Inno-Centre Canada (ICC) has launched its first full-fledged provincial operation with the creation of Inno-Centre Alberta (ICA) and is working with other provinces to expand its mentoring and commercialization concept across the country. ICA becomes fully operational this month, capping more than one year of negotiations between the Montreal-based not-for-profit organization and various provincial research funding agencies. The agreement will see ICA receive slightly less than $2 million annually for the next five years,with firm funding commitments already in place for the first two and half years.

With a staff of 12 located in Edmonton and Calgary, ICA represents a dramatic departure for the Alberta government, which up to now has steadfastly resisted consideration of public funding for most mechanisms designed to assist technology start-ups. The uniqueness of the ICC model, however, apparently convinced officials that there was a public role in encouraging commercialization and financing, although the government was careful not to provide direct funding.

“This is early-stage, high-risk, patient capital and it’s a phase where the private sector can’t afford to play,” says Susan Miller, a high profile technology executive who agreed to head up the fledgling ICA. “This is the right place for government funding, although the Alberta government doesn’t want to invest cash into the company but will instead invest resources.”

After spending a successful career in the information technology sector, Miller says joining a non-profit organization was a “big decision”. But she became convinced after conducting due diligence of Inno-Centre’s model and operations. She realizes that it will take time before the Inno-Centre concept is widely accepted in Alberta, given the province’s track record of investing in the past.

“It’s harder going in Alberta because there’s less venture capital under management in the province. Given the novelty of the concept and the due diligence, it takes time to do these things,” she says. “We’re running in start-up mode and building the kitchen while we’re cooking the food.”

Prior to the agreement between Inno-centre and its member organizations, seed funding was provided by Western Economic Diversification to develop the structure and complete the necessary licensing agreements. The Alberta Science and Technology Authority provided financial support to conduct due diligence.

In its first year of operation, ICA will work closely with Inno-Centre Quebec (ICQ), the first and largest of the Inno-Centre operations that has helped to launch 122 firms over its 12-year history. After two years of operation, ICA will be assessed by its member organizations (see chart), the equivalent to shareholders in a private sector firm. If they are satisfied with its progress, further funding commitments will be made.

Miller is moving quickly to inform the province’s financial communities of Inno-Centre’s role in building on the provincial technology base to generate new companies. She’s already received a positive response from angel and venture capital investors in Calgary and Edmonton, as well as angel networks in San Jose CA and Seattle WA.

On the ground, mentors are being recruited to implement Inno-Centre’s mentoring strategy for start-ups. All fees charged to the firms entering the ICC program are success-based and deferred, with ICC taking a small ownership stake and generating cash flow from liquidity to run its operation. A web site is currently under development (www.innocentrealberta.com).

Six proposals have already been examined — a process that required travelling to Montreal to consult with the veteran members of ICC’s screening committee. Once ICA hits full stride and its personnel become more familiar with the model and adapt it to the Alberta scene, ICC’s assistance will be significantly reduced.

“Inno-Centre is a risk reduction model for local financing and a vehicle to attract well organized venture capital. It’s a mechanism the public sector should support,” says ICC president Claude Martel. “Having a regional Inno-Centre should attract local money, but on a national level venture capital will follow the development of Inno-Centre across Canada to tap that deal flow. I want to build expertise and capital around them.”

The Alberta agreement was put into place far more quickly than the Ontario node, which Martel credits to the astuteness of the province’s political leaders and their ability to see the value Inno-Centre could bring to its fledgling technology sectors. In Ontario, Inno-Centre has had negligible reach beyond Ottawa despite its agreement with the National Research Council. Negotiations with the provincial government have yet to produce results

“It’s not obvious for any province to use an outsider for help, but in Alberta decisions were made that were more business than politics,” he says. “The Albert government can afford to spend money but it has taken a very responsible approach. Their leadership is strong and the minister (Dr Lorne Taylor, former minister of Alberta Innovation and Science) brought the scientific community to the table. The new minister (Victor Doerksen) is following the same path. I’m quite impressed.”

In the meantime, pending deals with Manitoba and Saskatchewan are nearing fruition, although Martel won’t speculate on when binding agreements will be put in place. Even in Ontario, progress is being made, with announcements expected in the coming weeks.

“Things are going very well in Ottawa. I’m expecting Inno-Centre Ottawa to expand and there are quite a few possibilities. If we’re successful across Canada, we will be the first network of this kind in the world. We could go a long way,” says Martel. “Other countries are already asking for it, but we want to develop it in Canada first.”

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