Dispute results in leadership change at Incubes accelerator

A. Traviss Corry left his role as managing director of Incubes at the end of October as a result of a dispute over the direction and ownership structure of the company.

Incubes CEO Ben Zlotnick maintains he owns the program and hires contractors to run its operations, but Corry disputes that and is requesting a lawyer-guided negotiation that would see him recognized as owning a majority stake in the accelerator program from inception until the day he left, Oct. 31, 2013.

To date, Incubes has hosted 18 startups in its offices to undergo a three-month curriculum concluding in a demo day pitch to investors. The various startups have offer Web-based services to both businesses and consumers. In a phone interview, Corry says he disagrees with the new direction the Incubes accelerator program is pursuing for its next cohort.


“There’s differing opinions around creating a new model that I didn’t feel there were enough resources to create,” he said. He also took issue with Incubes’ corporate structure. “It does not have a shareholders agreement. It never issued shares. It is unscalable.”

Zlotnick sees things differently.

“I’m the sole owner of Incubes,” he says. “There’s no shareholder’s agreement because I am the only owner.”

Zlotnick says he’d hired Corry on contract a year and a half before Incubes launched. At that time the contract was for his other firm Aden Earth Inc., which offers gardeners digital tools such as The Plant Encyclopedia. (Zlotnick also operates landscaping firm Aden Earthworks Inc.) When Incubes was founded, that contract relationship with Corry remained unchanged, Zlotnick says.

The Incubes program is continuing with a different model in regards to the stage of the companies that are joining the cohort, Zlotnick says in a phone interview. More details will emerge in December, and “many people across the city will be excited about it.”

Mike Betts, president of Castlegar Management, has been named entrepreneur-in-residence at Incubes and will be running the program for the next cohort, Zlotnick says. It will feature a reworked structure.

Meanwhile, Corry has a new job as chief operating officer at Smithson Martin, a vendor set to launch a new technology for DJs. The Emulator Elite is a transparent screen that allows DJs to manipulate digital music files. Corry says the opportunity arose after he and Incubes were at an impasse.

The rising temperature of the dispute is made clear in legal documents attained by ITBusiness.ca, including a Statement of Intent from Corry to Zlotnick and his lawyer. There, he claims ownership of the intellectual property related to the Incubes program. He also claims he urged Zlotnick to “fulfill his role.”

A response letter from Zlotnick’s lawyer, Zev Zlotnick, says Corry is an independent contractor that has no rights to Incubes. It goes further and demands Corry cease and desist his claims and “slanderous statements.”

Startup alumni members of Incubes’ four previous cohorts were surprised to hear of the conflict when contacted by ITBusiness.ca. But those founders also expressed they were not overly concerned with the matter.

When a startup joins up with an accelerator, it becomes associated with that brand, says one alumni entrepreneur in a phone interview.

“You want that other brand to be as credible as possible, so you don’t want lots of problems like that,” the entrepreneur said. “But my experience with Incubes is it was very well run and they knew what they were doing. I don’t think this is that big of a deal.”

Incubes has a 7.5 per cent stake in the entrepreneur’s firm. That’s the standard amount of equity the accelerator program takes in return for its services provided to startups. Determining the owner of the program would be necessary to distribute any financial returns from those companies.

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Jim Love, Chief Content Officer, IT World Canada

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Brian Jackson
Brian Jacksonhttp://www.itbusiness.ca
Editorial director of IT World Canada. Covering technology as it applies to business users. Multiple COPA award winner and now judge. Paddles a canoe as much as possible.

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