The University of Toronto Innovations Foundation on Monday opened the Exceler@tor and announced five new sponsors for the innovation centre.
Microsoft Canada Co., Microsoft Great Plains Business Solutions, Q9 Networks Inc., Spencer Stuart Inc. and J.L. Albright Venture Partners will provide some combination of software, support and industry expertise to the centre. Exceler@tor managing director Andrew Maxwell stressed the centre is not an incubator.
“The Exceler@tor does not take equity in the companies and provide funding; we encourage people to go the most appropriate place for financing,” whether that be an angel or a venture capitalist, Maxwell said.
Rather than cash, Exceler@tees receive use of the centre’s physical and technological infrastructure, including computers, phones and hosting services, as well access to the Exceler@tor’s staff expertise. Along with its relationships with venture capital firms, the Exceler@tor is also part of a network of 25 non-profit innovation centres around the world, giving Exceler@tees access to international resources should they decide to take their business global.
Rather than take a percentage of the Exceler@tees, the centre instead receives only a share of any profits the companies make, with the percentage depending on the amount of Exceler@tor services the company uses. The Exceler@tor recoups its costs from fees paid by each Exceler@tee, which are typically $1,000 per month.
There are currently eight Exceler@tees; three that tap into the centre’s services on a “virtual” basis, and five that either reside inside or are in the process of moving into the centre’s physical space. Companies involving students, faculty, staff and alumni of U of T, Ryerson University, University of Windsor, Trent University, York University and McMasterUniversity are eligible to become Exceler@tees, as are companies that have received funding from the Industrial Research Assistance Program, and other companies the centre deems eligible.
Justin Winfield, co-CEO of SonicBoomerang Inc., a multi-media content aggregator and one of the centre’s on-site members, said being an Exceler@tee has allowed his company to use Q9’s co-location services and avoid costs associated with “putting in furniture and getting phones.”
Despite the lack of hard dollar funding, Winfield said the Exceler@tor is an attractive option due to its not-for-profit philosophy.
“Frankly, we met NRG several times and know several of the startups that lived and died with that,” he said, referring to former incubator NRG Group. “We wouldn’t have touched it with a 10-foot pole.”
Rick Segal, a partner at J.L. Albright said the Exceler@tor has a more viable future than a traditional incubator because it is not under pressure to make money.
“You’re focusing more on the players than the (incubator or centre) itself,” Segal said, adding that the Exceler@tor is not fighting the multi-front war than engulfed failed incubators like NRG and Itemus Inc. “It becomes difficult to do, especially when the environment goes south.”
He said J.L. Albright’s sponsorship of the Exceler@tor is to stay close to the Exceler@tees that might not get noticed if not for the centre.
“Part of being in the venture capital business is looking for the next big thing. And a lot of things that come out of universities don’t get the funding they need.”
Maxwell said the combination of private and public sectors is key in making something the Exceler@tor work. He said that the more than 800 not-for-profit incubation-type centres in North America are in general doing quite well in spite of the limited success of the purely-private incubator model.
“You need a partnership between government, university and industry and I think we’re right in the middle of that,” Maxwell said of the Exceler@tor.
He said the Exceler@tor helps to raise Toronto’s profile as an innovation centre and to help Canada keep its best minds and attract the brightest foreign nationals.
“It’s to create the opportunities for innovation in Canada so that the best and brightest don’t have to go to the States,” he said. “That’s why I get up every morning.”