By David Campbell, President , Jupia Consultants Inc.
According to a recent report published by the Organization for Economic Cooperation and Development (OECD), technology incubators have become an important policy tool to help “new technology-based firms increase their chances of survival and generate wealth and jobs. ”
Technology incubators/accelerators are widely used across North America in areas with high tech clusters. They provide a number of services that are difficult to access but critical to the success of early stage firms such as proper business planning, mentoring and access to early stage financing.
Propel ICT is a private sector-led organization with funding from more than two dozen companies and organizations with a mandate to find and nurture potential new start-ups in the information technology sector across the Maritime Provinces.
A few weeks ago I was having coffee with Trevor MacAusland, the executive director of Propel ICT, when he pointed out the window of the coffee shop at a large office building across the street in downtown Moncton and said “in that building, there are people with innovative ideas that should be candidates for entrepreneurship but for some reason they are not taking the leap”.
Propel ICT recently unveiled its Launch36 accelerator program with the goal of launching 36 Maritime technology start-ups in 36 months. The Launch36 program is an innovative model designed to help technology-based entrepreneurs incubate their new ideas and assess the opportunities. Each potential entrepreneur is paired with an IT industry mentor and over a five month period works through issues spanning from fundraising to marketing.
Dale Ritchie, President of Moncton-based McKenzie College, recently established a new accelerator program meant to provide its entrepreneurial minded graduates with an incubator to develop start-up companies. Once accepted into the McKenzie Accelerator, budding entrepreneurs receive $15,000 per person to cover expenses through the three-month program which provides a wide variety of support services, advice and mentoring. Five companies went through the first program and Ritchie has plans for a second cohort in 2012.
The information technology industry in particular is one that is known for its high level of churn. A lot of entrepreneurs start up but only a small percentage ever evolve into profitable companies. Business accelerators/incubators are particularly important in this sector because the services and support offered can help a new entrepreneur clarify critical elements of their business plan. In addition, they prepare entrepreneurs for their eventual pitch to investors.
This new infrastructure to support IT startups in New Brunswick is timely. There are not as many people stepping out to start their own companies in the IT sector these days. The number of small IT firms across New Brunswick (fewer than 10 employees) dropped by eight percent from 2005 to 2011 while increasing by a robust 23 percent Canada-wide.
New Brunswick, like the rest of the Maritimes, continues to lose its young people to other provinces (it has a net out-migration of people aged 18-35) and infrastructure to support startups – is another incentive potential entrepreneurs to take the leap here in New Brunswick.
I would like to see this level of support for entrepreneurship across a broader base of industries in New Brunswick. How about doctors and health care professionals with good ideas and an entrepreneurial itch? Where do they go for support? How about business services professionals such as architects and engineers? Where is the incubation infrastructure support for them?
I proposed to Trevor MacAusland that his model at PropelICT should be expanded to other sectors of the economy. It is an elegant and powerful model and could work well beyond the IT sector. He told me he prefers to get the model right among IT entrepreneurs before looking outside the sector.
Business incubation is a vital part of an environment meant to foster more start-ups. It’s good to see New Brunswick embracing this approach.