Last week, I was interviewed by our local daily paper, Le Soleil, about the Québec City Technology Business Accelerator project, announced back in 2011 by our mayor, Régis Labeaume.
The article captured the main point I wanted to make, that for an accelerator to succeed here, we need to attract a variety of private funds, definitely more than the single government-supported early stage fund whose launch is frustratingly behind schedule.
Launching a tech business accelerator in Canada is not an easy task – it takes time, patience, and a lot of political muscle…
Here is a rough translation of the article (cleaned-up version of a Google Translate)
( Quebec ) With a technology accelerator that will soon see the light of day in Saint -Roch, does Québec City have what it takes to attract the foreign investment that will power our most promising technology startups ?
In the Quebec region , startups – these young businesses with high growth potential – abound.
Some of them already have benefitted from training programs and high-level support offered by reputable institutions as the Kauffman Foundation or the MIT Sloan School of Management in Boston.
Offered in collaboration with Quebec International, the FastTrac TechVenture program of the Kauffman Foundation – which is in the top 30 foundations in the United States with assets of approximately U.S. $ 2 billion – enables entrepreneurs to validate their business models and learn how to pitch with confidence to investors and customers. The program includes 10 days of activities over a period of 10 weeks and 22 hours of coaching and support from a mentor.
The next task is to find the money to finance the growth of these startups, which perhaps are sitting on gold mines !
Of course, startups have access to labour-sponsored funds ( Fonds de solidarité FTQ , Fondaction , etc), government loans and grants, and institutional funds. Although it is important to recognize the contribution of local angel investors looking for good deals and who are interested in something other than real estate, greenbacks from the pockets of private investors are rare in Quebec, especially the capital from the US . “And venture capital , like it or not, it found in the United States ,” says Mathieu Simard, co-founder of Aptgeek Technologies, a Quebec firm specializing in technology solutions, mapping and mobile development.
At the head of Startup Académie, a company that assists young startups throughout their process from idea to financing, Davender Gupta notes that most North American private investors do not go further than Montreal. “They are reluctant to show up in Quebec City . It takes a lot of hustle and convincing to encourage them to come and meet our startups in the provincial capital”, says Gupta , who advocates a diversity of funding sources.
In his view, the implementation of a technology accelerator could put Quebec City on the radar of major North American investment funds and pique the interest of wealthy people in the region, perhaps for the first time in their lives, who will see the potential value of these very small businesses. In this regard, a technology accelerator also is a great showcase for startups in their community.
Labeaume visits Silicon Valley
Starting September 17, Régis Labeaume, the mayor of Quebec City, will lead a trade mission in California. He will particularly focus on Silicon Valley, a major center for tech industries located near San Francisco, where technological accelerators have mushroomed in recent years.
In the economic development strategy he unveiled in December 2011 to members of the Quebec City Chamber of Commerce and Industry, Mayor Labeaume identified nine “very concrete” projects to support innovation and creativity in Quebec City. One of these projects involved the creation of a technology business accelerator in the Saint -Roch district, which included a physical incubation location for promising technology start -ups, the accompanying high-level support provided by experienced volunteer mentors and adequate financial support for the best products to launch and penetrate international markets.
There is money on the table
Indeed , by converting the Innovatech Québec and Chaudière-Appalaches Fund into a new mixed public-private capital fund through Desjardins-Innovatech , the Quebec government had pledged in 2012 to contribute twenty million dollars to finance a new fund – the Quebec Technology Fund – and a technology accelerator in the capital. With this money in hand, Desjardins-Innovatech then had to turn to private investors so that they add an additional minimum of $ 5 million to the kitty.
The first steps of the technology accelerator were supposed to have launched last fall. However, the delivery is taking longer than expected. Mayor Labeaume should shortly review the project and announce the plans for the technology accelerator .
At the FounderFuel school
Technology accelerators are popping up across North America, confirms Davender Gupta. In California – such as the prolific Y Combinator which has contributed to the birth of more than 500 companies since its founding in 2005 – there are also accelerators in Quebec. In Sherbrooke , the former CEO of Bombardier, Laurent Beaudoin, is one of the financial partners in the local “Technology Business Creation and Acceleration Centre”.
In Canada, the most active technology accelerator is based in Montreal.
Powered by five major investment funds, FounderFuel provides an intensive acceleration program through three month long high-level acceleration program. It helps young businesses in web , mobile and SaaS obtain seed capital by accessing a network of entrepreneurs, angel investors and venture capital firms. Each year, 20 startups are chosen from over a hundred entries from across Canada. The selected companies receive a basic investment of $ 50,000. In exchange, FounderFuel receives a 9% stake in the company . At the end of the course , startups are eligible for a convertible debenture worth $150000 and even a three-month stay in Silicon Valley.
Mathieu Simard and his colleague Keith Beaudoin were part of the first cohort of FounderFuel in the fall of 2011. The engineer and the computer programmer learned to develop their business acumen. “At all times, we had access to a panel of mentors , who gave us on-the-spot advice on every move that we asked ,” said Keith Beaudoin.
Unfortunately, their product did not find a market .
However, they refuse to talk about failure. “In business , there is never a failure. It’s all learning! ” And as Davender Gupta adds ,” In business, a failure is as good as a success. “
Mathieu Simard and Keith Beaudoin, who are working on other products in addition to providing consulting services, applauded the idea of the establishment in Québec of a technology accelerator . They say they want that English to be the official language of the new centre.
“At FounderFuel, everything was in English. Excellent command of English is essential when it comes time to convince financiers in Boston, New York or Toronto to invest in your company, “says Keith Beaudoin.
For more information
The original announcement about the technology accelerator (December 2011) which also launched the FastTrac TechVenture pre-acceleration bootcamp (in French):
Quebec City Economic Development Strategy speech (PDF – in French)
Announcement of the Desjardins-Innovatech startup fund (article in French, July 2012)