ONE - Building Global Winners ReportBUILDING GLOBAL WINNERS THE
EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF ENTREPRENEURS
Fall 2017
THE EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF
ENTREPRENEURS – Fall 20172
TABLE OF CONTENTS Letter from the Expert Review
Panel...................................................................
3
Executive Summary
.........................................................................................
4
Chapter One – Successes
...............................................................................
11
Conclusion
...................................................................................................
35
Appendix 1: List Of The One Members And Descriptions
................................... 36
Endnotes
......................................................................................................
37
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A LETTER TO THE MINISTER OF RESEARCH, INNOVATION AND SCIENCE FROM
THE EXPERT REVIEW PANEL
Our Expert Review Panel (the panel) was formed in the last quarter
of 2016 to assess the effectiveness and appropriateness of the
strategy, governance and
programs associated with the Ontario Network of Entrepreneurs
(ONE), with an emphasis on the Regional Innovation Centres (RICs),
and MaRS in particular. The five of us were chosen for our
expertise in venture capital, social enterprise and international
markets. Our group has first-hand experience dealing with the ONE
and similar international innovation networks.
Over the past 10 months, we traveled the province, from Ottawa to
Thunder Bay, conducting consultations with key members of the ONE
(network). We met with thought leaders in innovation policy, talked
to all levels of government in the field and poured over insights
from client surveys. We were also able to draw from Deloitte’s July
2017 program review of the ONE and MaRS that provided good source
material and guidance. Finally, we looked at how other
jurisdictions were meeting the innovation challenge to see if there
were lessons in best practices for Ontario to absorb.
Our findings and recommendations represent our combined assessment
of what is working well, what problems exist and what the
government should do to prepare for the next decade of growth of
Ontario’s innovation ecosystem. The report concludes that while the
ONE has many positives, there is a need to modify its structure and
approach to innovation in order to set the stage for continued
growth. The key themes addressed include a need to focus on “global
reach” for Ontario technology firms, and on centralization and
specialization of ONE members and their clients.
Gerry Remers Chair, Expert Review Panel Former President and COO of
Christie Digital Systems Canada Inc.
Andy Broderick VP of Impact Market Development, Vancity Community
Investment Bank
Ian Carew Director, Northleaf Capital Partners
JF Gauthier CEO, Startup Genome
The panel members would like to acknowledge the excellent support
we received from the staff at the Ministry. As well, we want to
thank the many contributors to this report – especially the key
members of the ONE who were very open with their concerns and who
collectively form the heart of Ontario’s innovation ecosystem. It
is their leadership and commitment that we need to channel as we
work together to build an even stronger innovation economy in
Ontario.
Gerri Sinclair Strategic Innovation Consultant and Managing
Director, Kensington Capital Partners
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EXECUTIVE SUMMARY
The speed and depth of technological change is astounding. A new
wave of platforms and technologies are set to transform the very
foundations of society,
from how we drive (or don’t drive) our cars to how we invest our
money or diagnose our health. Commerce is conducted increasingly by
algorithm. Huge data sets are spawning new industries. And all
these changes have unleashed a global innovation race, with cities,
regions and countries scrambling to get a piece of the economic
benefits at the risk of falling behind.
For the entrepreneur with a breakthrough idea, the challenge is to
navigate this dynamic terrain and turn that spark into a profitable
and successful company. For more than a decade Ontario’s Ministry
of Research, Innovation and Science (MRIS) has relied on its arm’s
length Ontario Network of Entrepreneurs (ONE) as its prime response
to that need. The ONE’s constellation of incubators and
institutions, support programs and advisory services has helped
nurture a culture of innovation in the province, with the number of
startups growing and world-leading research emerging from Ontario
universities and regional entrepreneurship.
Yet compared to its competition, which now extends from Taiwan to
Tel Aviv, Ontario’s innovation ecosystem remains stalled in the
middle-of-the-pack. Too few Ontario startups are plugged into
global networks of ideas, capital and customers. Nor is the
province producing enough companies that scale and compete
internationally. And too few are applying these breakthrough
technologies to address Ontario’s social and environmental
challenges.
This is not an academic problem. Building companies with global
reach is crucial to creating and attracting the high caliber jobs
that will entice the next generation of talented Ontarians to work
here, creating the communities and economy that will serve the
province.
So it is fair to ask, as the Minister of Research, Innovation and
Science has done of this panel, whether the ONE needs to make
adjustments. Is it adequately focused on identifying and helping
the companies most likely to succeed? Does it deliver the right
services and programs for entrepreneurs with global ambitions? And
as we face the next wave of disruption from technologies like
artificial intelligence, is a system that was designed for the
needs of a previous technological age ready to meet the
transformational challenges of the coming one?
The panel’s answer to the Minister is that the ONE needs
renovations to be ready for the next era. Our inquiry uncovered a
system that has grown organically over the last decade, resulting
in an unwieldy tool to deal with the accelerating pace of
technological change. The network needs a philosophical shift to
meet the challenges
4
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ahead, focusing more directly on Ontario’s core strengths and
connecting companies to global networks. Doing so will require
making changes to the way the current network is organized and
governed.
In short, we recommend that the Minister:
• Infuse Ontario’s innovation network with a greater global ethos
and strategic focus.
1. Focus the network’s strategic goal on “going global”.
2. Develop greater international reach by creating new programs
that connect Ontario entrepreneurs to the nexus of global knowledge
and markets from the earliest stages of their development.
3. Increase government spending, while targeting a greater weight
of those resources on sectors where Ontario has a competitive
edge.
4. Ensure firms can get expertise from the best mentors and
business leaders wherever they are in the province.
5. Improve the assessment mechanism of new and existing programs
and clients – and be willing to let go of those not meeting
expectations of the network.
• Strengthen the central “head office” functions of the network to
improve governance, program review and alignment to the province’s
strategic goals.
6. The network needs central coordination from inside the Ministry
of Research, Innovation and Science to ensure resources are focused
on priority sectors and technologies.
7. The ONE brand should be re-named (perhaps as “Innovation
Ontario”) to increase its profile and improve clarity among clients
about its mission and the services it offers.
8. An advisory body should be established to offer expert advice to
the Minister on innovation policies and programs.
9. Address the shortfall of investment capital through action on
the MaRS Investment Accelerator Fund.
10.The RICs should be grouped (and some re-named) in three
categories based on roles and responsibilities.
The ONE, buffeted by external forces as well as internal
challenges, is on the cusp of a new stage in its development. The
recommended steps outlined here are designed to prepare the network
to succeed in a transformational age, helping Ontario’s
entrepreneurs and innovators build the foundations of the
provincial economy for the decades ahead.
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OVERVIEW – A CHANGING GLOBAL ENVIRONMENT
The concept of innovation was not always embraced with the fervor
it enjoys today. Irish philosopher Edmund Burke surveyed the
political disruption caused by the
French Revolution and warned against its intolerant excesses;
lamenting that “a spirit of innovation is generally the result of a
selfish temper and confined views.”
But in the 20th century, innovation’s role in driving growth made
it a staple of economic theory. Its popularity has only accelerated
in the digital age. Since the 1990s, invoking the need to innovate
and embrace disruption (which Burke so feared) has become central
to the business and public policy vernacular among those seeking to
unlock the wealth of the next economic era.
Ontario has not been immune to innovation’s siren call. As far back
as 1987, the provincial government of the day sought to
better-connect industry with the publicly funded research being
done in academia and hospitals by creating the Ontario Centres of
Excellence (OCE). And in 2005, a host of provincially funded
programs and organizations aimed at developing a home-grown
innovation culture were pulled together under the auspices of the
Ontario Commercialization Network (OCN). Over time, it was renamed
the Ontario Network of Entrepreneurs (ONE) and provincial entities
such as Small Business Enterprise Centres (SBEC) and Business
Advisory Services (BAS) were included in the network.
Known by its acronym ONE, the network has evolved into a complex
web of 130+ independent not-for-profit organizations members that
span government agencies, university labs, incubators and industry
partnerships. All are aimed at supporting the growth of Ontario
businesses at different stages of development, from researchers
with promising ideas to startups with a new technology
product.
The ONE has grown through evolution rather than strict planning. It
was always intended to operate as a “mesh” network in which the
members and their business clients could be served according to
their needs, wherever they were in the province.
In fiscal 2016, the ONE received $97.7 million in provincial
funding, roughly on par with the level reached in 2014 when the
Campus-Linked Accelerators (CLAs) and On-Campus Entrepreneurship
Activities (OCEA) programs were introduced through the Youth Jobs
Strategy (YJS). The YJS was launched as a two-year strategy in 2013
and then extended for another two years in 2015. The largest
portion of funding of the ONE – $38 million in the 2016 fiscal year
– was delivered through the OCE, an intermediary organization
working with industry, academia and
CLAs & OCEAs
$97.7m
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government on R&D collaboration programs, commercialization and
entrepreneurship. Another $21.7 million funded MaRS, the
Toronto-based incubator that is one of 18 Regional Innovation
Centres (RICs) and which has become a coordinator to the wider
network. And $14.5 million went to the 50 Small Business Enterprise
Centres (SBECs) which work with municipal governments on the
creation and growth of local businesses [the SBECs are the subject
of a separate review].
Total MEDG/MRIS Funding to ONE members in fiscal 2016:1
CLAs & OCEAs 3%
OCE 39%
There is little doubt that an entrepreneurial spirit has been
rising in Ontario throughout the lifespan of the ONE. Ontario has
more startups today than it did a decade ago. The number of
startups in Toronto alone grew from 2,500 to 4,100 between 2012 and
2015, making it Canada’s top place to open a business.2
Yet the lifespan of the ONE has coincided with seismic changes to
the environment in which Ontario companies operate. Other
jurisdictions have piled into the innovation race, making the
competitive landscape riskier, faster-paced and more global.
Private sector incubators arose in Ontario and elsewhere alongside
those of the public sector. A host of new technologies and
platforms, from artificial intelligence to distributed block-chains
and more, are pushing disruption to new frontiers. Meanwhile
questions about how to protect and strategically manage Ontario
generated intellectual property (from foreign multinationals) and
how to ensure open access to data have become central to the fate
of startups and a healthy innovation climate.
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There are worrying signs that Ontario’s innovation system is stuck
at a regional level, with its competitive position slipping
relative to other jurisdictions. The 2015 Global Startup Ecosystem
Ranking showed Toronto fell nine places to 17th among its regional
peers (and that ranking did not include Asia’s hottest innovation
centres), while Kitchener-Waterloo fell out of the top 20 from its
16th place ranking in 2012.3
The Toronto-Waterloo corridor was combined into a single entity for
the 2017 Ranking, landing at 16th.4 We recognize that there is
volatility in these rankings from year to year. But we should not
ignore signs of Ontario’s main startup engines falling behind
global leaders on key performance measures such as company growth,
the number of company exits in which investors cashed in, and on
the amount of later-stage venture capital funding.
These weaknesses contribute to system-wide problems in Ontario
innovation:
• Ontario companies lack global reach, with only a small fraction
of small-and-medium-sized enterprises becoming strong
exporters.
• The percentage of small businesses that grow into mid-sized ones
has continued to fall since 2001.5
• Ontario startups have a poor record of graduating from incubators
to stand alone in the marketplace.
That performance begs the question of whether the ONE, as currently
constituted, is optimally positioned to help Ontario’s
entrepreneurs grow their businesses in a shifting, global
environment. And if not, what changes are required to ensure it
delivers the services Ontario businesses need to compete in what
has become a global innovation arms race?
This report lays out a diagnosis of Ontario’s innovation system and
makes recommendations to the Minister of Research, Innovation and
Science on steps the government might take to adapt for this
transformative era. This includes a fundamental shift on the way
the current network is organized and governed. It recognizes and
accepts that the roles and responsibilities of some members –
notably the OCE and MaRS – have expanded beyond their original
relationship to the ONE. This report and its recommendations deal
only with the work of those members as they relate to funding
received through the ONE.
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Briefly stated, the ONE needs:
• Greater strategic focus on building global reach. There is
increasing evidence to show that a company’s degree of global
connectedness is a harbinger of its future growth. Ontario
companies need to be better plugged into knowledge, ideas, people
and organizations in the world’s leading tech hubs, from Silicon
Valley to London, Boston to Berlin. The ONE needs to adopt a
strategic focus to help companies create those connections from the
earliest stages of their development.
• Stronger central governance. Strategic direction is hard to apply
across a network without a strong central authority. The ONE needs
stronger governance, located within the Ministry of Research,
Innovation and Science, to ensure the network’s players are aligned
to provincial priorities. This would allow for centralized data
collection to ensure network-wide funding accountability, as well
as common metrics to gauge whether a program’s performance goals
are being achieved.
• Regional Innovation Centres (RICs) to specialize in client
services and serve specific needs. RICs are serving more companies
at a time when provincial funding has been flat, stretching their
capacity to effectively deliver programs and services to clients. A
new grouping of RICs based on roles and responsibilities would
allow for greater specialization and collaboration, and return RICs
and other network members (such as the OCE) to their core mandates
as they pertain to the administration of ONE funding and program
delivery.
Our proposed recommendations may not be universally applauded. A
new model is disruptive to those vested in the status quo. Like all
jurisdictions, Ontario has local and regional sensibilities that
often see investments by government as a zero-sum game: if one
region benefits from some government policy, then surely another
must be losing.
Our investigation uncovered opportunities to encourage RICs to move
to greater specialization in regions that hold specific competitive
advantages rather than simply trying to expand their client base.
Indeed, the Ontario government must make hard decisions about where
our companies have the greatest opportunity to succeed in a rapidly
changing global economy, and the ONE must align its funding and
programs to this strategic direction.
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In examining the ONE we have heard terrific success stories that
left us encouraged about the state of innovation in Ontario. The
demand for the ONE’s services speaks to the emergence of a culture
in the province that values business creativity and an appetite for
risk that is vital to Ontario remaining an economic force in the
21st century. Our analysis and recommendations are designed to
foster that further, and to ensure that the government’s role in
the system is clearly defined, communicated and executed.
CHAPTER 1 Successes
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CHAPTER ONE – SUCCESSES
For generations of ambitious young Ontarians, the road to a
successful career ran through a big institution—the public service
or a large corporation, bank or law
firm. But that gravitational pull has weakened in the digital age.
Many of today’s graduates and young adults choose instead to pursue
the risks and rewards of building companies and new products on
their own. Culturally, startups are to this generation what rock
bands were to baby boomers: a creative outlet with social cachet.
Many of this century’s most celebrated icons are the founders of
the consumer digital era—Steve Jobs (Apple), Jeff Bezos (Amazon)
and Mark Zuckerberg (Facebook) —as well as next-wave entrepreneurs
like Elon Musk.
Silicon Valley’s potent formula of engineering skill, adventurous
venture capital, funding support from the Department of Defense,
and an eagerness to tinker has spawned envy and attempts at
imitation around the world. Ontario was no exception, launching a
variety of policies and programs through the first years of the
century designed to promote business-led innovation and
commercialize some of the research and knowledge within its higher
education system. Much of that “ecosystem” has since coalesced into
the ONE, a collection of organizations, programs, and services
spanning the full commercialization continuum to help businesses
grow from idea to market.
In the course of our inquiry, our panel found a great deal of
encouraging evidence that the ONE is having a positive effect on
entrepreneurship and innovation in Ontario. Among its
achievements:
1) The ONE’s members are deeply committed to their work and believe
in their mission.
Our discussions with members of the network found leaders and staff
deeply committed to their clients. Morale was high. Those working
in the system believe in the importance of their work to their
clients and the growth of the future economy.
2) The ONE has been a strong participant in nurturing a “startup
culture” in Ontario.
Ontario compares favorably to other jurisdictions on the number of
startups per capita and has sustained this growth in terms of the
number of startups created annually.6
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1.4
1.2
1.0
0.8
0.6
0.4
0.2
NOTE: Original chart modified 100% horizontal scale / 50% vertical
scale
2.05% 2.32% 2.34% 2.39% 2.43% 2.45% 2.62%
3.16% 3.19% 3.45%
NOTE: Original chart modified 100% horizontal scale / 92% vertical
scale
Apps Professional Services
Advertising Data and Analytics
Health Care Financial Services
Hardware Commerce and Shopping
Internet Services Software
Total Number of Startups Founded per 1,000 1.4 1.2 1.0 0.8 0.6 0.4
0.2 0.0
Ontario Silicon New London Berlin Tel Aviv Valley York
The ONE catalyzed the creation of 2,214 startups through On-Campus
Entrepreneurship Activities (OCEAs) along with Campus-Linked
Accelerators (CLAs) between 2014 and 2016 alone. The startups that
germinated from OCEAs and CLAs have a 91% two-year survival rate,
20% higher than the global average.7
Relative to peers, Ontario entrepreneurs are well supported by a
network of accelerators and incubators: 49 overall. According to
Deloitte, that is more than New York City, London, Berlin or Tel
Aviv.
3) The ONE has helped develop a clientele of entrepreneurs from a
wide variety of sectors.
The sectors served by the ONE range from app development to
e-commerce, healthcare and financial services. The largest share of
Ontario startups come from those involved in software, internet
services, and media and entertainment. Interestingly, technologies
oriented towards a specific end market (e.g., health care,
financial services) contain a relatively small proportion of the
firms, indicating a majority of firms most likely produce products
or services applicable across several sectors.8
Sectoral Composition of Startups in Ontario Apps
Professional Services Design
Content and Publishing Advertising
Financial Services Hardware
Mobile Sales and Marketing
Software
3.16% 3.19% 3.45%
0% 2% 4% 6% 8% 10% 12% 14% 16%
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There are several examples of regions in Ontario that have
developed sector- specific identities based on local assets and
capabilities. For example, Innovation Factory (iF), the RIC located
in Hamilton, has pulled together local health science assets in the
region, from St. Joseph’s Healthcare to McMaster University and
Mohawk College, leading to the creation of the Synapse Life Science
Consortium.
The ONE is also servicing Ontario’s emerging social enterprise
sector, small companies that seek to marry social and environmental
goals to healthy bottom- line results. For example, the Social
Enterprise Partnerships is a funding program, positioning the ONE
as the go-to source for social enterprise business fundamentals in
Ontario.
4) The Province’s investment in the ONE is paying dividends.
Evidence generated by Deloitte found startups that engage with the
ONE perform better than those that do not. Moreover, companies that
used services from the ONE were more successful at generating
private funding, had higher revenues and greater success in
generating patents.
Leveraging provincial money to get funding from other sources is
one of the main benefits of the network. For example:
• The OCE invested $44 million in companies in fiscal 2015,
enabling them to leverage an additional $40.6 million in federal
funding and $50.9 million from the private sector.9
• The MaRS’ Investment Accelerator Fund (IAF) has made 135
investments in high potential technology companies. Over 75% of
companies have received follow-on funding that accounted to
approximately $689 million. This represents 13.9 times invested
capital.10
• Since being designated a Sector Innovation Centre (SIC) for
information communication technology (ICT) in 2009, CommuniTech has
attracted $222.5 million from other public and private sector
partners to support its digital strategy.
The government data from 2016 indicates that the ONE helped 5,655
Ontario entrepreneurs open new businesses—20% more than five years
earlier. Those businesses created 14,160 jobs and brought 4,475 new
products, services and process improvements to market.12 Though
it’s unclear how many of startups and jobs would have been created
without the ONE. Entrepreneurs are not obliged to share credit for
their success.
5) The Ontario Centres of Excellence has grown into an essential
convener for collaboration between industry and the province’s
research institutions, and begun to reach global markets.
The Ontario Centres of Excellence (OCE) is the biggest single
player in the ONE and has a strong history of fostering innovation
in Ontario. The OCE was
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originally intended to accelerate industry academic collaboration
through the use of matching grants. Today, the OCE has become a
major vehicle for delivering and administering MRIS programs. It
has expanded its mandate to provide a variety of programs, such as
TargetGHG program, a $74 million GHG emissions reduction
technologies matchmaking initiative, and broadened the reach of its
startup and scaleup programs outside the province. Its annual
Discovery Event celebrates the best of Ontario innovation and has
become a must-attend gathering for innovators and
entrepreneurs.
The OCE is particularly effective at leveraging its provincial
funding into further investments from industry. As mentioned above,
the OCE has secured an additional $50.9 million in funding for its
clients in 2015 from its $44 million transfer from the Ontario
government. The OCE has incrementally increased sales by its client
companies by $165.2 million in fiscal 2015-16, a four-fold increase
over the previous year.13
6) The ONE has played a central role in broadening the innovation
system beyond established centres like Toronto and Kitchener-
Waterloo to reach all corners of the province.
The ONE has successfully nurtured startups outside the traditional
startup grounds of Toronto, Kitchener-Waterloo and Ottawa. Although
some concentration remains (and should be encouraged), the ONE has
ensured that the entrepreneur in Windsor or Sudbury has access to
capital, mentoring and a network of support.
SPOTL IGHT:
In Northern Ontario, the discovery of significant mineral reserves
including cobalt, silver and gold has played the major role in
settling new communities and developing resource extraction supply
chains for manufacturing. But mining faces enormous challenges, not
only from global competitors but on cost and sustainability
questions.
The Northern Centre for Advanced Technology Inc. (NORCAT) is a
Regional Innovation Centre (RIC) located in Sudbury. NORCAT’s
Innovation Mill partners with local entrepreneurs and existing
companies to help start and accelerate their innovation and growth.
NORCAT also has unique testing capabilities focused on the mining
industry and provides access to one of the few training mines in
North America.
In 2015, NORCAT made major investments in their Underground Centre,
a facility that allows local and international mining supply
companies to test and showcase their products.
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7) MaRS has emerged as a global player in the innovation space,
carrying the Ontario brand beyond the province’s borders and
attracting foreign investment.
MaRS began as an incubator but its presence in Toronto and its role
as a distributor of funds across the ONE has raised its workload
and profile. These factors have made it attractive to the
technology divisions of several multinational companies. The MaRS
incubator hosts 200 firms and organizations with 6,000 employees,
and its West Tower is home to blue-chip global innovation brands
such as Autodesk, Facebook, Airbnb, Etsy, Johnson & Johnson
(JLABS), and Merck.
MaRS is also mobilizing capital to close funding gaps. As of March
31, 2016, $100 million in capital was provided through MaRS
programs. This funding has leveraged an additional $700 million of
private capital in follow-on funding.14
MaRS now attracts hundreds of investors, corporate leaders and
“innovation tourists” from around the world. This map of 200
visiting delegations in 2015 shows interest in MaRS extends from
China to Brazil, India to Europe.
MaRS attracts hundreds of global visitors a year15
CHAPTER 2 Challenges
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CHAPTER TWO – CHALLENGES
The ONE has expanded organically and quickly over time. It has
added partners and mandates to its “mesh” network in response to
the needs of sectors and
regions as they emerged. It has become a go-to vehicle to deliver
policy initiatives and new programs from Queen’s Park that may only
tangentially fit the design of the network. The result is a system
that can appear operationally opaque, sometimes duplicates
services, and can lead to competition rather than cooperation among
the partners.
This chapter lays out the challenges facing the ONE, identifying
what needs to change if the model is to respond to a swiftly
changing global innovation landscape.
1) Ontario companies lack global reach.
Evidence suggests that Ontario startup companies stall before
reaching adequate size to compete globally. This issue is clear
when looking at the customer base of Ontario’s startups and the
percentage of those customers that are outside the continent (other
region customers).
Ecosystem % Other Region
Amsterdam 15% 28%
Stockholm 30% 46%
Montreal 13% 24%
Vancouver 18% 57%
Ottawa 11% 42%
Toronto 12% 42%
Waterloo 11% 43%
Specifically, the Toronto-Waterloo corridor ranks 34th globally to
the extent at which their startups have international customer
reach.16
Although the Toronto-Waterloo corridor has excellent connections
with New York City, Silicon Valley and other hubs in North America,
there is poor connectedness globally. Only 12% of Toronto-Waterloo
startups’ customer base comes from outside the continent compared
to 37% in Tel Aviv.17
This underscores the degree to which Ontario startups are focused
on selling in the province or just across the U.S. border. Lack of
global reach is a key factor hampering expansion of Ontario’s
startup ecosystem.18
Ecosystem Lifecycle Model
Phase 1 Phase 2 Phase 3 Phase 4 Activation Globalization Expansion
Integration
Glob al A
Rate of Early Stage Success
Part of the problem is that many startups may be reluctant to
“think globally” about their ventures. Anecdotally, innovation
experts shared the view that Ontario firms may not instinctively
prioritize global sales activity because they believe the local
market (which includes the United States) is sufficient to achieve
some level of sales.
There is evidence early-stage startups that show global market
reach see their revenues grow 2.1 times faster.19 Startup Genome
research concluded an ecosystem’s connection to entrepreneurs in
other top global ecosystems (i.e., connectedness to the global
fabric of knowledge, ideas, people and organizations), is a key
success factor leading to market reach and growth acceleration.20
Therefore, Ontario requires a paradigm shift to encourage companies
to more ambitiously “go global” from the earliest stages of their
development.
2) The ONE’s strategic goals are opaque.
The ONE lacks clearly articulated goals across the network. The
panel’s interviews with RIC leaders and staff found significant
confusion about the ONE’s targets—and how companies and RIC’s are
measured for success.
Among the strategic questions the ONE’s leadership needs to
resolve:
• Should members shift focus from helping startups to helping
businesses scale?
• Does the ONE emphasize technology plays or should it favour
innovative products that could make traditional industries and
sectors more competitive?
• Should the ONE lean towards serving companies that fill local or
Ontario demand, or should priority be given to companies with
global market ambitions?
Only by asking and answering fundamental strategic questions will
the network be able to operate in concert toward Ontario’s goal of
being a top ranking innovation jurisdiction.
3) The ONE lacks effective, active and transparent network-wide
oversight.
The ONE is currently governed by a patchwork of legal agreements
set out in its individual funding transfers, with almost no
effective oversight of system-wide funding. All ONE members are
separate legal entities and organizations.21
Each organization has its own corporate governance structure, with
independent boards and decision-making power.
Supervision of the wider network relies on two bodies:
1. ONE Advisory Committee – Created to provide general oversight
over the network, its programs and services and make
recommendations to support the implementation of the program
delivery model. The Advisory Committee has not met for more than
two years.
2. Individual ONE Member-Ministry Liaison Committees – Created to
manage the relationship between the two Ontario government
ministries that provide funding (MRIS and MEDG) and the individual
members delivers the funds and services. The committees monitor
performance against established goals, objectives, and performance
measures in the funding agreements.
This arrangement does not provide adequate system-wide
oversight.
• The committees fail to meet regularly, making its leadership
passive.
• The committees have grown unwieldy; the original membership of
eight ballooned to 26 members, without increased coordination or
delineation of responsibilities.
• There is not enough coordination between the committees and
MRIS.
• There is an unsatisfactory level of transparency on how the
committees make decisions.
The lack of strong, activist governance prevents the ONE from
developing a clear strategy and strategic goals. It creates
unnecessary confusion among the RICs and clients about what is
expected of them in return for funding. And it inhibits
network-wide data collection and funding accountability.
The lack of central governance discipline opens the path for RICs
to compete with each other and duplicate services. Furthermore, it
prevents RICs from having a longer-term view of how and when
funding will come. This inhibits their ability to plan and hire
staff accordingly and affects their ability to deliver the highest
quality of service to businesses.
The vacuum in central leadership has been filled, in part, by MaRS,
which has expanded its role as a RIC into that of a provincial
coordinator, overseeing network-wide activities such as metrics and
survey administration through MaRS Data Catalyst and Market
Intelligence. MaRS also distributes public sector funds across the
ONE through the Investment Accelerator Fund (IAF) and the Business
Acceleration Program (BAP).
But this expanded mandate for MaRS has created confusion – and at
times tension – among other RICs, who question where
decision-making power on funding resides. It opens at least the
perception of bias for MaRS as both a provider of services (funder)
to the businesses it incubates, while simultaneously being an
intermediary of which businesses are funded through network-wide
programs such as the IAF.
4) The ONE’s funding is flat.
Provincial money is the oxygen of the ONE system. It pays for the
innovation infrastructure and programs, and is a vital prerequisite
for leveraging capital from the private sector. But the current
funding model is unable to deliver the predictability that members
need to plan.
For example, the RICs core funding has been flat since 2010 even as
the network continues to expand its numbers of clients and the
services it delivers. Funding was based on a 4-year budget forecast
prepared by each RIC. However, unanticipated demand for RIC
services has led members to scramble for more resources to
adequately serve their increasing client base.
The current budget of the ONE is unlikely to generate the desired
outcomes of Ontario’s becoming a top tier innovation
jurisdiction.
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200$0
Thousands
Thousands $2,000
odified 1 1
vertical scale
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THE EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF
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5) The ONE’s funding and delivery model makes longer-term planning
difficult. It also leads to tensions among network partners.
The panel sees the current delivery model (i.e., the funding and
planning cycle) as an obstacle to growing Ontario businesses,
largely because it prevents long term planning. The fragmentary
distribution leads to duplication and inefficient accounting for
spending. The Ontario government currently uses both MaRS and the
OCE as a vehicle to flow funding to deliver ministry programming,
which has led to an unintended expansion of both their
administrative size. And by allowing some members of the system to
play a role in how funds are distributed, the current model has
contributed to tensions between members.
For example, there is a perception across the RICs that MaRS’ BAP
responsibilities extend beyond a purely administrative role and
include funding decision-making responsibilities. This creates
tension between MaRS and the RICs. Other RICs do not know if MaRS
is giving them funding or taking funding away from them. In our
interviews with RICs, the question “Is MaRS my boss or my peer?”
was frequently raised.
Furthermore, the panel believes its role as a distributor of
funding stretches MaRS’s capacity to serve its own clients, a
possible explanation for MaRS’s lower levels of client satisfaction
in the Net Promoter Score (NPS), a standard measurement of customer
experience and how likely they are to recommend the organization to
a friend or colleague. Just 39% of MaRS’ clients who responded to
the 2017 BAP Survey said they would recommend MaRS to other
potential clients – the lowest of any RIC. On average the
“willingness to recommend a RICs service to a friend or colleague”
was 63% across the other RICs.23
There are other possible explanations for this discrepancy,
including the potential that MaRS carries the pressure of greater
expectations because of its profile. Some members of the panel
argue that early-stage startup founders are not a reliable judge of
impact. But overall, the panel was concerned by the sentiment.
Deloitte’s analysis of the BAP survey results suggested the level
of dissatisfaction experienced at MaRS, at both the organizational
and individual service level, is the result of MaRS being stretched
too thin due to high client volumes.
6) The individual parts of the ONE operate independently,each
providing their own “back office” support that leads to fragmented
data collection and higher administration costs for the
network.
Each member (OCE, RICs, CLAs and SBECs) within the ONE operates as
an independent entity. Each has its own back office that handles
accounting, data collection, legal arrangements and performance
metrics. The lack of system-wide knowledge about clients, built on
a single customer relationship management (CRM) software system,
leads to misuse like the practice of “RIC-shopping” where
businesses rejected by one part of the network for support simply
try to
THE EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF
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get it from another. Meanwhile, as each RIC expands, it further
strains its own back office capacity and, potentially, the
resources it can devote to serving each client.
In short, this atomized approach to program monitoring hampers the
ONE’s ability to function as a true network, with negative
consequences for its effectiveness and Ontario’s overall innovation
brand.
7) The ONE continues to suffer from a lack of investment capital at
early stages in particular.
There are significant funding gaps, specifically for early stage
companies. Early-stage funding (i.e., the sum of seed and Series A
funding) is one of the most relevant indicators of the sufficiency
(or lack) of local funding, because from Series B and especially
for later rounds, capital markets are international rather than
local. While more and more jurisdictions are increasing their
innovation budgets, Ontario has not gone up in the 2017 Global
Startup Ecosystem Ranking with the ONE’s current investment:
• The Toronto-Waterloo corridor has reached a level of early-stage
funding per startup of $0.44 million, rivaling top global
ecosystems: $0.76 million for Silicon Valley, $0.57 million for New
York City, $0.48 million for Berlin, and $0.45 million for Los
Angeles and London.24
• Ottawa has a funding gap per startup of $0.14 million versus the
numbers above.25
While the total amount of venture capital in Ontario is increasing
(up from $1.2 billion in 2015 to $1.8 billion in 2016), the
province’s startups still trail leading jurisdictions in average
deal sizes per round.26 Overall dollar amounts and rankings are
highly volatile.
Startup Genome analysis reveals that Canada’s early-stage funding
is low compared to the United States.27 Thomson Reuters data shows
that average Canadian financing remains small at $8.26 million per
deal in 2016 (though up from $5.1 million in 2015), with the
average deal size is far behind the U.S., U.K., Israel and
China.28
The lack of early-stage funding could be a reason for our inability
to scaleup in Ontario. If the highest potential startups find it
more difficult than their counterparts in better resourced
ecosystems to raise appropriate amounts of seed and Series A
funding, they are less likely to accelerate (or survive) to the
scaling phase of their lifecycle.
CHAPTER 3 The Way Ahead
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CHAPTER THREE – THE WAY AHEAD
The last decade has been a period of remarkable flowering of an
entrepreneurial ethos in Ontario, visible in the number of startups
and an expansion of public
and private sector partnerships in innovation. That success
suggests the ONE has played an important role and should continue
to play a leading role in fostering further growth.
For Ontario startups, competition is just as likely to come from
Singapore or Berlin as from the startup across the street. New
technologies and platforms have emerged, making the innovation
landscape not only broader but dependent on factors, such as access
to big data sets and intellectual property protections.
The global innovation economy is increasingly driven by a leading
group of urban regions.
These innovation hot spots have several common features:
• strong academic institutions
• a rich pool of startups and innovative global companies
• an abundance of risk capital
• government support and focus on innovation
• access to open, dynamic markets (at home and abroad)
• interactions and collaboration between science, startups,
business, and creative industries (convergences)
Ontario’s innovation ecosystem is strong in some – but not all of
these areas. Thus the ONE requires a significant reboot if the
province is to keep pace in a global race.
Three themes emerge:
1. The ONE must adopt a strategic focus on going global, developing
programs that plug Ontario companies from the earliest stages of
their development into global markets and knowledge hubs.
2. The ONE needs greater centralization of purpose and coordination
to articulate and drive its strategic goals, as well as to govern
its mesh network. This requires a central body within government to
assume responsibility for network- wide back office functions like
program design, data collection and funding accountability.
3. The delivery end of the system – RICs, CLAs and other partners –
should focus on delivering services to clients and have the freedom
to specialize, either in local strengths, company size or specific
sectors.
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Our recommendations fall into two categories:
I. GO GLOBAL
Recommendation 1 Focus the network’s strategic goal on “going
global”.
The Minister’s top priority should be to focus on building global
reach in Ontario’s ecosystem to become a top 10 jurisdiction in
sectors or technologies where Ontario has a competitive
advantage.
There is increasing evidence to show that a company’s degree of
global connectedness is a harbinger of its future growth. Ontario
companies need to be better plugged into knowledge, ideas, people
and organizations in the world’s leading tech hubs, from Silicon
Valley to London, New York City to Berlin. An example is Israel’s
organization called “Start-up Nation Central” helps global
companies connect with thousands of Israeli startups and Research
and Development centres. These relationships enable Israeli
startups to grow globally from a very early stage. While some
members (such as MaRS, CommuniTech, and Invest Ottawa) are pursuing
stronger global ambitions, the ONE needs to adopt a network-wide
strategic focus on helping companies create global connections from
the earliest stages of their development.
Given the maturity of Ontario’s innovation ecosystem, there are
several fields of technology which have shown scale and momentum,
such as artificial intelligence and advanced computing. Potential
sectors to consider may be advanced manufacturing, digital/ICT,
clean technologies, and health sciences.
By clearly articulating a vision in a way that it can be easily
accessed, understood and disseminated, the entire network would
work together on shared goals.
Recommendation 2 Develop greater international reach by creating
new programs that connect Ontario entrepreneurs to the nexus of
global knowledge and markets from the earliest stages of their
development.
A startup’s fate is often determined early, when it first
identifies a problem to be solved or an untapped market opportunity
to be exploited. If we want Ontario companies to scale to global
size, they need to have that outlook from the earliest days,
seeking borderless opportunities for new products and
services.
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In turn, support from the ONE needs to focus on startups that
demonstrate a global view of customer development. While it is not
possible to precisely predict which companies will be among the one
per cent or so to flower into global firms, the focus of the ONE’s
support should be on nurturing those that are aimed that way from
the start.
Ontario companies must be aware of – and adopt – the best business
practices from the great centres of global knowledge and
technology. That means being engaged not only with Silicon Valley
and New York, but to global innovation centres in Europe and Asia
such as Tel Aviv, Berlin and Singapore. Top innovation ecosystems
are centres where global customers are found because startups from
all over the world compete there, and where entrepreneurs are
knowledgeable of global market needs. For example, in the software
sector the key global markets are primarily Silicon Valley, London
and New York City.
The panel recommends investing in new tactics to enhance global
reach, as well as allocating a large part of the network’s program
budget to executing these strategies. Below is a summary of
examples of programs that are on track and direction for
others:
a) Establishing global connections along the same lines as leading
private sector accelerators, to help startups develop quality
relationships with entrepreneurs in global markets.
For example, Techstars, Mass Challenge, 500 Startups and
Startupbootcamp are accelerators that provide access to
international capital, mentorship, marketing, business development,
customer acquisition, and talent recruitment. Techstars
accelerators are based in leading innovative jurisdictions around
the world, including New York City, Berlin and Tel Aviv.
b) Delivering more robust matchmaking services, in which government
resources help companies develop sales channels abroad.
• One particular example is Finland’s Finnpartnership’s Matchmaking
Services. This approach would help broaden the local entrepreneur’s
network and can promote the large presence of Canadians in places
like Silicon Valley, New York City and London.
• The panel recognizes that some of this work is happening under
the mandate of the Ministry of International Trade (MIT), but more
connections need to be made with the ONE.
c) Developing a think tank that would provide a platform for
academics and industry leaders to study best practices in “going
global”.
d) Hosting an international startup event bringing global
entrepreneurs to Ontario.
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e) Encouraging foreign entrepreneurs to come to Ontario, thereby
promoting global networking and partnerships.
For example, Hong Kong has started paying part of the salary of
their entrepreneurs that intern with Silicon Valley firms. Another
example of global network building is the Israeli Innovation
Authority’s 12 “landing pads” for foreign entrepreneurs as part of
an Innovation Visas program.
f) Leveraging Ontario’s foreign national community to increase
global collaboration. There may be lessons for Ontario from Startup
Genome’s Pay it Forward Project, for example.
g) Increasing international collaboration through program
criteria.
For example, the Ontario-Israel Research Network Program Magnet
(managed by the OCE but currently outside the ONE), is a successful
model. The Magnet program’s current challenge is focused on
cybersecurity needs in Ontario’s fintech sector. Applications must
include at least one SME from Ontario, one SME from Israel, and one
partnering financial institution from Ontario.
h) Launching an overarching web presence to showcase Ontario’s
brand to other governments, investors, and global jurisdictions.
This would make it easier for foreign firms to identify innovative
companies, hubs and sponsors in Ontario.
Recommendation 3 Increase government spending, while targeting a
greater weight of those resources on sectors where Ontario has a
competitive advantage.
Ontario competes against dozens of other jurisdictions that are
increasingly investing in their startup ecosystems. The Ontario
government should consider both increasing funding and directing
resources at those technologies, companies and sectors that have
the best chance of success. The panel recommends a significant
increase in the total innovation budget to meet the network’s goal
of becoming a top 10 innovation jurisdiction.
Increased investments must be aimed at a narrower number of sectors
and companies where Ontario has a competitive edge or opportunity
to compete globally. The panel recognizes there are budgetary
restraints, but is compelled to recommend that both a budget
increase and changes in how resources are allocated throughout the
network will have the biggest impact. Directing the ONE to focus on
targeted technology types or sectors of the economy will help to
amplify existing areas where Ontario has a competitive advantage.
This would orient the ONE towards scaling Ontario’s innovation
capabilities towards global competitiveness.
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Additionally, the network requires measurable performance goals in
these areas of competitive advantage. The panel recommends that
performance goals are set for each local ecosystem (including each
RIC) based on regional strengths. These strengths will be
determined by local companies, universities, any large technology
firms, and emerging clusters. This differentiation will help to
focus funding and set targets in priority areas that will have the
biggest impact.
Recommendation 4 Ensure firms can get expertise from the best
mentors and business leaders wherever they are in the
province.
Too many of Ontario’s early stage companies underperform and
underfund the management of international sales and marketing which
are linchpins of a firm’s long-term success. Support in these areas
would help companies overcome the perceived lack of global ambition
and promote greater business planning, with a particular focus on
“going global”.
The panel recommends that the ONE should increase funding to
programs such as the Entrepreneurs in Residence (EIR) which
provides advice to startups and businesses from a recruited body of
mentors. The panel was impressed by the effectiveness and
popularity of the program with clients. The Minister should
consider expanding the program to include high priority areas like
management of international sales and marketing.
Another idea is creating a database and a virtual forum of sector
experts to support business development in the province. This tool
would share resources, mentors and knowledge to increase collective
expertise in sectors like big data, artificial intelligence,
biotech and diagnostics, etc. Even though the expert could be based
locally, his or her objectives would be provincial in scope.
The panel was also intrigued by the Deloitte recommendation to
offer an equity incentive to the mentors as a way to attract the
most qualified leaders possible to the EIR program.
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Recommendation 5 Improve the assessment mechanism of new and
existing programs and clients—and be willing to let go of those not
meeting expectations off the network.
The ONE requires a system-wide method to evaluate its programs. The
panel was surprised to discover that additional programs and
investments are being considered for the ONE without evaluating the
current suite of programs that may be underperforming. The panel
felt limited in their ability to make program specific
recommendations because existing program assessment models were
unsophisticated (i.e., the Net Promoter Score) at best.
The Ministry should identify a robust framework or model to
quantify and evaluate the impact of the ONE’s programming, and
specifically break down their effectiveness. For example, the
objectives of an accelerator include increasing local connectedness
between entrepreneurs, investors, customers, etc. This can easily
be measured. A stronger approach to program evaluation will make it
easier to make decisions on where to cut, reduce, or increase
funding. Centralized data collection would ensure network-wide
funding accountability, as well as common metrics to gauge whether
a program’s performance goals are being achieved. This can easily
be measured by data-driven frameworks such as the one developed by
Startup Genome.
Indeed, the Ontario government must make hard decisions about where
our companies have the greatest opportunity to succeed in a rapidly
changing global economy, and the ONE must align its funding and
programs to this strategic direction. For their part, the RICS must
evaluate clients more strictly on their performance and ability to
reach explicit targets. A CRM-like tool could track client
performance, helping RICs make hard choices about whether to drop
some companies from their client base.
The UK’s Future Fifty Program offers a good model for evaluating
companies across the network. The program selects the country’s
highest growth potential firms and customizes programming to help
them scale. The panel recommends adopting the OECD criteria for
“gazelles” (i.e., firms up to five years old with at least 10
employees and average annualized growth greater than 20% over a
three year period) to qualify for specialized scaleup
support.
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II. CENTRALIZE AND SPECIALIZE
Recommendation 6 The network needs central direction and management
from inside the Ministry of Research, Innovation and Science to
ensure resources are focused on priority sectors and
technologies.
A central body should be constituted and positioned within the MRIS
in the same way that the Ontario Investment Office sits as a
quasi-agency inside the Ministry of Economic Development and
Growth.
This central body’s functions would include:
• Establishing innovation priorities to ensuring clarity of purpose
throughout the system.
• Assuming funding and accountability functions for programs
currently administered by MaRS and OCE to improve transparency in
the system.
• Serving as the back-office administrator of data collection,
client surveys and reporting – acting as a single, open repository
for the network. We strongly urge the Minister to transfer these
responsibilities from MaRS Data Catalyst and OCE to MRIS.
• Setting performance standards and metrics for measuring
success.
• Providing the Government of Ontario with a marketable brand for
all its innovation activities, to ensure clarity of mission across
the system.
• Promoting collaboration across the system by encouraging RICs and
others to specialize, funneling clients to the part of the system
that can provide the most appropriate support.
• Representing and connecting Ontario with other levels of
government and jurisdictions.
Recommendation 7 The ONE brand should be re-named (perhaps as
Innovation Ontario) to increase its profile and improve clarity
among clients about its mission and the services it offers.
The Ontario Network of Entrepreneurs is a little-known brand and no
longer conveys the breadth and scope of the work carried out by the
network. Ontario’s innovation system requires a new identity that
will make clear which public body speaks for all of Ontario
innovation, locally and internationally.
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Recommendation 8 An advisory body should be established to offer
expert advice to the Minister on the network’s innovation
priorities.
The Minister should have a standing body of advisors to provide
guidance and information on the network’s innovation priorities in
the province. The Minister will determine the advisory body’s
composition, but we recommend representation from the system’s
biggest members (OCE, MaRS, CommuniTech, Invest Ottawa), as well as
industry and academic experts, from Ontario and outside the
province.
The proposed composition would ensure that advice is aligned across
network to reduce duplication and strengthen efficiencies. Greater
clarity and focus on organizational mandates should be
provided.
Recommendation 9 Address the shortfall of investment capital
through action on the MaRS Investment Accelerator Fund.
The Investment Accelerator Fund (IAF) is the primary mechanism
through which the Ontario government provides seed funding to
companies. Although the IAF has met with success, it is limited in
its ability to grow companies given its strict $500k investment
cap.
The panel recommends that the investment profile of the IAF remain
intact but suggests a number of options to increase its impact to
Ontario based companies:
• Re-inject capital into IAF so it can increase its number of
investments.
• Increase the IAF’s initial investment threshold from $500k to $1
million.
• Create a matching fund that would invest pro rata alongside the
IAF’s investments.
• Permit the IAF to make follow-on investments in its portfolio of
high potential companies (i.e., the “winners”).
These potential solutions would increase the amount of private
capital available to the Ontario ecosystem.
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Recommendation 10 The RICs should be grouped (and some re-named) in
three categories based on roles and responsibilities.
In the future state of the network, every RIC would continue to
serve startups requesting support, preserving the “no wrong door”
philosophy to service delivery that currently exists. However, the
new grouping would allow for better triaging of clients to the
appropriate center of expertise based on sector, technology, or
company size.
However,
• Local Innovation Centres (LICs) will focus on local economic
development. They will support innovative/technology companies not
yet ready to scale, and collaborate with other local organizations
such as the Small Business Enterprise Centres to support the
improved adoption of technology among local businesses. LICs will
be expected to funnel clients requiring specialized services to the
most appropriate larger RIC.
• Regional Innovation Centres (RICs) would specialize in sectors
and technologies in which their region has a competitive advantage.
For example, Sudbury would continue to specialize in mining-related
technologies. This would also allow clients to access a host of
locally based assets, support and expertise. Those firms that have
global market potential and that require deeper support (from
higher levels of investment to export development) will be handed
off to:
• Provincial Innovation Centres (PICs). This category includes the
largest parts of the current ONE: MaRS, CommuniTech, and Invest
Ottawa which are already building global connections.
The panel suggests that program budgets be allocated differently to
each level (LIC, RIC, and PIC) based on the objectives of the local
ecosystem. The funding model should reflect the variation between
the groupings and allocate resources accordingly to address program
gaps. For example, additional funding should be directed to
Toronto, Waterloo and Ottawa for programs focused on increased
global connectedness compared to the earlier phase ecosystems
(LICs), that may receive greater funding for “activation phase”
programs (such as incubators, co-working spaces, startup
events).
Lastly, the panel believes that this new grouping of the RICs would
allow for greater specialization and collaboration, returning RICs
and other network members such as the OCE to their core mandates
and responsibilities. In the network’s future state, MaRS will
serve solely as a PIC and the OCE will focus on industry academic
collaboration. The role of Innovation Ontario will be to coordinate
the activities across insofar as they apply to the network. This
will ensure that members are clear – and are able to execute – on
the priorities and strategic goals as established by MRIS.
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CONCLUSION
To innovate means to do something differently. Why is innovation so
important? It is important because our economy, environment and
society is transforming
at a faster rate than at any point in our history. The Nobel
Prize winning Professor Robert Solow, understood this relationship
to change as far back as 1957, in his paper “Technical Change and
the Aggregate Production Function” where he found that the
introduction and adoption of new technology can impact a nation’s
gross domestic product by over 80%. Without a constant eye to
change and adapt, Ontario’s economy risks losing ground in the
global innovation race.
Our advice to the Minister is clear: Re-orienting the ONE for the
coming decade demands a greater global sensibility to connect
Ontario companies to international markets and ideas. Getting there
will require building a more centralized system of direction and
governance, while pushing the RICs to specialize on regional or
sectoral strengths. The ONE is at a critical inflexion point in its
evolution and more action is required to meet the needs of
Ontario’s entrepreneurs and researchers in an ever transforming
economy. Only then will Ontario be recognized as a leading
jurisdiction globally for entrepreneurs to start and grow their
businesses.
THE EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF
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APPENDIX 1: LIST OF THE ONE MEMBERS AND DESCRIPTIONS
MEMBER DESCRIPTION # MEMBERS
Regional Innovation Centres (RICs)
RICs are regionally based, multi-stakeholder, not-for-profit
organizations that are driven by the private sector to identify a
region’s competitive advantages and establish a vision for the
future. They are aligned with ONE and are responsible for regional
service delivery.
18
MaRS Discovery District
MaRS connects the communities of science, social innovation,
business and capital to create an efficient commercialization
marketplace in Ontario. Its community is built through a mix of
co-location, catalytic programs and services, and structured
networks. MaRS is uniquely anchored within the MaRS Centre, but
extends virtually through the MaRS Portal and MaRS Networks
throughout the province.
1
An innovation intermediary working with industry, academia and
government on industry-academic R&D collaboration programs,
commercialization and entrepreneurship.
1
Provide innovation and commercialization support in key priority
sectors of cleantech, ICT and the bioeconomy. 4
Angel Investors Ontario (AIO)
Angel investment continues to be important in growing early-stage
Ontario companies. Angel Investors Ontario (AIO) bring accredited
investors together with entrepreneurs and companies seeking
investment for mutual benefit. Formal Angel groups help make this
process efficient.
1
Small Business Enterprise Centres (SBECs)
Work with municipal governments to support the start-up and growth
of local “main street” businesses. 50
Business Advisory Services (BAS) Accelerate export oriented,
high-growth or high-growth oriented firms. 12
Institutions with Campus- Linked Accelerators (CLAs)
CLAS support expansion and scaling of world-class innovation and
entrepreneurial programs at incubators and accelerators which exist
at Ontario’s university/college campuses.
15
OCEAs support expansion and scaling of world-class innovation and
entrepreneurial programs at incubators and accelerators which exist
at Ontario’s university/college campuses.
29
36
THE EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF
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5
10
15
20
25
ENDNOTES 1 Deloitte Interim Report, March 2017 (see appendix for a
list of acronyms and ONE member descriptions).
2 Startup Compass Inc. (2015). JF Gauthier: Waterloo Startup
Ecosystem Report,
https://startupgenome.com/waterloo-the-david-vs-goliath-of-startup-ecosystems/.
3 Ibid.
4 Toronto Waterloo Start-up Ecosystem Analysis, Startup Genome,
2017.
The Scale Up Challenge: How Are Canadian Companies Performing?, BDC
Report, September 2016.
6 Startup Compass Inc. (2015). JF Gauthier: Waterloo Startup
Ecosystem Report,
https://startupgenome.com/waterloo-the-david-vs-goliath-of-startup-ecosystems/
Note: Comparator jurisdictions selected based on available data and
adjusted per 1,000 capita.
7 The Ontario Centres of Excellence (OCE) Annual Report,
2015-2016.
8 Deloitte Final Report, July 2017, Data is based on Crunchbase,
2016. Note: Deloitte’s analysis indicates firms may operate in
multiple sectors.
9 The Ontario Centres of Excellence (OCE) Annual Report,
2015-2016.
MaRS IAF Presentation to the Expert Panel, May 2017.
11 Communitech SIC Final Report, September 2017.
12 MRIS data for fiscal year beginning in April 2016, August
2017.
13 The Ontario Centres of Excellence (OCE) Annual Report,
2015-2016.
14 MaRS Presentation to the Expert Panel, December 2016.
Ibid.
17 Ibid.
18 lbid.
19 Startup Compass Inc. (2015). JF Gauthier: Waterloo Startup
Ecosystem Report,
https://startupgenome.com/waterloo-the-david-vs-goliath-of-startup-ecosystems/.
Startup Genome (2017). JF Gauthier: The Need for Global
Connectedness, Global Startup Ecosystem Report 2017, 20-23,
https://startupgenome.com/report2017/.
21 Note: The only exception is Business Advisory Services (BAS)
which is delivered through the Ministry of Research, Innovation,
and Science (MRIS) and the Ministry of Economic Development and
Growth (MEDG).
22 Deloitte Interim Report, March 2017.
23 2017 BAP Survey Results, Deloitte Presentation, March
2017.
24 Startup Genome (2017). Global Startup Ecosystem Report 2017,
https://startupgenome.com/report2017/.
lbid.
26 Ministry data, September 2017.
27 Startup Compass Inc. (2015). JF Gauthier: Waterloo Startup
Ecosystem Report,
https://startupgenome.com/waterloo-the-david-vs-goliath-of-startup-ecosystems/.
28 Canadian Venture Capital Review Full Year 2016, Thomson
Reuters.
NOTES
THE EXPERT REVIEW PANEL REPORT ON THE ONTARIO NETWORK OF
ENTREPRENEURS – Fall 2017 39
Structure Bookmarks
TABLE OF CONTENTS.
A LETTER TO THE MINISTER OF RESEARCH, INNOVATION AND SCIENCE FROM
THE EXPERT REVIEW PANEL
EXECUTIVE SUMMARY
Total MEDG/MRIS Funding to ONE members in fiscal 2016:1
CHAPTER 1. Successes
CHAPTER ONE – SUCCESSES.
1) The ONE’s members are deeply committed to their work and believe
in their mission.
2) The ONE has been a strong participant in nurturing a “startup
culture” in Ontario.
Total Number of Startups Founded per 1,000
3) The ONE has helped develop a clientele of entrepreneurs from a
wide variety of sectors.
Sectoral Composition of Startups in Ontario
4) The Province’s investment in the ONE is paying dividends.
5) The Ontario Centres of Excellence has grown into an essential
convener for collaboration between industry and the province’s
research institutions, and begun to reach global markets.
6) The ONE has played a central role in broadening the innovation
system beyond established centres like Toronto and
Kitchener-Waterloo to reach all corners of the province.
7) MaRS has emerged as a global player in the innovation space,
carrying the Ontario brand beyond the province’s borders and
attracting foreign investment.
CHAPTER 2. Challenges
CHAPTER TWO – CHALLENGES
Ecosystem Lifecycle Model
3) The ONE lacks effective, active and transparent network-wide
oversight.
4) The ONE’s funding is flat.
5) The ONE’s funding and delivery model makes longer-term planning
difficult. It also leads to tensions among network partners.
6) The individual parts of the ONE operate independently,each
providing their own “back office” support that leads to fragmented
data collection and higher administration costs for the
network.
7) The ONE continues to suffer from a lack of investment capital at
early stages in particular.
CHAPTER 3. The Way Ahead.
CHAPTER THREE – THE WAY AHEAD
Our recommendations fall into two categories:
I. GO GLOBAL
Develop greater international reach by creating new programs that
connect Ontario entrepreneurs to the nexus of global knowledge and
markets from the earliest stages of their development.
Recommendation 3
Increase government spending, while targeting a greater weight of
those resources on sectors where Ontario has a competitive
advantage.
Recommendation 4
Ensure firms can get expertise from the best mentors and business
leaders wherever they are in the province.
Recommendation 5
Improve the assessment mechanism of new and existing programs and
clients—and be willing to let go of those not meeting expectations
off the network.
II. CENTRALIZE AND SPECIALIZE.
Recommendation 6
The network needs central direction and management from inside the
Ministry of Research, Innovation and Science to ensure resources
are focused on priority sectors and technologies.
Recommendation 7
The ONE brand should be re-named (perhaps as Innovation Ontario) to
increase its profile and improve clarity among clients about its
mission and the services it offers.
Recommendation 8
An advisory body should be established to offer expert advice to
the Minister on the network’s innovation priorities.
Address the shortfall of investment capital through action on the
MaRS Investment Accelerator Fund.
Recommendation 10
The RICs should be grouped (and some re-named) in three categories
based on roles and responsibilities.
CONCLUSION.
ENDNOTES.
NOTES.