KW’s tech talent could be the cornerstone of one of the...

MARCH 2016 • VOLUME 5, ISSUE 1CANADA’S TECH SUPERCITY

Velocity on the Rise 7 Compass Report 10 Bridgit’s Big Year 13

KW’s tech talent could be the cornerstone

of one of the world’s top ecosystems.

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March2016•Volume5Issue1EntrevestorIntelligence3

By Peter Moreira

Thebackdropsaidasmuchas thebeamingmanstandingaloneonthestage.

ThemanwasPrimeMinisterJustinTrudeau.Heworenojacket,justawhiteshirtwiththesleevesrolledupandthetopbuttonundone.Hewascasual and friendly and apparently overjoyed to be opening the newGoogleCanadaengineeringheadquartersinKitchener.

The audience and cameras were all focused on the PM, but theyalso took in thebackdrop,which is always so important inapoliticalannouncement.Standingonalandingbehindthestagewereacouplerowsofprogrammers,manywearingGoogleT-shirts.And then therewas a row of school children, who had just received a lesson intechnologyfromthePrimeMinister.

“What’shappeningherereally,reallymatters,notjusttotheregion,buttothecountryandtheworld,”Trudeausaidtoheartyapplauseat theeventinJanuary.“Andit’sanincrediblepleasuretobeheretoday.”

Indeed there was something really, really important happening, and itextendedbeyondtheopeningoftheGoogleBuilding.ThereisareasonthattheyoungPrimeMinister,threemonthsintohismandate,appearedintheWaterlooRegionsurroundedbyyoungprogrammers.Againandagaininhisvisithereferredtothepotentialoftheinnovationeconomy,andtheWaterlooRegion’splaceatthecentreofit.Withtheoilpatchinserioustrouble,innovationmaybethebesthopeforthecountry’seconomy.

It’s well known that the Kitchener-Waterloo tech ecosystem is aphenomenon unique in the Canadian economy. But what’s lessappreciated is that theremaybenoplace like this littlecityofhalf-a-

millionsoulsanywhereintheworld.Simplyput,itisanextremelycost-effectivefactoryforsomeofthebesttechnologytalentfoundanywhere.Forexample,60percentoftheengineersworkingattheGooglebuildingthatthePrimeMinisteropenedaregraduatesofUniversityofWaterloo.Justas itpoursout talent, theWaterlooRegionproducesstartupsata dazzling rate.OnlySiliconValley has a higher density of startups.Itssupportsystems– fromCommunitech to theWaterlooAcceleratorCentretoVelocity–stackupwellagainst theircompetitorsanywhereintheworld.

Butsomething ismissing–a fewkey ingredients thatarepreventingtheWaterlooRegion frombecomingabona fidehotbed in theglobalinnovation landscape. The city is small. It is not the home of manymajor corporations. There are few venture capital firms operatingthere.Andthereisoverallalimitedamountoffundingintheregion.Toreallycapitalizeontheopportunityposedbythe innovationeconomy,KWneeds tostrengthen its linkswithTorontoso theyconstituteonesupercityinthemindsofinvestorsandcorporations.

“Size matters,” said Iain Klugman, the President and CEO ofCommunitech. “Toronto with 5 million people has the size, but it’smissing thatedgy thinking, thatdifferentculture, thatPaloAltobringstotheBayregion.

“Ifyou lookat theperformanceof theother innovationcorridors, thenyouseethisbigopportunity.Ifyoudon’ttakethisopportunity,thenyouwillcontinueforevertobeafarmteamtotheValley.Ifyoubuilditright,youcanbeatopfiveecosystemintheworld.Thenyou’regrowingtheeconomyatalevelgreaterthanthesumoftheparts.”

He added that there is a strong need for capital to grow the region’s

CORNERSTONE OF A SUPERCITYThe Waterloo Region churns out talent and startups, but it needs to

strengthen links with Toronto to reach its potential.

Photo:Communitech/MatthewSmith

4EntrevestorIntelligenceMarch2016•Volume5,Issue1

Most venture capital investments take place in major ecosystems

startups,andthatmostofthefundingdealsintheworldtakeplaceinthetopfiveorsixecosystems.Kitchener-WaterlooandTorontohavetostrengthentheirtiestobeconsideredaunit,asupercity,andattractcapitalintothefastest-growingpartoftheeconomy.

Of course, if you look at a map, the Waterloo Region and Toronto could easily beconsideredaunit.Thegapbetweenthetwoisonly100kilometres.ButthenightmarishtrafficcongestionalongHighway401leavescommutersandvisitorswonderingifthetwomunicipalitiesare in thesamegalaxy.Thepoor transport linksmakemeetingsdifficult,deterinteractionwithToronto-basedcorporationsandmeanKitchener-Waterlooistreatedasasingleentitywhentheglobalstartupecosystemsareranked.ButifKWandTorontoweretreatedasaunit,thenCanadawouldhavethemakingsofaninnovationpowerhouse.

“Kitchener-Waterloo is an important linchpin in themost important technology clusterin the country,” said JohnRuffolo, theCEO ofOMERSVentures. He explained thatthe lion’s share of venture capital deals inCanada take place in five cities: Toronto,Vancouver,Montreal, Ottawa and theWaterlooRegion. Toronto is extremely active,hesaid,combiningitwiththeWaterlooRegionwouldproduceanentityresponsibleformorethanhalftheVCdealsinthecountry.

“Because bigger is better in terms of startup ecosystem, an integration of Toronto-Waterloo would clearly benefit both ecosystems,” said the Silicon Valley think tankCompass in its recent reporton theWaterlooRegion. “WithacombinedmetropolitanGDPofabout$350billion–the10th largest inU.S.andCanada–thecorridorhas theassetstocompeteontheglobalstage.”

Compass–whosereport isdetailedonpages10and11--hasratedTorontoas the17thbestecosystemintheworld,andpegstheWaterlooRegionatNo.25.ThereportexcludestheWaterlooRegionfromthetop20eventhoughitgushesaboutthestartupdensityandtalentthattheregionhasproduced.Compassdoesnotquantifytalent–it’sprobablyimpossibletodoso–butitpresentsanecdotalevidencesuggestingthattheengineeringtalentinKitchener-Waterlooissecondtonone.Anywhere.

“Something is going on inWaterloo, because the applicationswe get fromWaterloostudentsarebetterthanthosewegetfromstudentsofanyotheruniversity,”itquotesYCombinatorco-founderPaulGrahamassaying.

TedLivingston thinksheknowswhat isgoingon.TheFounderandCEOofKik.combelievesthekeytothe“ridiculous”(hisword)talentintheregionisthelegendaryco-opprogramattheUniversityofWaterloo.

Prime Minister Justin Trudeau opens Google’s new Canadian engineering headquarters in Kitchener.

WHAT’S INSIDE

Imagining the Supercity The Waterloo Region has a unique startup ecosystem, but it needs to bulk up to truly gain international attention....................................................3

Velocity on the Rise Mike Kirkup has welcomed 163 companies into Velocity since he began as Director four years ago. Now the University of Waterloo accelerator is expanding to handle more....................................7

Probing the Compass Report The Waterloo Region has the second-highest concentration of startups in the world, but it’s not ranked in the top 20 ecosystems............................10

Bridgit’s Big Year The maker of a construction industry app was one of the region’s hottest startups in 2015, winning the Google Demo Day in Silicon Valley................................................................13

A Centre for Quantum Computing The revolutionary tool for processing data is at least five years from being a reality, but Waterloo is already a hotspot....................................................14

Improving the Digital Corridor Tim Jackson tells Ellyn Winters-Robinson the region needs a broad-based push to improve the transport links between Toronto and the Waterloo Region. .......................................................16

Revving up Rev After a few alterations, the second cohort of the Communitech accelerator is reporting increases in sales........................................................................... 17

The Case for Proper Governance Jaguar Capital Partner Gerard Buckley offers five steps to ensure your startup develops the proper corporate structure.....................................................18

Entrevestor Intelligence Entrevestor Intelligence is the quarterly publication of Entrevestor, which provides news on the startup and innovation communities in Atlantic Canada and the Waterloo Region. These reports provide a deeper analysis of the startup world than can be delivered in daily news stories. To receive our daily reports, please leave your email address at entrevestor.com.

Cover photo: The winners – Bridgit, Nicoya Life Sciences, and Piinpoint -- are honoured at the first Centre Stage Event, the demo day for the Rev accelerator. See our article on Rev on Page 17. (Photo: Communitech/Meghan Kreller)

Entrevestor Intelligence Design: Roxanna Boers


HesaidanengineerorprogrammerstudyingatWaterloohassixco-opterms,whichgiveseachstudentanunparalleledbreadthofexperiencein real companies by the time they graduate. It produces a rarefiedindividualwith the technicalknow-howand thebusinessacumen thataresoessentialinbuildingcompanies.

TheCompassreportalsorefersseveraltimestothespiritofcollaborationthatpervadestheWaterlooRegion’sinstitutions–fromCommunitechtotheAcceleratorCentretotheuniversities.AndCommunitechitselfhasbecomeanessentialmeetingplaceforthevariousstakeholdersinthecommunity.

Talentalonewon’tbeenough.TheWaterlooRegion isnowhome to1,100startups,andtheywillneedcapital togrow.ButCompasssaysthat they now only average about US$45,000 each in seed funding,comparedtoUS$490,000forSiliconValley.Toaccessmorecapital,itmaybenecessarytobepartofabiggercommunity.

Most investors–angels,VCsandsomesayeven investors inpubliccompanies–liketoinvestincompaniesclosetohome,sothattheycaneasilymeetwithmanagementandobservethecompany.AcloserunionbetweenTorontoandtheWaterlooregionwouldhelpTorontoinvestorsfeeltheKWstartupsarepartoftheirownbackyard.ItwouldalsohelptoconvinceinternationalinvestorsthattheywereinvestinginpartofamajorcentrewhenbackingWaterloo-areacompanies.

The gaps between Toronto and KW are also compounding anotherchallenge facing startups in the smaller centre – the lack of majorcorporations.

“One of the gaps that exists for companies in this community is thecustomer deficiency,” said Communitech’s Klugman. “We needcustomerscomingoutofthegate.”Hesaidthatthestartupcommunityin theWaterlooRegionneedsstronger ties toToronto’scorporations.What’smore,thesebluechipcompaniesarerealizingthethreattotheirbusiness fromdisruptive innovation,andare thereforealso interestedinstrongertieswithinnovativestartups.Bothprivateandpublicsectorsarethereforecallingforbettertransportlinks.

“Idothinkit’sgoingtobeveryimportanttoconnectthetwohotbedsofactivity,”saidSamSebastian,ManagingDirectorofGoogleCanada.“Iwould love toseemore interactivityand infrastructureconnecting thetwocities.”

There isbroadagreementamong thecognoscenti that stronger linksbetween Toronto and KWwould benefit everyone. But these peoplealsoagreethatimprovedtransportationlinks–especiallyahigh-speedrailservice–areatleasteightyearsaway.

KitchenerMayorBerryVrbanovicon thedayofTrudeau’svisitcalledfor two-way, all-day GO Transit train service in southern Ontario toattractandretainknowledgeworkers.Butheaddedinaninterview:“Ifeverythingwentaccordingtoplan,therecouldbeahigh-speedtrainineightto10years,buteventhat’sbeingabitoptimistic.”

Thetransportationproblemmayprovedifficult toovercome,but therearestrongtailwindspropellingtheregion’sstartupcommunityforward.Communitech and the University or Waterloo’s Velocity accelerator(Seeourstorystartingonpage7)arebothexpanding.Theregion’shighgrowth companies are beginning to generate larger funding rounds,withKik.comlandingaUS$50millionstrategicinvestmentandVidyardsfollowingwithaUS$35millionventurecapitalround.Googleandotherbluechipcompaniesareexpanding in the region.There’sasenseofoptimismintheair.

“IjusthavethefeelingthatWaterlooisonthecuspofgreatness,”saidLivingston. “The biggest problemwe have here is getting people torealizehowamazingitis.”*

There’s a Resounding Call for Improved Transport Links

‘If you don’t take this opportunity, then you will continue forever to be a farm

team to the Valley.’ – Iain Klugman

Collaboration within the community, like this meetup in Communitech, is a key to producing KW’s world-class talent.

Photo:Com

munitech/MeghanThom

pson


VELOCITY Expands to Meet DemandMike Kirkup has welcomed 163 companies into Velocity since he began as Director four years ago. Now the University of Waterloo accelerator is expanding to handle more.

By Peter Moreira

WhenTedLivingstonwas23yearsold,hehadaproblemnotmanypeoplethatageface:hehadtogetridof$1million.

LivingstonistheFounderandCEOofKik.com,thehigh-flyingchatservicethathasalmostaquarter-billionregisteredusers. In2011, thecompanywasclosingafundinground,andtomakethedealworkLivingstonhadtosellsomeofhisownshares,forwhichhewastoreceive$1million.Hewasworriedthatwouldn’tsitwellwiththeotherfounders,sohedonatedeverynickeltooneoftheorganizationsthathelpedhimgetstarted:Velocity.

“Iwantedittobeastatementtothecommunityandtotheworld,”Livingstonsaidtwoyearslater.ThestatementwasnotjustthatKikwassomethingspecial.ItwasalsothatVelocitywasspecialaswell.

Velocity is the accelerator of the University of Waterloo. Livingston’sseven-figure donation became the cornerstone of the Velocity fund,whicheachyearhandsoutabout$400,000tocompaniesintheprogram.TheacceleratorisbasedintheCommunitechhub,whereithasrecentlyexpandedtoencompassatotalworkspaceof36,711squarefeet.

To call Velocity a university accelerator is technically correct. EverycompanythatgoesthroughtheacceleratorhasatleastonefounderthatattendedtheUniversityofWaterloo.Butitalsomissesthepoint.VelocityisanorganizationthathasproducedcompanieslikeKikandThalmicLabsand Pebble – startups that draw international attention and customers.At theendof2015, theacceleratorhad thecapacity forabout74 to76companiesatanyonetime.Withtherecentexpansion,thecapacityhas

risento120companies.ItisnowthelargestacceleratorinNorthAmericathatdoesn’ttakeequityinitsclientcompanies.

“Thatmaybethelargestintheworld,”MikeKirkup,thedirectorofVelocity,saidinarecentinterviewintheHub.“WejusthadnowaytocheckitbeyondNorthAmerica.”

AnalumnusoftheUniversityofWaterlooandtheregion’smostsuccessfulstartup,ResearchinMotion(nowBlackBerry),KirkuphasbeenthedirectorofVelocitysince2011.Inthattime,atotalof163companieshaveenteredVelocity,andmorethan40havegraduatedfromtheprogram.Sevenhavebeenacquired.

Kik is certainly the posterchild for Velocity, and Livingston’s smilingpresenceshinesthroughatmanyoftheevents.Butgraduatesincludesuchcompanies as Thalmic Labs, whoseMyo armband lets users wirelessly

VELOCITY . . . BY THE NUMBERS

Total intake in 2012-2015 163 companies

Number of companies launched 43

Percentage of Velocity companies still active after 4 years 66%

VC raised by Velocity graduates, as of Fall 2015 $250 million

Capacity as of 2015 74 to 76 companies

Current capacity 120 companies

Size of Velocity after its recent expansion 36,711 s.f.

“The culture of the university has always been entrepreneurial. It was founded by engineers that needed help and expertise to help grow their businesses.”

– Mike Kirkup


Kik $120.5 million

Vidyard $60.7 million

Thalmic Labs $15.6 million

Pebble $15.4 million

MappedIn $3.4 million

Source: CrunchBase (All figures in US$.)

control technology through gestures and motion, and Vidyard, whoseplatformhelpsmarketersusevideo to reach their audience.Aswell asfinding clients, the companies have been darlings of venture capitalinvestors. Kik has raised a total of US$120.5million, VidyardUS$60.7millionandThalmicLabsUS$14.5million.

Infact,Velocityrevealedintheautumnof2015thatitscompanieshaveraised$250millionin“follow-onfunding”.Butthereisoneprovisoaboutthestatement:itassumesthattheCanadianandU.S.dollarsareatpar.Whenyouconsider that theC-dollarclosed2015at justover72U.S.cents,it’sobvioustheVelocitygradshaveraisedsubstantiallymorethanthatamount.

So how have Kirkup and his band of collaborators produced suchexcellentresults?

Thefirstreasonisgreatpartners,startingwiththeUniversityofWaterlooitself.Theuniversityisrecognizedasthepreeminentinstitutionforscienceeducation in the country.Thatmeans it attracts studentswho thriveonthesciences.Itscoopprogramhasoperatedfordecades,sothestudentsgethands-onexperienceoverfouryearswithleadingcorporationsintheirchosenfield.Andfinally,theuniversityhasapragmaticbent,sothereisvirtuallynoblowbackfromprofessorswhoworrythatscienceistaintedbyteachingstudentstocommercializetheirwork.

“The culture of the university has always been entrepreneurial,” saidKirkup. “Itwas foundedbyengineers thatneededhelpandexpertise tohelpgrowtheirbusinesses.”

It’salsoworthnotingthatVelocityisacornerstoneoftheCommunitechhub, and that the Velocity companies can tap all the mentorshipand industry expertise that is drawn toCommunitech. It’s a happy,symbioticrelationship.

Thesecondreasonforthesuccessistheprogramitself,whichislooselystructuredandbasicallyletsfoundersgetonwiththebusinessofdevelopingtheirbusinesses.It’sdividedintothreemainsections(whichwillbeunitedunderoneroofwiththeexpansion):VelocityGarage,whichhouseslargelysoftware companies; Velocity Foundry for hardware companies; andVelocitySciences,whichispredominantlyfor lifesciencesstartups.Theparticipantsmustbeworkingontheirprojects full-time,andat leastonemusthavegonetotheuniversity.WhatthatmeansisthatthefoundersarecustomarilyWaterloograds,buttheyfleshouttheirstaffwithcoopstudents(wholearnaboutstartuplifethroughtheexperience).

Velocityisunlikeotheracceleratorsinmanyways.Therearerelativelyfewformalclassroomsessions.Themostfrequentformofmentorshipisthefoundersidentifyingwhattheyneedtolearnandlinkingupwithsomeonewhocanteachittothem.Suchpeoplearerarelyfaraway.Andit isnotthecustomary four- to six-month “accelerated” format, butaprocessofoneortwoyears.There’snotasettimeforcompaniestolaunch.Usually,successfulcompaniesknowwhenit is timeto leavebecausetheyhaveoutgrown theirallottedspace,ordecided there isnothingmore to learnfromtheVelocitymentors.

Whereastheuniversityisrenownedforthequalityofitsscientificeducation,Kirkupsaidstudentsby theirnaturedon’thave theexperience in lifeorcareerthatallowsthemtoidentifyacutepainpoints.They’rekeentosolveproblems, but theydon’t fully understand theproblems that need tobesolved.Toovercomethishurdle,VelocityandtheuniversitycreatedtheProblem Lab. It’s ameeting placewhere corporate executives can gettogetherwithstudents,discussthecompany’schallengesandworkwithstudentsondevelopingtechnologiesthatcanhelp.TheProblemLabwillgetanewspaceundertherecentexpansion.

The third factor is theVelocityFund–which isa rare,possiblyunique,facet of a university-affiliated accelerator. The fund awards funding tostartupscomingoutof theuniversityonceasemester,or three timesayear.Itgives$25,000toeachoffourstartups,plusa$10,000bonusforthebesthardwarecompany.Anditalsoawards$5,000fundingpackages

Until recently, the Velocity Garage was a stand-alone unit within the Communitech Hub. With the latest expansion, Velocity Garage, Velocity Foundry and Velocity Science will all be under one roof.

TOTAL FUNDING by High Profile Velocity Companies*


to three early-stage teams. Ten finalists deliver three-minute pitches ineachdivisionbeforearoompackedwithstudentswhocomeouttowitnessthecontest.

“It’ssupercompetitivesoyoureallybringyourAGametothiscompetition,”saidRachelPautler,whowon$25,000withhercompanySuncayr.IthasmadeamarkerthatteststheeffectivenessofsunscreenusinginkthatonlybecomesvisiblewhenskinisexposedtoUVrays.“[With]alotofothergrants,youjustsortofapply,youdon’treallythinkaboutit.Butyoureallyhave toworkhard toget to thispitchcompetition.Anddoing that reallyhelpsyouthinkaboutthingsaboutyourbusinessthatyoumightnothavethoughtabout.”

Ted Livingston, right, speaks with Mike Kirkup during a Velocity event. The founder of Kik.com donated $1 million to the Velocity Fund when he was 23.

CTO Devon Galloway, left, and CEO Michael Litt are the Co-Founders of Vidyard, a Velocity graduate that has raised $60.7 million in funding.

NowVelocityisgrowing.OnJan.12,thefacilityalmostdoubleditscapacity,allunderone roof.Kirkupsaid theorganizationnowhas to “pressbothendsofthepumpatthesametime”todevelopenoughnewcompaniestofillthespace.HebelievestheenthusiasmforentrepreneurshipandthequalityofresearchattheUniversityofWaterloowillensurethattheycanfillthespaceinacoupleofyears.

Inshort,KirkupsaidthisnewexpansionwillmeanthreethingstoVelocity.

“One,wecanrepatriatethefacilitiesbackintoonefacility,”hesaid.“Two,we’regoingtohaveadedicatedfacilityforourhardwareandlifesciencescompaniesthatwillbeabigimprovementoverwhatwehavetoday;andthree,wewillhavemorespaceformorecompanies.“*

EXITS by Velocity Companies

COMPANY BUYER

Bookneto Unknown

Fora Andela, New York/Lagos (Nigeria)

DraftingSPACE BuildDirect, Vancouver

Kitematic Docker, San Francisco

BufferBox Google, Mountain View

TrendRadius Intelex Technologies, Toronto

Jingu Apps Rebellion Media, Waterloo


By Peter Moreira

ToreadtheCompass.coreportontheWaterlooRegion’sstartupecosystemistobestruckbyamassivedisconnect.

InWaterlooStartupEcosystemReport:TheDavid vs.GoliathofStartupEcosystems,theCaliforniaresearchinstitutesaidthattheWaterlooRegionisagloballeaderinarangeofcategories.

Ithasthesecond-highestconcentrationofstartupsintheworld.It’sedgedoutof firstplaceonlynarrowlybytheglobal leaderSiliconValley,andithasabouta50percentgreaterconcentrationthanthethird-placefinisher,Dublin.

TheWaterlooRegion is the third-fastestgrowingecosystem intheworld.

Fundingin2015rose97percent,fromUS$135milliontoUS$266million.

And although the 71-page report doesn’t quantify the technicaltalentproduced in the region, itsayssomepeople rate itas “theverybest”intheworld.

And yet, Compass ranked the Waterloo region as the 25th topstartupecosystemintheworld.Twenty-fifth.

Theproblems?Theregionispunyincomparisontothecompetition,anditsstartupshavechallengesinraisingmoneyandscaling.Andthe transportation problems in and around Toronto reduce thebenefitsthattheWaterlooRegionshouldenjoyfrombeingsoclosetoCanada’scorporatecapital.

“Waterloo’s top technical talent, deep sense of community,and the unmatched cooperation and coordination betweenstakeholders are the pillars of its success,” said the report. “Ifit canhelp itsstartupsclose the fundinggap,especiallyat theseedstage, takesteps towardsan integrationwith theTorontoecosystem, and solve the challenge— shared with almost allnon-U.S. ecosystems—of rapidly scaling U.S. sales, Waterloocanbecomeaninternationalsuccessstory.”

Thecruxoftheproblemisthattheregion’sstartupstaketoolongtogrowanddon’traiseenoughcapitaltohelpthatgrowth.

“Waterloo’sstartupvaluationsgrowmoreslowlybecauserevenuegrowthismuchslower,”saysthereport.“TherootcauseisaGlobalMarket Reach gap, centered around customer development…andgrowth.”

Canadiancompaniesingeneral,itsays,don’tmakeitaprioritytolandcustomersinothercountries,mostnotablytheUnitedStates.Canuckfounderstypicallycompoundtheproblembyattackingthe

U.S.marketfromtheirbaseinCanada,whichtendstoslowsales.

Compasssaidthefinancinggap–whichisacuteinseedfundingandalsoexists inSeriesArounds–existsmainlybecausetherearefewerangelsandinstitutionscompetingtoinvestinthestartups.ItsaidtheproportionofstartupsinSiliconValleythatreceiveseedfundingisfourtimesgreaterthaninKitchener-Waterloo.

The report offers solutions. Obviously, the startups and theiradvisershavetomakeagreaterefforttodevelopsalesteamswithintheU.S.Thefundinggapcouldbereducedwithaconcertedeffortbystakeholdersandpolicy-makers.

“Drawing fromsuccessful policiesexecuted inotherecosystems,policymakers canhelp solve gaps in seedandSeriesA fundingthroughmatchingfundsandtaxcreditprogramsdedicatedtoonetypeof round,” said the report.Theseparties couldalsohelpby“investing as [limited partners] in local funds and foreign fundswillingtoopenofficesintheecosystem.”

Finally,Compass said that theWaterlooRegion can improve itsstandingwithentrepreneursandinvestorsifitmanagestointegratemorefullywithToronto,andcreateatrulyunifiedcommunityalongthelinesofPaloAlto-SanFranciscoorCambridge-London.

Withapopulationofahalf-a-million,theWaterlooregionisclearlyaminnowswimminginaschoolofwhales.WiththeexceptionofTelAvivandAustin,allthemajorstartupcentreshavepopulationsof several million people. And the report is overwhelminglycomplimentaryaboutwhattheTorontosatellitehasachieved.

Concluded the report: “Today the lessons fromWaterloo are ofglobalrelevanceforeverystakeholderworkingongrowingstartupecosystems and creating economic growth—from investors andbusinessleaderstopolicymakersandeconomists.”*

The Waterloo Region has the second-highest concentration of startups in the world, but it’s not ranked in the top 20 ecosystems.

The Big Disconnect

“Waterloo’s startup valuations grow

more slowly because revenue growth is

much slower. The root cause is a Global

Market Reach gap, centered around

customer development … and growth.”

– The Compass Report

September2015•Volume4,Issue3EntrevestorIntelligence11

51

18

2

17

254

20

3

THE COMPASS REPORT BY THE NUMBERS

Source: Waterloo Startup Ecosystem Report: The David vs Goliath of Startup Ecosystems, published by Compass.co. All figures are in U.S. dollars Infographic by Roxanna Boers

1. Silicon Valley 2. New York City3. Los Angeles4. Boston 5. Tel Aviv

17. Toronto 18. Vancouver 20. Montreal 25. Waterloo

NUMBER OF STARTUPS

Waterloo 1,100

Austin 1,900

Vancouver 2,150

Montreal 2,200

Toronto 3,300

Tel Aviv 3,650

STARTUP DENSITY

LEADING ECOSYSTEMS IN THE WORLD

PERCENTAGE OF FOREIGN CUSTOMERS

2.2

2

1.1

1

0.95

0.56

0.54

0.51

Silicon Valley $490,000

Avg. NYC, LA, BOS $360,000

Toronto $70,000

Vancouver $70,000

Waterloo $45,000

The Compass report on the Waterloo Region is a goldmine of data on our place in the startup world. Here are just a few nuggets.

Silicon Valley

Waterloo

Austin

Tel Aviv

Vancouver

Toronto

Montreal

Avg. YC, LA, BOS

Tel Aviv

Vancouver

Montreal

Waterloo

Toronto

74%

60%

57%

51%

40%

EARLY-STAGE FUNDING PER STARTUP

What would you build with $40,000?

We can help you build it.

What is AC JumpStart?AC JumpStart provides eligible companies with

• $30,000 in seed capital*

• $10,000 in mentoring from the

Accelerator Centre’s team of experts

• Access to market research and connections

to investors

AC JumpStart is delivered in partnership with

*To be matched by recipient firms.

Think you have what it takes?

Apply now at www.acjumpstart.com


What would you build with $40,000?

We can help you build it.

What is AC JumpStart?AC JumpStart provides eligible companies with

• $30,000 in seed capital*

• $10,000 in mentoring from the

Accelerator Centre’s team of experts

• Access to market research and connections

to investors

AC JumpStart is delivered in partnership with

*To be matched by recipient firms.

Think you have what it takes?

Apply now at www.acjumpstart.com

By Rose Behar

Theconstruction industry is often consideredslowatadoptingchangebutKitchener-basedstartupBridgithasbrokengroundquicklywithits mobile application Closeout, a tool thatsimplifiescommunicationonconstructionsites.

“Weheardalotof,‘You’renevergoingtosellsoftwaretotheconstructionindustry,becauseit’s too old school,’” saidCo-Founder LaurenLake in an interview. “That was the outsidepoint of view. When we actually went andspoketoallthesepeople,theysaid,‘Ofcoursewewanttousesoftware,butthere’snothing.’”

Lake and Co-Founder Mallorie Brodie spentsix months doing intensive market researchon construction sites in the development ofCloseout, which replaces the pen-and-papertask of documenting unfinished, damaged orincorrectwork,referredtointheindustryasa“punchlist.”

WithCloseout,userstakepicturesoftheworkareas and upload them along with notes forimmediate viewing by the team, significantlystreamliningthetask.

The app has been adopted by about 100companies since its launch in March 2014,includingpowerhousesMintoandCentreCorp.Dependingon the scaleof theproject, thesecompaniespaybetween$800and$3000permonthforthesoftware.

Bridgitisnowsettingitssightsoninternationalgrowth, branching in to the New Yorkconstructionecosystemthispastfall.Theteamplans to target other large construction citiessuch as Seattle, Houston and Washington,D.C.,thisyear.Ifitcontinuesitsaveragerateofsalesgrowthfrom2015—over20percenteachmonth—Bridgitispoisedtotakealargechunk of the North American constructionsoftware market. There are now a rangeof startups (FinishLine, KO Punchlist) andestablished companies (Textura, AutoDesk)all vying for domination in this relatively new

arena. The difference betweenCloseout andthecompetitionisitssimpledesign,saidLake.

“Themain thing thatwe really focused on iskeeping it as easy as possible,” she said,notingthatthesoftwarehastointegratequicklyintoabustlingconstructionsite.

“You can take a site of 500 people and this

afternoontheycanbeupandrunningwiththeeffortofonlyacouplepeople.”

Reflectingbackoverthepastyear’ssuccesses,Brodiesaid thekey to the team’smomentumwas continuously getting user feedback toimprove the app, while Lake points to theteam’sfocus.

“There’salotofhypeinthestartupcommunity,”shesaid. “We’ve just triedtokeepourheadsdownanddriveresults.”

Instead, they’ve let the Kitchener-Waterloocommunity do the buzzing for them. Thecommunity played a large role in Bridgit’srecent win at Google Demo Day in SiliconValley,wheretheyrepresentedCommunitech.

“It was a really positive experience for us tobringbacktheprizetoCanadaandtoWaterloospecifically,”saidBrodie,addingthatsheandLake made the conscious decision to buildBridgit in theWaterloo regionbecauseof the“greatworkingculture.”

After beginning their journey at WesternUniversity,whereLakestudiedengineeringandBrodie business, the co-founders usedmanyWaterloo-area and Toronto startup programsincluding The Next 36, Creative DestructionLab and, most recently, Communitech’s Revsalesaccelerator.

Thecompany,now in its third year,wrappedupa roundof funding thispastsummer,andwon’tbeseekingoutanymoreuntiltheSeriesA,whichtheco-foundersareplanningtokickoffinearly2017.

Therearemanythingsthatthepairareexcitedabout for2016—amongthemtheexpansionintotheU.S.andtheirfirstsoloofficespace.Butwhenaskedifshehadanypersonalresolutionsfor theNewYear,onlyonecame tomind forLake:“Getmoresleep.”*

Bridgit To Expand into U.S. The maker of a construction industry app was one of the region’s hottest startups in 2015, winning the Google Demo Day in Silicon Valley.

“You can take a site of 500 people and this afternoon

they can be up and running with the effort of only a

couple people.” – Lauren Lake

Mallorie Brodie, left, and Lauren Lake attribute much of their success to the ease-of-use of their flagship product, Closeout.


By Peter Moreira

Here’safactabouttheInstituteofQuantumComputingthatwecanallgetourheadsaround:teaisservedeachdayat4pm.

It’sacustom thatExecutiveDirectorRaymondLaflammestartedat theUniversityofWaterloofacilityafewyearsago.HeimporteditfromhistimeatCambridgeUniversity,wherehestudiedunderStephenHawking.Nowit’sadailyroutineattheinstituteintheMike&OpheliaLazaridisQuantum-NanoCentreattheUniversityofWaterloo.

Otherthanthatmorselofinformation,discussionofwhattheydoattheIQCcanbeadauntingsubject.TheIQCwebsiteitselfsaysit’sallrighttobeabitbaffledbytheconceptandpotentialofquantumcomputing.Butifthe23facultymembers,fourresearchassistantprofessors,108graduatestudentsand41post-doctoral researcherswho toilat the institutearecorrectabouttheprospectsofquantumcomputing, thewholeworldoftechnologywillberevolutionized.

“Quantum technology is a topic worth getting very excited about.The possible applications cut across almost every imaginable field,including sensor technology, ultra-secure communications, and highperformance computing,” said Paul Salvini, CEO of the AcceleratorCentre.“Quantumcomputerswillbeabletosolveproblemsthateventoday’smost powerful computers cannot easily tackle. The potentialimpact on society is likely to beona scale similar towhatwehavealreadyseenintheeraofdigitalcomputing.”

Thecomputingsystemweusetodayisdigital–meaningthatitusesalongstringof“bits”,whichencodeeitherazerooraonetoprocessinformation.Quantumcomputing,ontheotherhand,processesinformationusingthelawsofquantummechanics.Aquantumcomputeruses “qubits”,andaqubitcanbeazerooraoneorboth.

Whatthatmeansisthat–intheory–therewouldbeexponentiallymorevariables that the quantum computer can process than a conventionalcomputer. And that means that successful advances in this new fieldcouldrenderallofthecomputersweusetodayobsolete–tooslow,toocumbersome,toovulnerabletosecuritybreaches.

“Todayweareharnessingthepowerofthesmallestquantaofmatter,”said

Laflamme.“Asaresult,technologiesincomputing,securecommunications,medicine and beyond are emerging that will transform our lives. Wealreadyhavespinofftechnologiesonthemarketandthefutureofquantumtechnologiesisboundless.”

Thereisahugerangeofopiniononwhenuniversalquantumcomputingwillbeareality.Optimistssayitwillbefivetoeightyears,whereasskepticsquestion theentireviabilityof theconcept.Be thatas itmay, therearealreadysomestartupsdevelopingaroundthefieldattheIQC.Theyinclude:

Universal Quantum Devices: Co-founded by Laflamme and ThomasJennewein,UQDoffersdevicesforthemeasurementofentangledphotonsources–akeycomponentofquantuminformationscience.

EvolutionQ:Thisisaconsultingfirmincyber-security–ithelpscompaniesand government understand how they can maintain security in theirnetworksshouldquantumcomputingbecomeareality.

High Q: This company is working on extremely sensitive sensors formaterialscienceandbiochemistry.

AndNeutronOptics: this company is building components for the nextgenerationofneutronscience.

Some of these companies are working on support for the quantumcomputing industry, while others are planning businesses using thequantum-basedtechnologyitself.Theyareallpioneersandexpecttogrowasactivityinthefieldincreases.

“Fromacommercializationpointofview,thesearestillearlydays,butwealreadyhaveseveralstartupcompaniesemergingoutofresearchinthisarea,”saidSalvini.“We’realsoveryfortunatetohavetheworld-class Institute for Quantum Computing right here at the UniversityofWaterloo.”*

The Holy Grail of ComputingThe University of Waterloo’s Institute of Quantum Computing is working to revolutionize the way the world processes data.

‘Quantum computers will be able to solve problems that even today’s most powerful

computers cannot easily tackle.’ ~ Paul Salvini, CEO of the Accelerator Centre

Faculty member Michal Bajcsy adjusts the laser setups on an optics table at the Institute for Quantum Computing.

You want to reach The part of the economy that’s growing. Young entrepreneurs in high-growth companies. The Waterloo Region Innovation Community.

You want to advertise in the next Entrevestor Intelligence Report.

Contact us at [email protected] our free daily reports at entrevestor.com

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By Ellyn Winters-Robinson

LikemanyintheWaterlooRegion,techexecutiveTimJacksonknowsthatthecommutetoorfromTorontoisnotjustamassiveinconvenience.It’sadeterrenttoeconomicgrowth.

Back in 2007, when he was CFO of Pixstream, Jackson commuteddailyfromhisTorontohometoWaterloo.Now,asEVPCorporateandCommunityDevelopmentandLeadExecutiveat theMaRSCentre forImpactInvesting,hefindshimselftravellingthe401onceagain,shuttlingon Sundays and Thursdays between his family in Waterloo and hiscondoinToronto.

He’snotalone.Anestimated10,000individualsnowcommutedailyfromtheGreaterTorontoArea to theWaterlooRegion.Tensof thousandsmoreheadtheotherway.

“As early as 2000,whenmy family and I decided to relocate here toWaterloo, you could clearly see that a significant sector was beingbuilt, as the community transitioned from its traditionalmanufacturingand insurance roots intoacentre for informationandcommunicationstechnology excellence,” said Jackson in an interview. “Companiessuch as RIM (now BlackBerry), OpenText, Descartes andMKSwerepioneering thewayback then,andwere thecompaniesweall lookeduptoandadmired.AlongsideUniversityofWaterloo, theywere layingthegroundwork forWaterlooRegion tobecomewhat it is today -- anemerginghotbedforstartupsinNorthAmericaandamagnetforglobaltechbrandssuchasGoogle,Huawei,SAP,Shopify,Squareandothers.”

ButtheWaterlooRegionhasnotearnedthisreputationwithoutgrowingpains. One problem is the 100-plus kilometres between Toronto andKitchener-Waterloo,whichonagooddaytranslatesintoatypicalfour-hourroundtrip.

The individual frustrationsaside, the lackofanefficient transportationconnectionisabusinessinhibitor,saidJackson.

“WhileWaterlooRegionishighlyregardedasasourceforengineeringtalent, the community has always struggled to attract executives [likeCEOs and COOs], as well as marketing and sales professionals.Companiesinthisareaneedthiskindofbusinesstalenttogrowtothenext level.So thequestionwe’rewrestlingwith is, ‘HowdowebetterdockwithTorontoandtheresources itoffers toexpandouraccesstocapital,talentandcustomers?’”

Jacksonisoneoftheindustry,academicandgovernmentleaderswhoare collaborating ona long-term strategy to solve this challenge.But,Jacksonwarned, theprocesswillbe far fromeasyandwilldemandamassiveinfrastructureoverhaul.

“Let’slookatwhathappenedwithLightRailTransitinWaterlooRegion.It took different groups coming together to speakwith one voice and

advance thebusiness case,” he said. “That effort gavepoliticians thecover to make the hard decisions.We now need to do the same tomovepeoplethroughthedigitalcorridor.Itwillrequirestrongintestinalfortitudetomakethiskindofinfrastructureinvestment,andsoweneedbroadinvolvement....Anditneedstohappenallthewayalongtheline,involvingothermunicipalitiesthatliealongthecorridorincludingMilton,Brampton,Mississaugaandsoforth.”Glimmersofearlycooperationarethere.UniversityofWaterlooandUniversityofToronto recently joinedtogethertopublishanop-edpiece.

The Accelerator Centre, Communitech and MaRS are collaboratingmore,withtheWaterlooorganizationstappingintothesignificanthealthsciences, cleantech and fintech expertise in Toronto. Toronto andWaterlooarealsocooperatingoneffortstobringcapitalupfromtheU.S.

Jacksonnotedthattheresolutiontothetransportationchallengeislikelyadecadeormoreaway.“Iftheultimateplanisanall-daytrainlink,thenthesethingsalwaystakelongerthananyonewouldlike.Whatweneedtobuildisalong-termplanwithmilestones,andthenfigureoutinterimsolutions,suchasdedicatedHOV [High-OccupancyVehicle] lanes,ortrain/buscombinationstobridgeustoourfinaldestination.”

TheultimateresultwouldmeangreatereconomicprosperityforWaterlooRegion. “Even a few decades ago you could see that somethingextraordinarywas happening here,” said Jackson. “Themorewe candotohelpentrepreneurshipflourishandtoattractcapital,themoreallofCanadabenefits.”

Ellyn Winters-Robinson is President and Chief Marketing Officer for Ignition Communications, a boutique marketing communications and PR firm based in Waterloo Region focused on the tech sector. She also serves as the in-house PR and communications mentor with the Waterloo Accelerator Centre. You can follow her on Twitter @ellynjane.*

Improving the Digital CorridorTim Jackson believes a range of leaders need to come together to push for better transport links between Toronto and the Waterloo Region.

Tim Jackson

March2016•Volume5,Issue1EntrevestorIntelligence17

By Peter Moreira

ThereisamassivedisplayscreenaboveMarylinMa’sdeskintheCommunitechHubandallday,everyday, it flashestheweeklysalesgoalsofeachteamintheRevaccelerator.

It is a constant, Orwellian reminder that thecohortmembershave togetoutandsell,andmeettheirweeklytargets.Anditisonereasonthat all four cohort members – BluePointTechnology,FunnelCake,KnowledgehookandTallyfi – increased their sales in the first twomonthsoftheprogram,eventhoughtheholidayperiodisusuallyadeadseasonforsales.

“Thisnewmodel isgoingextremelywell,”Ma,theProgramManager, said in an interview inJanuary. “We’re working with the companiesreligiously on their sales and marketingstrategies.”

Revstartedearlylastyearasameansofhelpingcompanieswithrevenuestoscale.ThethinkingwasthattheWaterlooRegionwasreallygreatatlaunchingcompaniesbutneededtopaymoreattentiontohelpingcompaniesgrow.SoRevisa program for companies with a product andthatneedtogetseriousaboutbuildingscalablemarketingandsalesprocesses.

After the first cohort successfully concludedwith about eight companies graduating, theorganizersrefinedtheprogram.

First,theystaggeredtheintake.Fourcompaniesentered the six-month program in November,and another four entered the program inFebruary. By staggering the program with afour-company intake at one time (rather thaneight companies at once), Rev allows formore customized programming because eachbusinessisunique.

The second change is that the organizersintensifiedtheexecutives-in-residencepositionsfor theprogram,namingthreeof themfor thefourteams,anddeepeningtheirworkwiththecompanies.

“Thementorsarealmostactingasembeddedexecutives,” said Ma, adding that theseexperienced executives are diving into thecompanies’strengthsandweaknesses,comingwith themonsalescallsandworkingside-by-sidewiththefounders.“Beinginthefieldallowstheexecutivestogaininsightsdirectlyfromthecustomers. They’re then better positioned toadvisewherethecompaniesshouldgo.”

Butforthemostpart,thegoalsofRevhaven’tchangedsincetheprogramstartedayearago–togrowrevenuesanddevelopsolidcorporateorganizations. When the four members ofCohort 2 pitch at Centre Stage (the nameforRev’sdemoday) inMay, theywillhave todemonstrate how the sales and marketingenginethey’vebuiltwillhelpthemachievetheirfuturerevenuetargets.It’swhatRevcompanieshavetodotograduate.

“We’ve gone in sinceDay 1 with that goal,”saidMa.“It’snevereasybutwehavealotofknowledgeunderourbeltnowtobetterguideourcompanies.”*

THE MEMBERS OF

COHORT 2

FunnelCakeFunnelCake provides B2B marketers with insights into marketing influences across their entire funnel. The company’s software aggregates data from existing sales and marketing apps and helps marketers make decisions faster with

more accurate data.

BluePoint TechnologyBluePoint Technology has developed a hardware product, Kindera, that allows parents to supervise their home Internet from their smartphone. Kindera is a wireless router that parents install in their homes to manage their children’s online activities through an easy-to-use web service.

TallyfiTallyfi’s hardware is the 21st Century equivalent of the bouncer’s counter. It’s a handheld wireless device that has big mechanical push buttons suited to bouncers’ hands. It counts men and women both entering and leaving an establishment.

KnowledgehookKnowledgehook’s technology enhances math education through gamification. Its products are HomeWork, which gamifies individual lessons that teachers assign to students, and GameShow, which poses problems for students.

Rev Revs UpAfter a few alterations, the second cohort of the Communitech accelerator is reporting increases in sales.


By Gerard Buckley

There is a considerable amount of writing dedicated to corporategovernance for public companies. However, there is substantially lesspublished about governance for private corporations considering thenumberofCanadian-controlledprivatecorporationsdwarfthenumberofCanadianpubliccorporationstradedonitsvariousstockexchanges.

TheentrepreneursthatstartbusinessesinCanadaareoftenmystifiedbytheamountofjargonandbestpracticesthrownatthemundertheguiseof“corporategovernance”.InthisarticleIwillattempttogivethereaderfivesuggestions thatshouldbe implemented if the founderofa techgrowthcompanydesirestoscaleandsucceed.

ToquoteRichardLeblanc,aYorkUniversityprofessor,“Howacompanyis governed influences rights and relationships among organizationalstakeholders,andultimatelyhowanorganizationismanaged,andwhetheritsucceedsorfails.Companiesdonotfail:boardsdo.”Ortoparaphrasethisforanewentrepreneur,thisstructuregivesinvestors,acquirersandotherstakeholderstheconfidencethatyourcompanyiswellmanaged.

It isjustnotgoodenoughforentrepreneurstohaveanidea.Theymustdevelopastrategyanditisaboardmember’sresponsibilitytoensurethatthestrategicdirectionisset.Whenthereisapivotfromthatstrategy,therearegoodfundamentalandbusinessreasonsfordoingso.Althoughyouwillhearmesay“strategywithoutpassionorvisionisuseless,”itisincumbentonaboardtounderstandandmeasureacompany’sperformanceagainstthe agreed strategy. In the early stages of a company, this process is

Five Ways to Improve yourCorporate Governance

Advisory and corporate boards don’t have to be complicated. Gerard Buckley has a few simple suggestions on corporate structure to make your company more attractive to investors and acquirers.

fluid.However,aninvestorwillbemotivatedwhentheyseeachievementagainstthosestrategicgoals.

In March 2014, BDC discovered, through its extensive research intosmallbusinessgovernance inCanada, thatonly6percentofCanadiancompanieshaveadvisoryboards. In addition, 76percent of companieshadneitheradvisoryboardsnorboardsofdirectors.However,whereeitheradvisoryorcorporateboardsexisted,grossrevenuewas24percenthigherand productivity was 18 percent higher than those companies withoutboards.ItcanbeconcludedthatprivatecompaniesinCanadabenefitfromstrongercorporategovernance.

There are a number of relationships where there is amisalignment orimbalanceof skills andexperience thata founderwill face in startingabusiness that will include accessing venture capital to being acquired.Puttinginplacesoundgovernancestructureswillassisttheentrepreneur,eveningtheplayingfield.

Although access to capital, talent, partners, and customers are anentrepreneur’smost importantconsiderations,havingastrongcorporatestructure ensures confidence in management’s ability to succeed. Thefollowingrecommendationsarethe“low-hangingfruit”toenabletheCEOofagrowthcompanytoimplementseveralgovernancestructureswithoutgettingoverlycomplicated.

Create an advisory board early in the company’s growth cycle and set up a board structure just before the company raises a professional investment round.

When creating an advisory board, you are hoping to recruit significantresources who provide support, knowledge, and access to uniqueprofessional networks. When raising a professional investment round,

‘Having a Lead Director or Non-Executive Chairperson is a key criterion for a company’s governance structure.’

~ Gerard Buckley

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governance,andboardseatscanbeskewed.Notallboardmembershavethesameinterest.Forexample,afteraprofessionalrounditisoftenseenthataninvestorwillsitontheboard.However,theirprioritiesareincreasingcapital,andeventuallyhavingabigpayout,whicharenotalwaysconducivewithwhat’sbestforthecompany.Anadvisoryboardisagreatsoundingboardforyourstrategyandbusinessplan.

Appoint a Non-Executive Chair or Lead Director to lead the governance structure.

HavingaLeadDirectororNon-ExecutiveChairperson isakeycriterionforacompany’sgovernancestructure.TheChairpersonwillbeamentorfor theCEO,providingguidance,structure,andsupport.Notonly is theLeadDirectoramentortotheCEO,butheorsheisalsoaspokespersonfortheboard,whetheritisanAdvisoryorCorporateBoard.Thispersoncollects inputfromtheboardandfromtheseniormanagementteamfortheCEO’sannualreview,andreportsanyrelevantfeedbacktotheCEO.Heorshehostsanexecutivesessionwithoutmanagementattheendoftheannualreviewmeetinginordertogatherfeedback,andcreatesandrunstheagendaoftheboardmeeting.ANon-ExecutiveChairbyandlargeallowstheCEOtorunthecompanyandtheChairtomanagetheaffairsoftheboard.

Structure the board of the company for the size you want to grow to (i.e. audit, compensation, risk and governance committees).

In order to ensure a solid governance practice in the future, differentcommitteesmustbeestablishedearlyon inorder for thecommittees togrowwiththecompany.Theobjectiveistoallowthecommitteestofunctionefficiently,allmemberstoparticipate,andanappropriatelevelofdiversityofexperienceandknowledgetoensureoversightofthecompany.

Ensure the company uses skills-based criteria to select board members.

Itisimportantforyourboardtohaveadiverseskillbase.Constructingaqualityboardisaboutthecalibreandperspectiveofindividualdirectorsaswellasthedeliberatecreationofadynamic,andachemistrythatallowsfortheeffectiveexecutionofcorporategovernanceandstrategicoversight.Buildingaskillsmatrixthatisoverlaidonmanagementandboardpositionsensuresthecompanyhasthenecessaryskillstoscale,acquireclients,andmanageitsaffairs.

Regularly communicate with shareholders through quarterly newsletter, AGM, etc.

Communicationbetweenshareholdersanddirectorsisstronglybeneficialfor both parties. Directors will benefit from hearing factual views fromshareholders. Investorswill benefit fromhearing theboard’sphilosophyandperspectiverelatedtocertaingovernanceandstrategicissues,inturnjustifyingtheboard’sdecisionsandactions.

Private corporations, such as Spartan Bioscience of Ottawa, havedemonstrated that good governance practices – regular shareholdercommunicationandappointmentofanon-executiveChairhavecontributedin the recent strategic investment fromCanonUSA. “Goodgovernanceprovides checks and balances for private companies. It’s especiallyimportantforstartupswhereexperiencedBoardmemberscanhelpyoungentrepreneursavoidmistakesandcapitalizeonopportunities,”saidPaulLem,M.D.,CEOofSpartanBioscience.

SaidtheLeadingCanadianBankManagementCircular:“Webelievegoodcorporategovernance isanessential foundation forstrongperformanceand fundamental to our success. It provides proper oversight andaccountability, strengthens internal and external relationships, buildstrust with our stakeholders and promotes the long-term interests ofshareholders.” This is as true today for private corporations accessingcapitalasitisforthelargestpubliccorporations.

Governanceisnotmeanttothwartinnovation,buttoallowittothriveinanenvironmentoftrustandcommunicationbasedonthestrategicdirectionofthecompany.

Gerard Buckley is the founding partner of Jaguar Capital. In a career that has included work with Scotia Bank and Maple Leaf Angels, he has worked on M&A teams transacting more than $10 billion. He wrote this article with Harlen Suslik.*

Research by BDC shows that companies with boards of advisors or directors produce 24 percent higher gross revenues than those without boards.

Gerard Buckley

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