Scaleup initiative in Atlantic Canada seeks to break "invent and sell" cycle
April 10, 2019
A new program in Atlantic Canada wants to help businesses grow rapidly. Launched in late March by the University of New Brunswick in partnership with the Government of Canada and Opportunities New Brunswick (ONB), Scale Up Atlantic Canada aims to fill a major gap in Canada’s innovation system: the ability to convert startups into scaleups.
Fifteen companies, with combined annual revenues of $77 million and 652 employees, have been selected to participate in the program's first cohort; most have annual revenues between $4 million and $15 million. Over a six-month period, the companies’ CEOs or senior managers will participate in a scaleup program developed by Daniel Isenberg, founding executive director of the Babson Entrepreneurship Ecosystem Project at Babson College in Massachusetts.
The initiative stems from a report on improving innovation by the Council of Canadian Academies (CCA) prepared for Innovation, Science and Economic Development Canada (ISED) and released last October. The report concluded that Canada needs more “managers of innovation” who can grow and mature enterprises, and break the “invent and sell” cycle that is so dominant. The report also identified best practices for training those sought-after innovation managers.
“The entire country is struggling with this gap: How do we grow? How do we scale?" said Dhirendra Shukla, professor and chair of the J. Herbert Smith Centre for Technology Management and Entrepreneurship (TME) at UNB, in an interview with RE$EARCH MONEY. Shukla participated in the CCA’s workshops and is part of the team behind Scale Up Atlantic Canada. "The report pulled out Babson as the model. We said, 'It’s great that the report is written, now let’s do something'.”
Scale Up is supported by the Atlantic Canada Opportunities Agency (ACOA) and ONB, which respectively committed $350,000 and $330,000 in funding, with in-kind contributions from the University of New Brunswick.
"As in the rest of Canada, the startup ecosystem in Atlantic Canada faces similar challenges, which is converting the abundant population of startups into genuine scaleups that are competing on a global basis. The Atlantic region is also facing specific challenges, including a lack of practical experience in sales and marketing to generate sales revenues, a lack of focus on globalization/becoming globally-engaged companies, limited access to world-class mentorship, and attracting and retaining talent," ACOA said in a statement to RE$EARCH MONEY.
Scale Up Atlantic Canada isn’t just focused on technology companies. Participants in the cohort come from diverse industries, including automotive, aviation, education, food products, IT, software and AR/VR. At the outset of the program, each company sets a goal of 25 per cent new growth or a minimum of $1 million in new revenue, whichever is higher. Then they complete a series of seven workshops at UNB, representing approximately 100 hours of face-to-face time, led by Isenberg and his Babson team.
Isenberg has created and trademarked a method for achieving new growth called the Scalerator, which focuses on customers, capacity and cash. The program has been implemented around the world, including in cities in the United States, Brazil, Columbia, Denmark and Panama. Scale Up Atlantic Canada is the program’s eighteenth cohort and the first in Canada.
“In general, we don't look for scaleups: we look for scaling up,” Isenberg told RE$EARCH MONEY in an interview. “It's not a question of designating a company as a scaleup. It's whether we can unleash the potential of the company to scale up. It's a subtle but very powerful difference because it says that what is important for regional economic development isn’t choosing a few winners — it's in creating a culture in which more and more companies grow more and more rapidly.”
Impact of Scaleups
Research on scaleups supports Isenberg’s assertion. Scaleups are generally more productive, raise more capital and revenue, and create more jobs than non-high-growth companies. One Canadian study showed that while high-growth companies represent only approximately 0.5 percent of Canadian businesses with 10 employees or more, they generate 40 percent of new jobs.
Policymakers are taking note. Canada's Innovation and Skills Plan aims to double the number of high-growth, high-impact firms in Canada, from 14,000 in 2014 to 28,000 in 2025. And last December, Mary Ng, Minister of Small Business and Export Promotion, appointed Sheldon Levy, former Ryerson president and former CEO of Next Canada, as a special advisor on scaling up.
Regionally, the Atlantic Growth Strategy (AGS) was launched in 2016 to spur research, innovation and entrepreneurship. "The Scale Up project activities complement the objectives of the AGS.... It also complements the Accelerated Growth Service, an AGS initiative, which helps growth-oriented Canadian businesses to expand by helping them access the key government services they need to grow, such as financing, exporting, innovation and business advice," according to a statement from ACOA.
The University of New Brunswick offers a suite of programs to support startups. Shukla sees its new focus on scaleups as part of a continuum. “We are not leaving out startups by focusing on scaleups,” he said. “What we have to do is build a very inclusive framework for people and companies at all stages.”
Though Scale Up Atlantic Canada launched less than a month ago, Shukla said he is already being approached by other people in Canada that hope to emulate it.
“We are treating this as a pilot. As we figure it out, we are very excited to work across different agencies and different partners so that our lessons learned can scale across Canada. We want to see the kind of conversations and engagement around scale-ups that we’ve had around startups,” he said.