A Covid-19 Check-up on Montreal’s Innovation Hubs


Covid-19 has posed unprecedented challenges for business as we know it, as well as healthcare, commerce and tourism. While many programs have been made available to support individuals and businesses in traditional verticals, the situation is somewhat different for the city’s innovation hubs. MTLinTech has taken a look at how incubators and accelerators in our ecosystem are dealing with the crisis, as well as the unique challenges and opportunities each is facing at this extraordinary time.

These are the comments of the leaders of four of Montreal’s best-known incubators and accelerators:

 

Richard Chenier – General Manager at CENTECH

Centech has switched to a remote working model until further notice. That’s staff and startups. They’ve brought in all the tools and protocols necessary to operate the institution and continue to provide support and expert coaching to their dozens of startups in residence. All while keeping everyone safe and respecting social distancing.

“This poses more of a problem for those of our startups who are working on prototyping and developing hardware” said Richard Chenier, General Manager at Centech. “Some have been able to bring that type of work home, but it’s not your typical work from home setup.”

The ETS affiliated innovation hub continues pretty much all operations at this point. In fact, they will even be launching a new cohort next week. Just a week later than initially scheduled. They will not be applying for any of the federal or provincial funding programs currently available. However, some of their startups will be, says Chenier “It depends on what stage they’re at, but probably 90% of our startups are not exactly a fit for these programs right now. But not everything is black. Many of them can keep surfing on R&D funding they’ve recently received.”

Centech has increased the amount of psychological help available to its entrepreneurs to help them cope with the impact of the pandemic on their business. They’ve even set up focus groups with these companies, to get a better sense of what they need in terms of support during these extraordinary times. That includes looking at how to help those who are in the middle of prototyping to get back access to their equipment and labs.

He says entrepreneurship won’t be slowed down by Covid-19. The challenge for his team is to figure out how to help develop a startup remotely, or through some kind of hybrid model. The main risk he sees at the moment is how the pandemic will impact corporate purchasing. Because of the economic and social distancing effects of the coronavirus, it will likely take longer for startups in residence to make the necessary contacts and cultivate the relationships they need to build partnerships and eventually get sales.

 

Jan Arp – Founding Managing Partner at Holt Accelerator

When Covid-19 hit North America, Arp was about to do his big annual roadshow, meeting founders all around the globe, when suddenly the world changed. “We had all these events lined up, and airline tickets. And suddenly we had to suddenly go super focused on digital. We made sure that we still found ways of getting in front of as many founders as possible. We did these webinar groups, MEA – Asia LATAM – US. They were an hour long, and about 100 of our advisors participated.” Adding that there’s differences in how coronavirus is impacting business in different parts of the world.

“We’re lucky. Some accelerators have postponed or delayed activities, others are having trouble getting applications. This has really forced people to pivot and be digital, and it’s going to start to separate some companies from others too.”

Arp believes the Holt Accelerator is an economic growth engine for Quebec. They’re still seeing some portfolio companies now closing good seized rounds even after Covid-19 because of the new digital reality. Entrepreneurs are very adaptable says Arp, and continuing to come up with solutions in areas like digital identity, fraud detection and fraud prevention. “It’s Not without challenges, we saw term sheets get pulled and other things go wrong. But so far everyone is healthy and digital transformation is still happening.”

He rightly points to the vital role fintech has played in making society “cashless” to the extent that it is today, highlighting how much more difficult the worldwide lockdown would be without the financial technologies we take for granted.

Holt has 18 active investments, and their portfolio is still looking strong right now. And Holt’s Founding Managing Partner remains impressed with the innate ability of modern entrepreneurs to pivot and solve problems as circumstances evolve. “I’m pleasantly surprised. A lot of them have slightly pivoted their value prop under Covid-19. Fraud especially, goes through the roof whenever there’s a crisis. So we’re seeing some focus shifting to combat that now as well.”

Xavier-Henri Hervé Executive Director at District 3 Innovation Centre

District 3 delivers over 100 events and workshops in a year. Having made scientific entrepreneurship its mission, we are always experimenting with tools which define the future of work. Both its team and its startups have shown exemplary maturity in mastering digital tools.  The focus now is on the wellbeing and the sustainability of their startups. Mr. Hervé tells MTLinTech:

Like many other incubators, we receive support from the municipal, provincial, and federal governments based on different initiatives. District 3 is also part of and supported by Concordia University, along with its donors and corporate partners.

Most now recognize that innovation from tech startups generate well-paying jobs. For our country to emerge as a global leader in this pandemic, our leaders recognize the importance of continuing to invest in our talent, research, and scientific entrepreneurs to build a resilient economy. However, we feel that the tech innovation world is not yet considered formally as a sector per se. In the same way that our governments are rallying the manufacturing sector to produce medical supplies, or that we are seeing more recent efforts to support the retail sector, our governments must also launch programs tailored for the tech innovation ´sector’. One brilliant initiative has been the recent NRC-IRAP programs for contribution to payrolls of tech startups.

For those of us who expect a longer-term economic crisis, our preoccupation is that many companies in the tech sector will not have the runway needed to outlast this storm. The focus of all those that can contribute liquidity, be they governments, financial institutions, investors or foundations, must be to work closer together. We must stop using old frameworks of ´margination’ which do not apply to fast growing tech firms and innovate in liquidity solutions for our tech sector, notably our early-stage tech startups.

‘The Great Rebuilding’ requires all of us to collaborate and rethink our fundamentals to emerge more resilient than before. With Covid-19, what became clear is that we have no choice but to speed up innovation by investing in scientific entrepreneurship. We stand to benefit from enhancing collision between industry, researchers, government, and top-tier talent in Quebec and Canada to develop both immediate solutions for the pandemic and long-term solutions for our economy. “We hope for the sake of our tech startups that the new ‘normal’ will include alternative ways to evaluate the potential profitability of these companies.”

Another very important dynamic is the upcoming explosion of the bioeconomy. Covid-19 is speeding up the bioeconomy revolution for the next decade. After the ITC-led 4th industrial revolution, we witness the bioeconomy materializing significant advancements in improving human health, and bio-generated eco-friendly solutions as viable energy sources for example, as a result of a multidisciplinary mix of emerging technologies, including artificial intelligence, genomics, synthetic biology, and digital health.

What inspires me during this unprecedented crisis is the countless scientific entrepreneurs across Quebec and Canada, leveraging emerging technologies and adapting their business models and solutions to fight the pandemic. Whether it’s Affinité Instruments’ miniaturization and acceleration of testing, Molecular Forecaster’s computational approaches to advance the discovery of repurposed drugs, or Intellistem Technologies Inc announcing the development of a peptide-based vaccine. These are among many of Canada’s talented entrepreneurs working hard to bring us closer to re-opening businesses and getting people back on their feet.

District 3’s finance team has been working tirelessly to compile a list all funding resources available for startups during this period, with an eye towards helping them emerge from this crisis still standing with Hervé adding “We’re happy to see the government starting to roll out programs specifically for early stage startups.”

He says we need to recognize that for deep tech startups, even sophisticated investors lack the profound expertise to analyze which teams are undertaking a commercially viable solution; making angel investors and early-stage venture capitalists shy away from deploying capital at the R&D stage.

Grants and subsidized financing, on the other hand, require some initial equity investment from the founders themselves to match the funds that the grants will be financing. The Canadian ecosystem needs a financing mechanism to allow scientific entrepreneurs to cross the R&D startup valley of death. Having a more efficient mechanism can provide bridge financing for R&D activities to reach a commercially viable product to speed up the creation and development of successful Canadian companies.

Moreover, he says, this pandemic is forcing businesses in all industries to adopt new technologies to serve their clients and emerge as winners. The ones who can help the big industry players deploy innovative solutions are the small and nimble tech startups. They can move quickly to build feasible market-ready solutions. But they must do so in collaboration with industry experts as this will be the only way to insure rapid adoption by industry. Facilitating partnerships between startups and corporations is a win-win solution. We must not underestimate the impact of our startups to build the future; what seems novel today will be the new normal tomorrow.

 

Martin Lessard – General Manager at MT Lab

The mission of MT Lab is to accelerate the opportunities between big and small business. The Covid-19 changed the context, but not the mission. The innovation lab now believes its role is to offer partners and startups an understanding of opportunities and a business connection in the fields of tourism, culture and entertainment. These are verticals which have been hit hard by the crisis, yet continue to offer new opportunities. MT Lab’s online working methods have allowed them to switch to remote work culture in the blink of an eye. They have closed their coworking space according to government confinement directives, but all activities (incubation cohort, call-for-innovation services) are now done by digital only.

While operations continue, they do plan to apply the Federal assistance programs for salaries, rent support for businesses and for training.

When it comes to getting their cohort the support it needs, Lessard says that in the first week of confinement, they set up a catalog of available solutions that lists products and services derived from the solutions of our startups in response to the current crisis. The success was such that fifteen other accelerators and incubators participated and 75 startups are now registered.

“What start-ups need most is customers!” he says. “By grouping innovation offers in the same place, startups are more likely to find customers. These customers who take the gamble to try something new are taking a risk and it is they who should be helped. This is what the MT Lab is putting in place from now on. Primarily these are based on requests for solutions that arise from the needs expressed by MT Lab partners, which we’re looking at in order to relaunch contracts for our startups.”

 

Note: Certain comments have been edited for brevity.

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