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31 December 2014

Tech Transfer Regions: Canada

This month's regions piece focuses on the rapid growth of Canada into the university innovation scene.

Author: Gregg Bayes-Brown, editor

Canada is going through something of a golden age, not only in terms of tech transfer, but university innovation as a whole. The country’s tech transfer efforts are fundamentally different from those in the UK or the US. Unlike the US, where the Bayh-Dole Act governs intellectual property (IP) rights in government-funded research, Canada’s universities are more or less left alone to develop their own regulations for tech transfer, similar to how Sweden’s “professor’s privilege” law gives the academic inventor full rights.

This situation has created freedom for institutions, but also presents its own set of problems when it comes to developing a network to support academic entrepreneurship. However, whereas Sweden’s tech transfer system is disjointed and fragmented, Canada has been able to fill the void with an intricate and well-connected mix of organisations all geared to supporting university innovation.

One of drivers behind this cohesion is the Ontario Network of Entrepreneurs. The network consists of academic institutions within Ontario, 17 regional innovation centres, such as Mars Innovation, focused on technology companies, and a group of small business centres.

One of the organisations working with that network to bridge the innovation gap is Ontario Centres of Excellence (OCE). Established in 1987 by the provincial government, OCE is looking to bring together academic institutions and the private sector, both corporates and investors, with the aim of producing spin-out companies and getting IP licensed.

OCE is working with every academic institution in the province, the most focused area for research in the country, with 44 of the 90 Canadian institutions. Traditionally, it splits its activities into two categories. One is research and development collaboration, where OCE sets up and funds projects between companies and research institutions. The other focuses more directly on the commercialisation of research stemming from the institutions.

Frequently, IP generated by research collaborations will not initially be picked up, so OCE will step in to invest and support further development. OCE has a market-readiness investment fund, which is split into two stages. At the first stage, the organisation invests up to C$25,000 ($21,470), and at the second stage, it will co-invest with other investors for up to $250,000. OCE also works closely with larger investors, such as Omers Ventures, the venture arm of the Ontario Municipal Employees Retirement System, as well as with networks of angel investors.

However, in the past year, OCE has opened up a third branch of activity – campus entrepreneurship. Universities around Canada are now opening up their tech transfer programmes to make them more inclusive than simply standard tech transfer for faculty, and are broadening their campus entrepreneurship programmes to anyone associated with the university.

Students can now access the programmes even without strict academic IP, and the universities are also opening their doors to the community by establishing incubators that offer space, education and training to the general public. OCE is supporting this drive by providing $35m to 42 of its academic partners to create programmes that stimulate entrepreneurship on campus. The range of activities varies, from outreach programmes to help young people understand the opportunities of entrepreneurship, to extracurricular training and providing speakers, and establishing incubators, of which OCE is now supporting around 20.

Martin Croteau, director of academic entrepreneurship at OCE, said Canada had been going through a rapid change in terms of tech transfer. “Back in the heyday of the dot.com boom, if you were caught on our campuses even whispering the idea of a startup company to a researcher, faculty staff or students, and the dean of the department caught you, he would pick you up by the scruff of your neck and throw you out the building.”

That has now changed. “There has been a revolution over the past 15 years, and the last five in particular,” said Croteau. “If you ask the universities why that has occurred, they would tell you that they are doing it in response to their faculty members looking to develop IP, and students looking at entrepreneurship as a career option. This group of millennials has the world by the tail.”

Universities in Canada are adapting to this increasing pressure from staff and students, but also to pressure from government and funding agencies looking to promote university innovation. Around a third of all research and development in the country is conducted on university campuses, and is therefore driving universities to become beacons of innovation within their communities, something to which the institutions are responding by providing talent, IP and the cluster around which startups can be formed.

One of the universities that has really picked up the entrepreneurship ball and run with it has been University of Waterloo. Although universities around Canada have the option of drawing up IP policies where the institution owns the IP, Waterloo long ago opted to give academics full ownership of their inventions – it has been that way since the university was first incorporated in 1957.

The university also runs one of the largest co-operative education programmes in the world. Last year 19,000 students and 5,000 employers took part in the programme, where the students are posted, sometimes internationally, to participate actively in businesses in paid roles – collectively they earned $190,000 last year. The programme has helped build stronger entrepreneurial activity on campus as students returning from their placements have had the opportunity in the workplace to identify potential problems and opportunities.

Scott Ingram, director of the Waterloo commercialisation office (WatCo) said “Both of those programmes have conspired over the years to create a more business-friendly environment, a more entrepreneurial environment. Between the IP policy and the students circling out of academia and back, you have this dynamic mix that has brought us to where we are today, where we have significant amounts of student-generated commercialisation activity.”

The university broadly splits its commercialisation support into four organisations. WatCo, which  handles the more traditional tech transfer support, the Conrad Business, Entrepreneurship and Technology Centre aimed at masters students in business, entrepreneurship and technology (MBET), Accelerator Centre, which provides support for startups in the community around Waterloo, and an incubator, Velocity.

Velocity brings together students, sorts them into teams, and gives them mentoring and support to develop business ventures alongside undergraduate studies, and is also available to recent students. Since 2008, Velocity has overseen $90m of investment in its startups, and the creation of 63 companies and 341 jobs. The programme also runs pitch competitions twice annually, with four or five groups of students receiving $25,000 each to seed fund their venture, along with free space and mentoring.

The MBET course runs for a year and draws heavily on the engineering, technology and mathematics background of Waterloo, which focuses principally on high-tech sectors. Mostly made up of returning students who have had work experience before returning to Waterloo, teams will be built and focused on a business idea. Students then go through a programme tailored towards launching a startup, rather than qualifying for an MBA, which is normally about running an established company. Focus will be on building a business plan, how to pitch, enter competitions for financial awards and attract seed funding, and other skills in entrepreneurship. Conrad has now led to 100 startups founded, with 45% of its graduates gaining experience in leading a startup.

At the university’s Accelerator Centre, the doors are open to the public. It currently has 49 clients at three sites, has helped 119 clients since its inception, led to the creation of 1,055, and its businesses have raised $157m in external funding.

Along with the more regular tech transfer office WatCo, the university provides support for entrepreneurial activity from the start of an undergraduate course all the way through to faculty research outcomes and beyond.

“There is a continuum of support here for someone to find their place in the mix,” Ingram said. “If you are business-minded, here at Waterloo there is some place for you to land.”

Ingram said most of this activity was all driven by the IP policy. Pointing out that although there were other institutions in Canada with similar policies, there was an expectation at many of those universities that there would be a kick-back to the institution if an individual went off to start their own venture and was successful.

“That is fine, but it still represents a bit of baggage,” said Ingram, who explained the kick-back was normally expected to be around 25%. “You can go out to try to raise money and the investor will say: ‘You have to provide 25% back to the university? What are they doing? Are they providing patent costs, funding programmes, or legal support?’ and you will have to say: ‘No, it is 25% with no net benefit.’ At Waterloo, you can go out and raise money without the baggage and the strings attached.”

The policy has also led to an influx of entrepreneurially-minded professors from places such as Massachusetts Institute of Technology, Silicon Valley and institutions in the UK. While the policy itself may not actually be used by the academics, it is the flexibility along with the academic prowess and ability to do focused research that Ingram believes act as a draw for top-level talent.

The activities at Waterloo reflect the Canadian model for tech transfer at large, with a well-connected web of collaborative elements all going their own way but working towards a similar goal.

“It is not a one-size-fits-all model,” said Ingram. “It is whatever is right for the institution and the research it does. People ask me if our IP model is better, and I would say it is contextual. If you have a medical school and you are looking at a 10 to 15-year route to market and half a billion dollars, if the institution did not own the IP then nothing would ever happen. So, in Canada the tech transfer landscape is driven by the culture of the institution, the research conducted, and the local community. It is not top down, it is organically derived.”


Canadian tech transfer units

McGill University - Research and international relations

University of Alberta - TEC Edmonton

University of Calgary - Innovate Calgary

University of Toronto - Innovations and partnerships office

University of British Columbia - University-industry liaison office

Centre for Drug Research and Development - CDRD Ventures

University of Montreal - Univalor

McMaster University - Industry liaison office

University of Ottawa - Technology transfer and business enterprise

Queen’s University - Parteq Innovations

University of Waterloo - WatCo

University of Manitoba - Technology transfer office

University of York - Innovation York

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