accelerators will be supporting the sheer number of startups. There is only so much funding, training, and other resources to go around. With growing pressure to find better startups, better events, better coaching, there is a visible strain on the people running these organizations. While Venture Capitalists are less involved in informative and educational events for early stage entrepreneurs, most accelerators and incubators host at least one a month, each of which has to be meticulously planned, managed, and executed. Accelerators and Incubators are trying to cover fixed costs via sponsorships, paid events, even by charging startups, and the bar keeps rising. When the costs are added to the resource constrained entrepreneur, a feeling of resentment can occur. The truly difficult part for accelerators is finding, attracting, and developing the best entrepreneurial talent. It is only the very best startups that will generate enough follow-on venture capital, investment, and growth to pay for the entire operation of an accelerator. As an example, Y Combinator is successful because they successfully turned out AirBnB and DropBox. Without these, they would not be able to afford to exist. TON Incubator Report May

6 Report Findings: 1. Ottawa has approximately nine (9) incubator/accelerators currently operating. Incubator/ Accelerator Website Interviewed Type Reason WesleyClover er.com/technologiesict/recruitment/ Yes Accelerator/ Venture Program exploriem rg/ Yes Incubator CodeFactory ctory.ca/ Yes Incubator HUB No Incubator Restructuring too new StartupGarage ge.ca/ Yes Incubator Venus CyberSecurity Invest Ottawa No site yet our-services/startupacceleration/ No Incubator Incubator & Accelerator Yes Incubator ROI No site yet Yes Incubator No Incubator Yes In process of starting In process of starting 2. Ottawa has only three accelerator/venture programs that we were able to locate Invest s GrindSpace, The Garage and Wesley Clover. 3. Services were fairly consistent across all incubators in terms of office space, mentorship, networking opportunities and other services offered. What seemed to be extremely evident was a lack of available financing/funding. 4. All offer differing levels of access to mentorship, a range of informal to formal incubator programs, and all offer a wide range of services including office and administrative space for a fee. 5. Most incubators have either an interview or pre-screening process. 6. All are active to some degree in the community in addition to assisting clients to network and exchange effectively. This allows additional opportunities for learning and stray seeds being planted amongst the clients, the mentors and the community. TON Incubator Report May

7 Questions/Responses for Incubators/Accelerators: 1. How does the incubator promote collaboration and networking? Exploriem: hosts many events throughout the year including: Thirsty Thursdays, a monthly networking event, TechLinks, and Bootstrap Awards are also held yearly and encourage networking throughout not just the incubator but across the community. Other ways we encourage collaboration is through our newsletters and various social media channels. TheCodeFactory: When we first started, one of our key objectives was to build a community of shared interest around open source software. Initially we were the only incubator downtown, so almost all of the open source software groups started out of the TheCodeFactory or used our space for their events. We have since changed to support a wider variety of startups and host fewer events. We are actively involved in collaboration and networking through structured events as well as informal meetings. Typically, 2-3 people/per week come to chat about ideas. Collaboration and networking is just part of the typical daily routine and is encouraged through management of the incubator as well as through the design of the incubator s building Invest Ottawa: Invest Ottawa promotes monthly and ad-hoc events for entrepreneurs and companies on various subjects. All are invited, whether they are incubator entrepreneurs or visitors from the outside. One such event, called Entrepreneur Hangout, is an informal event that lets people get to know each other and socialize a little. Since 95% of the entrepreneurs that Invest Ottawa works with don t reside inside the incubator space and the fact that the incubator is happy to provide services to anyone who asks for it, its only logical. The organization also promotes organizations like Startup Garage and others that help entrepreneurship in the community and it continuously collaborates with the colleges and universities in Ottawa and to some extent those located in other Ontario cities to identify and train emerging entrepreneurs towards business success. Invest Ottawa also regularly updates a community calendar on their web site containing events being hosted and prepared by a great many startup-related TON Incubator Report May

8 organizations in the Ottawa region. Soon, the organization will release a beta mobile application for smartphones that will allow the Ottawa community access to promoted and regular events in a more passive way. StartUp Garage: During the summers of 2012 and 2013, Invest Ottawa sponsored the office space for the Startup Garage companies at 80 Aberdeen. This allowed the Startup Garage companies to network with the other startups located within Invest Ottawa. Since the program runs from June to August, and given that most organizations do not host networking events during this time, Startup Garage informs the companies of the networking opportunities available in Ottawa. To support networking opportunities, TiE memberships were awarded as prizes in the final pitch competition culminating the end of the program in Wesley Clover: We have a common area in which we encourage collaboration between the companies. We also do regular events such as Tech Tuesday, which draws over 200+ attendees providing ample networking opportunities. ROI: Every 2 weeks we have an open house where we invite up to 10 people form creative and business industries producers, writers, directors, digital media business, gaming companies. We also do active outreach to the postsecondary institutions, and partnerships with startup community, invest Ottawa, we do a lot of cross promotion for the members, we include them in a public directory of members, we provide them with space on our YouTube channel where we interview members that come in and put the interview on our channel. We also provide weekly educational sessions where our members actually provide the topics and provide the education to other members. We also partner with runway networking that organizes bi-weekly meetings, monthly networking events, quarterly workshops and annual galas that allow members to market their brand and cultivate meaningful and lasting business relationships. 2. Is there access to angel, seed or early-stage capital? If yes, how much investment capital do you receive in return if giving up equity? Exploriem: Yes and No. No, Exploriem does not provide direct funding for start-ups. Exploriem emphasizes the importance of self-capitalization first. We are strong believers in customers first and when you have real revenue and cash flow then the company can seek out investors and angels. Exploriem encourages their startups to TON Incubator Report May

9 prove their business model first, this results in less up front capital that has to be provided. We help and encourage capitalization for our startups through more grass roots initiatives. However, Exploriem can introduce startups to Angel Networks and potential investors. In addition, if Exploriem is aware of potential program and funding initiatives, we can lend our support through our network and services provided to assist the startup obtain funding for needed education, business services, etc. TheCodeFactory: The incubator does not provide seed or early stage capital. However, several startups have received funding that they arranged themselves. TheCodeFactory is more of a bootstrap incubator; the focus is on helping our clients to establish cash flow from customers. Invest Ottawa: The incubator does not make investments into incubated businesses. However, some of the programs at the incubator provide funding to entrepreneurs on a project basis. Invest Ottawa never requests or retains equity for these as the funds are locked in as part of the program and awarded by merit. However, Invest Ottawa does make introductions to VC, government programs/funds and Angel funds. Startup Garage: Yes. A grant of up to $20,000 is awarded to each of the Startup Garage companies. The grant is paid in reimbursement of company expenditures. The institutions do not take equity in the Startup Garage companies. Wesley Clover: Yes. It varies. Primarily provide some seed and angel funding. We are in with the company for the long term. ROI: We are looking at setting up some type of potential funding, but at the moment, we will look at private funding per project. We will help guide startups on how much money they need and how and what to spend it we don t have direct access to investment capital but we do assist with access to capital. We have in depth knowledge about available grants, programs; loans and help startups build their pitch to investors. TON Incubator Report May

10 3. How much equity do you have to give up to participate or what type of fees are involved? Exploriem: Exploriem does not request equity in a company; we are a not-for-profit organization. Fees are dependent upon the services and/or training requested. TheCodeFactory: We do not take equity and have no plans to take equity in startups. We work on more of a shared success model. Our shared success model is a work in progress that we are currently trialing with a couple of startups. Our goal is to produce 30 startups and 250 knowledge based jobs per year. Fees vary for services. Invest: Invest Ottawa does not make equity arrangements with companies. Invest Ottawa does charge for office space within their incubator program. Startup Garage: The institution does not take equity in the Startup Garage companies. There are no fees involved for the companies to participate. Wesley Clover: we do not charge fees but rather take an equity position within the companies in or portfolio. ROI: The founders of ROI will be collectively providing mentorship. Combined we have an extensive background in video, cinematography, sound, lighting, print, magazine, newspapers, books, features films and television show production. We are entrepreneurs having started and owned various companies and have extensive sales, marketing and funding we don t have direct access to investment capital but we do assist with access to capital. We have in depth knowledge about available grants, programs; loans and help startups build their pitch to investors. 4. Who are the mentors you will be working with and are they easily accessible and what are the backgrounds of the business incubator manager and staff? Exploriem: Exploriem focuses on entrepreneurs helping entrepreneurs. Our mentors are carefully selected successful entrepreneurs and seasoned business experts that offer their business experience to young startups on a volunteer basis. Mentors sign a code of conduct indicating that they can t have a business or personal relationship with the mentored start-up within the first year. Mentors agree to a one-year TON Incubator Report May

11 commitment with Exploriem and mentors commit to an amount of time that their schedule allows on a volunteer basis. Larry Poirier has been an entrepreneur from a young age as the owner of multiple successful businesses, NitroIT and TUC Managed. Larry s real world experience of building companies from the beginning through to the acquisition phase offers a unique perspective, which has created a manager that leads by example. Larry also mentors numerous start-ups in his private time and is passionate about helping entrepreneurs succeed. Earlana Lavergne, Exploriem s Project Coordinator, was also an entrepreneur at a young age and one of the few women working in the construction contracting field in Earlana chose to work at Exploriem as her way of giving back to the entrepreneurial community; she understands the needs of entrepreneurs. Presently she manages the incubator and any ongoing and upcoming workshops and events. In the future she will be moving into providing some training courses and primarily connecting startups to mentors and organizing upcoming entrepreneurial training programs. TheCodeFactory: We facilitate peer-to-peer learning. Advisors are brought in through a partnering model. There are so many strong individuals around the incubator space that people want to work with that we don t find a need for a structured mentoring program. Invest: The organization deploys 10 Entrepreneurs In Residence (or EIR) that have founded, been the CEO of and have exited a company of their own in the past. These act as strategic advisors to all companies serviced by Invest Ottawa. Other specialists are located in house to help with special topics of interest such as business presentations, sales processes (B2B and B2C) and other verticals critical to an entrepreneur s success. These mentors and advisors are available to entrepreneurs based on their progress at the incubator and their immediate or forecasted needs. Startup Garage: Mentorship opportunities are offered both through Invest Ottawa and through the network of the Startup Garage team. The goal is to have one mentor per company. The Startup Garage is also aiming to have an entrepreneur-in residence for the duration of the program in Startup Garage is staffed through the Technology Transfer and Business Enterprise (TTBE) office of the University of Ottawa. The backgrounds of the manager and staff TON Incubator Report May

12 of the TTBE include professionals with a combination of at least two of the following fields of expertise: business (MBA), legal (LL.B.) and scientific (B.Sc. or M.Sc.). A part-time undergraduate student is usually tasked with communications and project management for the duration of the program. Wesley Clover: We have over ten mentors internally and then also bring in some outside mentors. Mentors advise on an as-needed basis but the company has to ask for assistance. Mentors meet weekly to track progress on each organization based on skill levels. ROI: We just opened our doors (early 2014) so this is not currently : The program started officially on January 1, we have no graduates at this time. 5. How many of the program s graduates have raised money or found a buyer? Exploriem: Exploriem has primarily focused on assisting pre-revenue and early stage companies. We do not keep track of who has raise money and there is no formal program so graduation is also not tracked. Exploriem has assisted well over 500 companies in various ways. TheCodeFactory: We have had 2 graduates both of who have successfully outgrown our incubator. We also have several successful senior startups that will likely graduate in the next year or two. Our number one metric and measure of success is graduates from our facility. We do not disclose details of our clients financials. Invest Ottawa: Invest is currently incubating over 200 companies, where only a small percentage is located in-house. Since the incubator only follows in a more strict manner the companies that are located in the building, it doesn t keep a precise track record of success rates overall. Some of the portfolio companies are acquired, some raise small or large amounts of funds. Fundraising help is only part of what Invest Ottawa provides as a service. The most recent funds raised by a portfolio company was in the $8 million range. The in-house companies that graduate the first phase of the Invest Ottawa experience go into other phases of services depending on specific needs such as TON Incubator Report May

13 promotion to generate sales, fundraising to get their first funds or for those businesses that are in a growth phase past their initial round of funding, help to acquire their next round. In 2013, $50 million of follow-on investment funds have been raised by graduated portfolio companies and approximately 570 new jobs have been created through these firms. Startup Garage: 4 companies in total have raised money or found a buyer: 1 company from the class of 2011; 2 companies from the class of 2012; 1 company from the class of The other active companies have been financing their operations through sales. Wesley Clover: We have had a total of 90 companies, of which 6 have failed, 22 are currently in the portfolio now, 50 have had IPO s and the remainder have been acquired. ROI: Not applicable as per the This is not applicable, as we have just opened. 6. Does your organization provide the opportunity to engage and be vested in other businesses with the incubator? Is there a founders pool of shares where all fellow graduates of the incubator get a small stake in each other companies. Exploriem: No. Exploriem stays out of the capital structure of the enterprises. However, there is a royalty program startups set aside a percentage of revenues for a period of time a give back program. TheCodeFactory: There are lots of opportunities to engage, we put on over several public events per year like Open Lunch, Demo Day and Students and Startups. However, there is no founders pool of shares or any formal program like that in place. Invest: Invest Ottawa never takes an equity position with incubated firms. TON Incubator Report May

14 Startup Garage: No Wesley Clover: We encourage collaboration but do not currently provide this type of opportunity. ROI: We have not currently considered a co-vesting type of structure. However, our incubator will focus on a collaborative work environment where we share projects, ideas, costs, No equity for any services is taken. 7. What services/resources do I have access to? Exploriem: Exploriem provides access to a large boardroom and small meeting room, kitchen, printer, internet, smart board, reception, mailing, partner discounts, mentoring, on-site IRAP ITA office within the incubator. There is a $95/year registration fee which provides access to the board room, discount tickets for events, lounge access during business hours and a free copy of entrepreneur s handbook. TheCodeFactory: We provide hassle free workspace for early stage businesses that provide them flexible growth options. We are in the process of prototyping a broader range of services that allow our clients the ability to focus on the value added part of their business while we alleviate many of their backend tasks. We will also be launching our formal incubation program in Invest: The following services and resources are available at Invest Ottawa: - - Free advice from well-established entrepreneurs in residence and niche business advisors Free market intelligence: service where Invest Ottawa provides Gartner and Forester reports, analysis and data synthesis service. The market analysts sit down with entrepreneurs and provide a tailored report the entrepreneur can use to direct his product and business towards success. Invest Ottawa spent $100,000 in 2013 on reports and it is estimated that, on aggregate, approximately $6 million would have been spent if each company serviced would have purchased these reports individually. TON Incubator Report May

15 Opportunity to have your company on Forester Wave: an agent from Forester comes to the incubator every quarter to sit down with companies and to provide some few new profiles with Forester (get on the Forester Wave). The typical cost for Forester to do this per firm is $30,000, but if the company featured is part of the Invest Ottawa in-house family, the service is part of the Invest Ottawa s subscription model. Free participation in international business forums: Invest Ottawa sends companies to business forums around the world at no registration cost. Companies still need to pay for travel and accommodations but typically this saves companies a few thousand dollars per person and provides them great market exposure. Space for rent: Invest Ottawa accepts companies within its walls (in-house companies) in exchange for a nominal monthly fee. These companies must pass through a simple vetting process to ensure the business is valid and has some potential. As part of the monthly rent, companies have access to all inhouse services, workshops and continuous mentoring. Training: Includes mentorship through the EIRs and a wide variety of workshops. In 2013, over 6000 individuals have attended workshops at Invest Ottawa, whether they are part of Invest Ottawa s portfolio, or simply individuals interested in the topics. Most of the events and workshops are free. Startup Garage: Mentorship Office space, Cash, Formal training, Access to our networks Some administrative support Wesley Clover: We handle all payroll, legal, accounting, marketing, branding, etc. ROI: We are providing marketing, sales, business planning, branding, business development, ideation and conceptualization resources to our incubating companies. We also provide rental space for YouTube video/podcast/crowdfunding platforms - $100/hour provides the startup with a consult, 2 operators and everything you need. With our combined creative solid depth and skillsets in all different applications we can typically turn around a simple professional video in a few hours, making it incredibly affordable. We are a creative hub offering inexpensive services TON Incubator Report May

16 for startups. We offer various office rate scenarios, including a $99/month drop in rate from 9 am 4 pm and a full package including: Internet, boardroom access, consulting support 4 hours/week for : We found there was a huge gap in services available for startups. There is a lot of support for technical startups but not a lot for the smaller business startups services, product companies that are small, etc. We are hoping to quickly scale to 40 members and then to build out locations in the suburbs. Our goal is to see an overall reduction in the number of small business failure rates by services: Space we have various rates and space sizes depending upon the needs of the startup. Basic Package - $99/month 8:30-5:30 5/days per week space, access to professional directory and 30% discount on all other. Premium book keeping, admin support, office - $199/month Business Support - $599/month includes coaching, accounting, use of space for events after hours, etc. Services Bookkeeping/accounting, admin support, sales (direct), cold calling, pitch and sales consulting, mail. We also leverage each other s expertise within the incubator Community & Education education sessions, networking, promotion via a newsletter, Facebook, YouTube, etc. to a list of over 2k individuals A few consultants also provide ad hoc marketing services. 8. How long has the business incubator been in business and what is your history and track record/success rate? Exploriem: Exploriem was incorporated in 2004 and primarily focused on mentorship until Since 2011 Exploriem has offered mentoring, training, networking events and rental workstations/offices to young startups in a business incubation environment. TheCodeFactory: We were incorporated in 2007, we expanded in April We have the following track record: 2 Graduates 6 senior startups 50+ jobs created 29 students hired TON Incubator Report May

17 Have conducted over 1,000 events TheCodeFactory lives and breathes the reality of our clients we are boot strapped, self-funded and eat our own cooking when it comes to growing our business. Our goal is to provide and encourage an environment for startups, which puts passion back to work. Invest: Invest Ottawa is now 2 years old, but it was born out of OCRI, which was over 20 years old prior to the name and direction change. Startup Garage: Startup Garage Year Number of companies in the cohort 2009 Launch (4/8 received funding) Number of companies still active in Feb Startup Garage: Startup Garage grew out of the support of new technology companies broadly within TTBE and specifically with its mandate to support student entrepreneurship at uottawa. This commitment began in 2002 when TTBE actively began providing support (financial, space and human resources) to start-ups led by undergraduate students. At that time, TTBE used space within its office to create a virtual "garage" where these students could further their studies and their companies at the same time. Based on the early popularity of this model, and the growing number of business and technology competitions opening up to uottawa students, TTBE began a lecture series in 2004 that brought professionals from law and finance as well as entrepreneurs to provide, in an interactive forum, what was billed as "Start-ups from the Ground Up". These lectures were promoted amongst the student population through courses in engineering and science that included elements of intellectual property. At the same time TTBE began actively seeking the input of student leadership within the School of Management's Entrepreneurship Club. Through this linkage, TTBE was able to better understand the needs/wants of students considering starting their own business. This relationship lead TTBE to develop a "pizza and pop" evening lecture series that sought to bring experienced researcher/entrepreneurs together with student entrepreneurs that were being assisted by TTBE in getting their businesses off the ground (Incogna, Spartan BioScience). These events invited students to consider: "If 9 to 5 is Not for You - Innovate". TON Incubator Report May

18 The Office of Technology Licencing at Yale had started a summer program that Startup Garage was ultimately modelled upon in order to follow global best practices. Startup Garage launched in Wesley Clover: This model since 2007, originally since 1972 but this model has been honed, more of an affiliate model. We have had a total of 90 companies, of which 6 have failed, 22 are currently in the portfolio now, 50 have had IPO s and the remainder have been acquired. ROI: We just opened so that information is currently not We have been open since January We leverage expertise from local experts in the different areas. 9. What is the average length of time spent in the incubator? Exploriem: Most Exploriem clients stay approximately 6 months to a year. TheCodeFactory: The average length of time in our incubator is approximately 3 years. When we launch our incubation program in 2014 our goal is to reduce the time in incubation from 3 to 2 years. Startups typically move on when they have enough cash flow from customers that they are able to commit to longer-term arrangements. Invest: Generally speaking, the incubator has a few models: 1. Fixed length programs: There is currently only one live at the moment called Grindspace, which is a 120-day program for startups. The intent of the program and its length is to accelerate these product-centric companies through prototype to product to revenue in a short amount of time. 2. If the company is renting space in the building, there is a periodic 3-month check-in where the company is evaluated to make sure there is still value for it inside the incubator walls and value for them moving forward. 3. For companies that are virtually part of the Invest Ottawa incubator or at a distance, the various services provided by invest Ottawa are continually available to them as long as they wish to access them. TON Incubator Report May

19 Startup Garage: The Startup Garage program runs for 3 months, from June to August. Wesley Clover: It varies depending upon stage and growth acceleration. We have no set timeline. Some leave because they become too large to be housed in the Wesley Clover building but we still continue to assist them. ROI: We estimate that the average length of time will be 3-6 Average length of time is estimated to be 3-4 years 10. Who is your typical client? What kinds of companies are current tenants starting? Exploriem: clients are approximately 65% technology companies and 35% other. Most of them are early stage companies. TheCodeFactory: Our clients are typically tech and tech enabled organizations. Invest: 75% of the entrepreneurs serviced by Invest Ottawa are people that have created at least one other startup prior, and are aged between years range. Most entrepreneurs that use the incubator s services have a little money to invest allowing them to invest in their own business. Though this is what is observed, Invest Ottawa accepts entrepreneurs and businesses of all types, age and experience. Startup Garage: Companies eligible to apply to Startup Garage must have a leader that is a student at the University of Ottawa, Carleton University, Algonquin College or LaCité Collégiale. Students that have graduated from either one of these institutions within two years of the start of the Startup Garage in June are also eligible to apply. The types of companies that have graduated from the Startup Garage program are mostly software-based or SAS-type companies. However, and most recently, there have also been a drug development company, a company that makes handcrafted guitars, and a company that offers gift totes with edibles from local artisans. TON Incubator Report May

20 Wesley Clover: Our clients are recent university graduates and the companies are usually formed by Terry Matthews. All are in the technology space. ROI: We are a Digital Media Zone! The types of entrepreneurs and businesses that we serve all have content creation at their core, be it a product or service; designers, directors, social media providers, film / TV / video producers, game developers, and all other forms of cross People who need client-facing features and are mobile and need support. Our typical client is a solo-preneur or a small company that are looking to accelerate their business growth through leveraging our infrastructure. Most of them are mobile, most of them are looking for social fabric and comprehensive help. 11. Can you break the lease or agreement? Exploriem: Currently we offer month-to-month, 3 month, 6 month and 1-year space license agreements and all can be broken with 60 days written notice. TheCodeFactory: Yes, the agreement can be broken. There is a clause for 60-day notice to break the agreement. Invest: If space is rented, renters need to give 30 days notice as a courtesy to move out. In some cases, companies working with Invest Ottawa also have special agreements that may have terms around special services requiring advance notices or termination terms. Otherwise, companies working with this incubator are free to come and go as they please, no strings attached. Startup Garage: The agreement between Startup Garage and the companies can be broken if the companies do not respect their obligations. Wesley Clover: We don t work as an incubator and because we take equity position in the company and therefore do not have lease type agreements. However, there are terms with special contingencies that require advance notices or have termination terms. TON Incubator Report May

21 ROI: We operate on 3-6 month terms, that way a startup is not locked into the space for more than a 3-month We operate on a membership basis. Membership fees are month to month and there is no commitment. 12. How do you decide who can join your business incubator? What are the criteria with which you admit members? Exploriem: Admission to the incubator is based on the ability to pay for the services, but we have a variety of package offerings to fit every startup budget and requirements. TheCodeFactory: Wallet based permission is the only criteria. Invest: When companies come to Invest Ottawa, whether to rent or to use the services, there is always a sort of triage process to identify the company s particular needs and how Invest Ottawa can be most helpful. In the case of companies that wish to rent space, there is another layer of investigation involved to ensure they are a proper fit. After acceptance, these internally incubated businesses are offered workshops and customized plans with an EIR pulling resources, as the business needs them. In addition, Invest Ottawa will help to plug the company s weaknesses, constantly working with the entrepreneurs to add as much value as possible towards their next successful milestone. In the special case of GrindSpace, there is an online application process after which the case is studied by a panel of experts from within and outside of Invest Ottawa. This panel determines which company will get to pitch to a panel of judges composed of investors, entrepreneurs and experienced businesspeople, from which the next cohort is selected into the program. Startup Garage: An online application form is available to interested applicants. The application form has evolved from one year to the next. A few years ago, we would request that a business plan be submitted. This year, we have broken down the main elements of the business plan in the form of a questionnaire to facilitate the accessibility of the application process to students who do not have a background in business. TON Incubator Report May

22 The application requests details on the business that relate to identifying the need (or problem) to which the product or service is the solution, the strengths of the team running the business, the description of the target potential customer, the validation of the product or service with potential customers, the business model, the competition and how its offerings differ from the company s, the advantages of the product or service and the 90-day plan of action to move the company forward. The applications are subjected to 2 rounds of review. In the first round, all the applications are reviewed and evaluated by at least 2 reviewers. The reviewers are both internal and external to the TTBE, and include graduates from the Startup Garage program. Based on each reviewer s evaluation, a score is assigned to each application. For each application, the scores are averaged to generate an overall score. Applications with overall scores ranking in the top 50% will move on to a second round of review which is also conducted by at least 2 other reviewers. This second round of review will determine which applications have the highest total scores. In the event that 2 or more applications have the same overall score after the second round of review, and that these companies are competing for a spot in the program, a mini-pitch session before a panel of judges will determine which company should be invited to join Startup Garage. Only the companies that are competing for a spot in the program after the 2 rounds of review will be invited to pitch. Wesley Clover: We have brought very few companies in that were not formed by Terry Matthews. There is no formal application process in place. ROI: We have no set defined criteria. We welcome any small startup that is looking for support and services that really want a return on any dollar they We welcome all small startups and have aligned our fee structure to accommodate all. 13. What is your compelling value proposition? Exploriem: is an organization that was founded by entrepreneurs and seasoned business professionals for entrepreneurs. Being an entrepreneur isn t a career choice one makes, it is a lifestyle. Owning your own business touches every aspect of your life. Through experience, hard work and lessons learned Exploriem has a seasoned team of successful entrepreneurs from various industries that provide mentorship and training to young and growing companies. We aim to provide the support that is needed and guidance to help entrepreneurs achieve their highest potential. TON Incubator Report May

23 CodeFactory: 1. We eat what we kill and practice what we preach 2. Ethical and principled and focused on results. 3. We have a track record of creativity and success. Invest: Invest Ottawa is purely there to back the entrepreneur. The organization never takes any equity in the companies it incubates and always tries to provide them what they need to succeed. If this means Invest Ottawa needs to get out of the way, that is exactly what they will do, no strings attached. There is no profit motive for Invest Ottawa doing what it does as it is funded by the province hence companies can be comfortable coming to Invest Ottawa, check it out and access services. Startup Garage: Startup Garage offers students an opportunity to be their own boss, and to launch their dream of building a company from the ground-up, by providing student-led companies with cash, space, mentorship and support for the summer. Wesley Clover: We act as more of an accelerator than an incubator and as such have the ability to provide not only advice, mentoring and coaching but we also provide our expansive network of contacts and are able to quickly accelerate the growth and earning capacity of a company. ROI: We are a fully outfitted design studio, so we help facilitate the creative process for startups. We really care about the clients return on their investment, every dollar they spend should come back to them 3 or 4 times over, whether in marketing reach or We are truly different we provide hands on infrastructure services and support to small business/startups. We are going to be building a network of locations across the city to become more than just another incubator. We will be a true business eco-system in which our members will have access to any location across the city allowing them to easily work and meet clients anywhere. TON Incubator Report May

24 Definitions Classic Incubators: Classic incubators are those that operate out of a shared building where tenants have subsidized rent, access to computers, office equipment, staff members and experts. Fee-based, ranging from a few hundred to a few thousand dollars a month, which covers expenses like office space, equipment rental and kitchen access. Most programs expect tenants to graduate within three to five years. University Incubators: Offer access to equipment and experienced staff. Typically free (some programs offer grants) but limited to current students or alumni. Many programs expect the company to graduate when the student does. Typically these incubators are meant for Student entrepreneurs looking to spend the summer or school year fleshing out an idea with the help of professors, fellow students and alumni. Specific Questions for Ed Incubators >>> what is this here for? Does the program offer a stipend? What restrictions come with the money? Who are the professors and the staff members who will be advising you and what kinds of experiences do they have? Niche Incubators: Most niche incubators offer facilities and advice at a reduced cost to companies with a specialized focus for example, food or social entrepreneurship, gaming. Typically fee-based although some programs take equity stakes. Exits typically 3-5 years. The Accelerator: Most accelerators, which are run by groups of experienced business owners and investors. They require entrepreneurs to move to a facility for a specified amount of time. Eventually, they are given the opportunity to market their businesses to investors. You get 90 days of intense focus from a team of experienced entrepreneurs and investors. Typically a 6 percent equity stake in return for about $20,000 in seed financing is expected. (Dahl, Darren (2011). How to choose an Incubator. New York Times. January 26, Para: 8-27.) TON Incubator Report May

25 References Mielach, David. (2013). Business Incubators and Accelerators: Here's the Big Difference BusinessNewsDaily June 19, Dalziel, Margaret (2012). A Study of Business Incubators and Accelerators in Canada. The Evidence Network. Koetsier, John. (2013). Accelerators doubling annually: too much of a good thing? Venture Beat. August Stangler, Dane. (2012). Evaluating the effects of accelerators? Not so fast. Forbes. August 8, Zimmerman, Eileen. (2013). Assessing the Impact of Business Incubators. New York Times. August 12, Roush, Wade. (2013). It takes decades to build a startup hub. Xconomy. November 9, Amezcua, Alejaandro, S. (nd). Boon or Boondoggle? Business Incubation as Entrepreneurship Policy. A report from the National Census of Business Incubators and their Tenants. Syracuse University. Dahl, Darren (2011). How to Choose an Incubator. New York Times. January 26, TON Incubator Report May