Inno-Centre seeking Finance Canada support to replicate successful technology commercialization model across Canada

Montreal-based Inno-Centre is on the verge of rolling out a truly national network of not-for-profit, networked virtual incubators, 14 years after its founders quietly began building a unique model of technology mentoring and commercialization that has caught the attention of governments coast to coast. Armed with a favourable ruling from Canada Customs and Revenue Agency (CCRA), Inno-Centre is now in discussions with Finance Canada to secure a multi-million dollar funding commitment that would allow the company's model to be replicated in virtually every province. Discussions are preliminary, and if successful another department - most likely Industry Canada - would be tagged to launch the program.

From its original centre in Montreal, Inno-Centre Canada has established operations in Ottawa that will be used to expand across the province in the key technology areas of information technology (IT) and telecom, life sciences and photonics. Deals are also imminent in Alberta, Manitoba and Saskatchewan that would see the blossoming of the Inno-Centre concept with the financial assistance of federal, provincial and local collaborators. Those sources would comprise 75-80% of the financing required to take each centre through its six-year start-up phase, with the remainder coming from corporate sponsors.

"With federal financing it will depend on the number of centres, but we're looking at about $15 million per centre over six or seven years," says Claude Martel, president and CEO of Inn-Centre Canada and president of Inno-Centre Montreal. "We're trying to sell a national vision and if we want to be world-class we need to catch up to our counterparts in this area, especially the United States where companies get much more money much sooner. We need to speed up the process (of company formation) and be a risk reduction model for venture capital."

The CCRA ruling was the key building block in Inno-Centre's long-standing drive to apply its mentoring and commercialization formula at the national level. The ruling was granted after Inno-Centre spent $500,000 to convince government that its not-for-profit status was justified, allowing it to seek financial input at the federal level. If a deal with the federal government is successfully concluded, it could pump millions of dollars into the I-C Canada concept, establishing provincial centres that complement rather than complete with private sector financing interests.

For the federal government, the Inno-Centre concept has obvious appeal given its strong Canadian focus and emphasis on exploiting Canadian-developed technology at home using domestic expertise and financing. The federal funding would assist Inno-Centre Canada (the highest level in the Inno-Centre corporate structure) in developing virtually linked networks of local technology expertise, financing and other types of support. After approximately six years, each centre is supposed to become self-sufficient, once the incubated companies begin to generate revenues.

"We do not provide cash, but what we do is invest $250,000-300,000 in in-kind support for every company that we recruit and coach," says Dr Jom Aw, founding president of Inno-Centre Ottawa and a key member of the national team focusing on life sciences. "We provide business, engineering and marketing advice and we also prepare entrepreneurs to be ready to talk to venture capitalists by bringing up their value as quickly as possible and help define what they've got. Most of that is encapsulated in the intellectual property. They (the government) see us as a mechanism that can actually work, knowing that they don't have to put in money ad infinitum. At the same time, jobs are created, new technology is created and the companies remain in Canada."

Federal funding is key to the deals being structured with the Alberta, Manitoba and Saskatchewan governments, which see value in the creation of a non-competitive, networked series of centres that would seek out promising technologies in their jurisdictions for Inno-Centre's two-year mentoring program. Inno-Centre Montreal currently accepts 15 firms into its program annually, and the plan is to achieve a similar deal flow in other centres.

The concept behind Inno-Centre is unique yet powerful in its simplicity. Technologies within government laboratories, universities and research institutions that display commercial potential are examined by an internal review committee, which then forwards the best prospects to an external review committee composed of local experts in the areas of financing, science, technology and sales and marketing. The prospective entrepreneurs present their cases and if they convince the committee that their technology holds the prospect of global niche success, they are accepted into the program.

Once accepted, the potential firm is assigned a coach - typically a retired senior executive - who works closely with the entrepreneurs over the next two years. The coach is paid a per diem, plus a portion of the small equity stake Inno-Centre negotiates with each company.

"We're very much in there on a coaching level, mentoring and helping entrepreneurs identify the key factors for success," says Dr Howard Thaw, president of Inno-Centre Ontario. "It ensures continuity and one person is responsible for making sure that our formula is implemented within the company... This is really a bridging of the two area that have proven needs. The venture capitalists (and other sources of financing) need to find a lower risk to put their money into, and the entrepreneurs need to find a way for their technologies to see the light of day."

Thaw recently succeeded Aw as head of Inno-Centre Ontario and he is aggressively recruiting potential financial and corporate collaborators for the operation. The Ontario branch was launched through an agreement with the National Research Council (NRC) in 1999, which was instrumental in proving that the Inno-Centre model could be successfully replicated.

Inno-Centre Ontario continues to work closely with the NRC, although it has struck agreements with other research institutions and has begun recruiting corporate sponsors, with Pricewaterhouse Coopers the first on board. Negotiations are also underway to establish outposts through the province, although the Ontario government has been slow to endorse the Inno-Centre model.

"It takes time to build a network, and if we have to we will work elsewhere before making progress in Ontario," says Martel. "Some day when the network becomes a reality, they will see that they cannot stay isolated," says Martel.

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