OCE partners with new pan-Canadian accelerator to assist digital start-ups

The Ontario Centres of Excellence (OCE) has joined forces with a freshly minted pan-Canadian accelerator to assist start-ups in the digital economy space as part of its Ontario Youth Jobs Strategy. OCE is partnering with Highline through its SmartStart Seed Fund, which recently received $9 million to help up to 250 youth between the ages of 18 and 29 start their own businesses.

Highline was created in August through a merger of Toronto-based Extreme Startups and Vancouver-based GrowLab Ventures, with major backing from the BDC Capital (the venture arm of the Business Development Bank of Canada) and Toronto-based Relay Ventures, which specializes in mobile start-ups. Using the tagline "Speed to Seed", it will provide successful applicants with specialized entrepreneurship programs, up to $200,000 in funding and access to key global markets starting off with Vancouver, Toronto, New York City and San Francisco.

The partnership builds on OCE's collaboration with Extreme Startups prior to its merger with GrowLab which also saw relationships develop with INcubes –—a Toronto-based accelerator — and the Ontario Brain Institute. The latest venture will see up to 10 companies supported over the next two years.

"Our pilot project with Extreme Startups last year blossomed into a full-fledged seed-stage innovation fund called SmartStart. The only criteria are youth and we find a lot of prospects on campuses," says Martin Croteau, OCE's director of academic entrepreneurship. "Of the startups system wide, 50% of Ontario startups are information technology, software and digital media companies."

During its two-year pilot phase, the SmartStart Seed Fund received support from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario). Of the 45 companies that received investment and mentorship, Extreme Startups was a co-investor in 23, creating 68 full-time jobs and attracting more than $13 million in follow-on investment.

The OCE-Highline collaboration is just the latest illustration of the increasing popularity of incubators and accelerators. In recent years, more than 100 have sprung up across Canada, spurred by the success of accelerators in the US like Y Combinator, Mountain View CA. That firm pioneered a process for investing small amounts in start-ups and providing mentorship services by bringing them to Silicon Valley to whip them into shape for making pitches to investors.

"There's been a realization in the past five years that companies at the early stage need a lot of heavy-lifting support. It used to be informal," says Croteau. "Accelerators are a systemic way to guide companies and dramatically increase their chances of success by providing a blanket of additional mentorship and networking."

Croteau says the decision to move towards a formal collaboration with Extreme Startups was sealed with its decision to merger with GrowLab and form Highline.

"They provide the entrepreneurship and training ... With Highline we're building on a long-term, best-in-breed collaboration. They're stronger through the merger."

Highline is the first example of two accelerators merging but it could become a trend as organizations seek scope and scale while weaker initiatives fall by the wayside. It is also part of a new breed of so-called financial accelerators that can provide a combination of financing and mentorship.

"Accelerators are a common platform but the sector is fragmented. Some will fail as most are not built on sustainable models and have no revenue streams," says Marcus Daniels, Highline's co-founder and CEO. "Our model is for 10 companies and 20 investments a year. We plan to scale up in 2015."

With campuses in Toronto and Vancouver, Highline plans to deliver its unique products across the country, focusing exclusively on web and mobile-based software prospects. Daniels says the demand is huge, with his firm receiving 1,500 applicants for each cohort. That's not surprising as Ontario alone is producing 30,000 STEM (science, technology, engineering and mathematics) graduates annually.

"Our deal with OCE is a great example of a private entity and a very progressive government entity trying to collaborate and create economic and societal value," says Daniels.

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