Start me up: Waterloo's innovation ecosystem

This September, the University of Waterloo and Communitech will partner to deliver the 2015 Waterloo Innovation Summit. The University’s DAVID FRANSEN, recently returned from a role as Canadian Consul General to Los Angeles, works closely with IAIN KLUGMAN, president and CEO of Communitech, to shape the high-impact agenda.

THE RISE (AND RISE) OF WATERLOO’S INNOVATION ECOSYSTEM

start me up 18

There’s something going on here that’s really powerful.

It has become pervasive. In L.A., it’s in the air — and I get the feeling it’s like that here, too, now.

DAVID FRANSEN, Chair, Waterloo Innovation Summit

It wasn’t so long ago when innovation was a dirty

Fransen calls Waterloo’s culture of entrepreneurship

word — and innovators themselves, if not quite persecuted,

a collaboration of “attractive, magnetic forces” —

were ridiculed as troublemakers and mocked as fools.

the cool downtown space in Kitchener being a great example — that gives bright young minds reason to

Today, of course, innovation is embraced and revered.

The brightest minds with the best ideas are not only being heard, they’re being handed the keys to the kingdom.

take their great idea and build a life around it right here.

The startup revolution has extended far beyond Silicon

He points to the University’s hugely successful co-operative

Valley — long considered the entrepreneurial heartland —

education program, its intellectual property policy,

to create a playing field more level than ever before.

rapidly expanding Velocity programs and Communitech as key contributors to the success of young entrepreneurs.

Waterloo’s own modern-day innovators are going head-tohead with the world’s best.

As chair of the Waterloo Innovation Summit, taking place from September 16 to 18, Fransen will help

David Fransen, chair of the Waterloo Innovation Summit,

convene a group that includes some of the world’s

describes the region’s ecosystem as an organic, dynamic,

leading thinkers on successful innovation ecosystems.

living whole and a chaotic interaction of elements that brings to bear the intellectual horsepower of the University

The region is living proof that geography and size

of Waterloo, a well-functioning governance system and a

matter less than you might think.

robust “mini-ecosystem” of incubators and accelerators.

Big fish, big pond

Fransen, who was appointed Canada’s Consul General in

In fact, when the Startup Genome team (now known

Los Angeles in 2008 and returned to the region in early

as Startup Compass) compiled a list of the world’s

2014 after retiring from government, is energized by

top 20 startup environments in 2012, Waterloo was

what he sees.

ranked 16th. A new list is set to be released soon — and

“There’s something going on here that’s really powerful

the expectation is that Waterloo will almost certainly

and it’s really different than it was six years ago when

have climbed higher, perhaps even into the top 10.

I left,” he says. “This entrepreneurship did not exist to the same extent. It has become pervasive. In L.A., it’s in the

Stacked against some of the biggest hotshots on the

air — and I get the feeling it’s like that here, too, now.”

list — Silicon Valley, Los Angeles, London, New York — Waterloo is a minnow by comparison. And yet

Although the University has always generated incredible

considering the accomplishments of its many

talent, many young superstars — with a few notable exceptions — felt like they had to leave Waterloo Region to

economic superstars, it is a very big fish indeed.

make their mark, whereas now the conditions are ripe for

According to Avvey Peters, vice-president External

them to stay, says Fransen, who served as executive director

Relations at Communitech, Waterloo’s global standing

of the Institute for Quantum Computing and associate vice-

comes from a willingness to do it all.

president (Strategic Relations) at the University of Waterloo before moving to Los Angeles.

“The reason we’ve been successful as an innovation ecosystem is that we pull together,” Peters says.

“Now we’ve got a system that reaches out to students and

“It’s bigger than any one company or organization.

says, ‘You can have your own company,’ ” he says. “If you’ve

It means everybody is doing everything they can to

got a great idea, we’ll nurture you, we’ll mentor you, we’ll

support innovation and entrepreneurship. It’s about

create the conditions for you to succeed.”

building more, better, stronger, faster tech companies. »

TEXT NANCY HARPER | PHOTOGRAPHY JONATHAN BIELASKI

19

It’s hard work to build and grow a company. Any help that we can give in terms of filling in the gaps and helping them avoid key early mistakes is so useful.

PAUL SALVINI, CEO, Accelerator Centre and associate vice-president Research Commercialization, University of Waterlo

“And our view is you have to do it all. It’s not just about

After the Second World War, business leaders in the

cool technology. It’s about solving a problem and making

Waterloo region knew that if they wanted to drive local

money with that solution.

prosperity, they’d have to take a big gamble. They decided

“We put entrepreneurs at the centre of the ecosystem, but we need the University to produce that great talent,” she says. “We need people who aren’t afraid to take risks. We need capital providers to put money into those [ventures.]

would train engineers to be ready to work in their factories.

The University of Waterloo was founded in 1957, with the Faculty of Engineering at its core. With co-operative education — also known as work-integrated learning —

“We need law and accounting firms to give great

as a defining piece of that experience, the University took

professional advice, and we need governments to create

some big bets that ended up transforming the region.

great policy that helps the efforts of entrepreneurs.”

“The University is at the core of why this has evolved into

Quite simply, a region like Waterloo has a competitive

what it is today,” says Justin McFadden, executive director

advantage because it understands the power of

of Economic Development for the City of Waterloo.

innovation and has the good sense to nurture it.

“We’re the only one of the 20 [startup communities] that

“You can’t just focus on the startups,” Peters says.

“Communitech works with companies at all stages of their life cycle. We have a strong program for early-stage companies and we work with about 500 new companies a year, but we also work with the small-and medium-sized enterprises and the big enterprises as well.

“We’re the ultimate connector. We have networks provincially, nationally and internationally, and we can connect [entrepreneurs] to the resources and expertise they need.”

As for the young guns coming out of the University with great business ideas, being able to lean on a team of executive mentors — tech entrepreneurs and former CEOs who provide their services free of charge — certainly helps.

“We convene people who have experience with those who don’t, and in that sense, the ecosystem mentors itself,” Peters says.

has a population of less than one million. We’re certainly [punching] above our weight class compared to those other startup ecosystems.”

“A little startup called RIM” McFadden himself came to Waterloo in 1999 to work for what he jokingly refers to as “an up-and-coming little startup called RIM.” That would be smartphone manufacturer Research In Motion, now known as BlackBerry.

“I was drawn here purely for opportunity,” he says. “The startup scene really hadn’t begun at the time. But the bottom line is that a number of tech companies were very successful — and by working directly with the University, these leaders recognized the need to reinvest and set an example and make sure it was a sustainable ecosystem going forward.

“What’s interesting about this community is that people are willing to reinvest. I’m not sure that exists in other

An entrepreneurial spirit, with academia at its core

places. It could go back to that Mennonite barn-raising

So what exactly is an “innovation ecosystem?”

The outcomes speak for themselves. The failure rate in

In essence, it combines material resources (funding, equipment, facilities and the like) with human capital (drawn from business and engineering schools, academic

20

a different kind of university was in order — one that

culture where everybody is willing to help.”

a typical startup ecosystem is 85 per cent, McFadden says. But between 80 and 85 per cent of startups in the Waterloo ecosystem are still operating after 18 months.

researchers, entrepreneurs, venture capitalists, private

“The one thing that’s interesting about the startup

sector scientists, centres of excellence, funding agencies,

community here is that because there is such a support

policy-makers and others) to drive the progress of science

system, a lot of the mistakes are filtered out before

and technology.

the products are actually launched,” McFadden says.

WHAT DOES THE FUTURE HOLD? Waterloo’s innovation ecosystem isn’t just about the startups anymore.

In fact, a gradual awakening and shift in the

“They learn so many things about how to run a business, how to

mindset of large corporations is one of the

find investors, how to filter out bad ideas and focus on the good

biggest reasons the ecosystem will flourish even

ones. The system here helps increase the ultimate success rate.”

more in the coming years.

Outsiders may only know Waterloo because of BlackBerry,

“We’re seeing large enterprises wanting to

McFadden says, but that association obscures the fact that the

engage with the innovation ecosystem to

economic base here is actually quite diverse. With the universities,

do a better job inside their own company,”

the manufacturing sector and the enormous insurance industry —

Communitech’s Avvey Peters explains.

in addition to the tech sector — Waterloo’s diversity is the key

“As an example we have Canadian Tire, TD Bank

to ensuring that innovation remains a fundamental source of wealth generation.

What it means for the average Joe So what about all those Waterloo region folks who don’t work within the ecosystem? What does it actually do for them?

and Manulife Financial here with us in the hub, and ordinarily we wouldn’t think of them as tech companies. They’re here because they’re seeing something in the innovation ecosystem that suggests they better figure out how to innovate internally, to shift the mindset to be more

According to Rod Regier, executive director of Economic

entrepreneurial, to take some more risk.

Development for the City of Kitchener, the ecosystem is for

“They’re really interested in the talent coming

everyone — and the concept of innovation represents not only our past and our present, but our future.

“In a nutshell, it is what creates hope for the future,” Regier says.

“Our region has for the last 150 years been about innovation. It’s been about people creating new opportunities, first through the industrial revolution and then through technology.

“If you go back to the great industrial companies of the region —

out of the universities and the college, and the talent running startups. They want to learn and that’s a good thing for Canada. If we can make sure Canadian Tire is a huge success, that’s a lot of jobs across Canada. We don’t want them to be second to Amazon as an e-retailer. We want them to be first.”

Electrohome, Schneiders, Kaufman, Krug Furniture and so on — you can go back literally 150 years to see how innovation has been fundamental to our ability to make things, create new ideas and products and sell them to the world.

“The whole economy that we’ve got right now is founded on the concept of innovation. It underpins all the jobs that exist here. Even our institutions like the University of Waterloo have been created to support that ecosystem by the industrial leaders of our past.

“The fact that we still have a thriving innovation ecosystem here means we’re able to help create the future, not just simply be victims of it. That means that we’ll continue to produce high-value jobs into the future.”

Regier points to the fact that even with the structural adjustments at BlackBerry over the past three years or so — and the shedding of thousands of local jobs — employment in the region has actually grown to its highest level ever.

“That cascades right down through the whole economy, into our housing market, our service industries and so on,” Regier says.

“Really, everybody in the Waterloo Region has a stake in our ability to adapt to and help shape the future.”

Accelerator Centre puts the pedal to the metal The Accelerator Centre is another major player in Waterloo’s complex ecosystem, providing mentoring and support to about 40 companies looking to become the next startup success story. »

Our view is you have to do it all. It’s not just about cool technology. It’s about solving a problem and making money with that solution.

AVVEY PETERS, vice-president External Relations, Communitech

Start me up

21

“The important thing is that within our community we

Salvini also sees cause for optimism in the way the

have such a robust ecosystem for entrepreneurs that we’re

workforce has bounced back from very significant

able to give them every chance to succeed and to grow,”

job losses.

says Paul Salvini, Accelerator Centre CEO and associate

“In terms of some of the hiccups we’ve had in the tech

vice-president of Research Commercialization at the

sector, it’s allowed some people to create another

University of Waterloo. “It’s hard work to build and grow

generation of companies that are even more diversified

a company. Any help we can give in terms of filling in the gaps and helping them avoid key early mistakes is so useful.”

Salvini points to some of the region’s early startup successes like Miovision and Clearpath Robotics as having the perfect recipe of great idea, inspired talent and targeted support.

He believes Waterloo’s standing among global startup communities is only going up — and the growth of University of Waterloo undergraduate entrepreneurship programs like Velocity is one of the clearest indicators.

with just as much potential to grow. I really think that’s helping our economy and strengthening the economic potential.”

Adds Fransen: “This has always been a communityoriented place where there were good people. What was lacking, perhaps, was a sense of energy and optimism. What I’m really struck by now is that sense of energy, the feeling that something is being built here. It’s still a work in progress, but the fact that these

“Velocity is looking to inspire the next generation of

talented young people who are starting companies are

students and get them thinking about starting a business

deciding to stay — there’s been a magnetic attraction

for themselves,” Salvini says. “We’re doing a really good

for them to do that and then that will become the

job of preparing the next generation to participate in

magnetic attraction for everything around it. People

the startup economy.”

will start investing in it.”

WHAT DRIVES LEADING INNOVATION ECOSYSTEMS

Hear from those who know

SEPT 16 - 18 | 2015 WATERLOO, CANADA

Join top academic, business and policy decision-makers in one of the world’s leading innovation ecosystems. Hear from influencers, share best practices and experience first hand what it takes to lift regions into global contention.

Registration opens May 25. Sign up for information and updates at waterlooinnovationsummit.com

KEYNOTE SPEAKER STEVE BLANK

©Eric Millette

Steve Blank rarely leaves Silicon Valley, but this year, he’s coming to Waterloo. Blank, who has inspired a generation of startup founders, shares insights into how great entrepreneurs — and great entrepreneurial communities — are made.

C007807

PRESENTED BY:

22