The federal government announced Friday it is contributing up to $7.7 million over the next five years to fund incubator and accelerator programs for small businesses in eastern Ontario.
About $3.8 million will go to L-Spark, an Ottawa-based incubator and accelerator that supports fledgling enterprise software startups, providing access to expert mentors, venture capital and angel investors. Invest Ottawa, which is a partner in L-Spark, and Kingston’s PARTEQ Innovations will also receive additional cash from the feds.
“We’ve always had a pretty good track record at helping companies grow, but what we found is that there’s now more demand than we’re able to provide for,” said Invest Ottawa president and CEO Bruce Lazenby. “We’ve got people knocking at the door and our big fear was that we wouldn’t be able to provide them the programs that they needed. With this additional funding, now we can.”
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The money is being delivered through the Canada Accelerator and Incubator Program (CAIP), a federally funded initiative that is giving $100 million to agencies such as Invest Ottawa to provide entrepreneurs with the resources and expertise to create business plans, seek financing and establish new markets for their products and services.
“It creates an environment where smaller businesses, which are the lifeblood of Canada, have the chance to go global and have the chance to succeed,” said Minister of State for Science and Technology Ed Holder, who noted that nine out of 10 Canadians work for small and medium-sized businesses.
Mr. Lazenby said the extra funding will allow Invest Ottawa, the city’s major economic development agency, to supplement its existing programs for nurturing young companies. The hope is that the best software startups can then graduate to the L-Spark program, which is set to launch in December.
The nine-month L-Spark program will provide up to $360,000 in seed funding for six companies chosen from more than 100 applicants from around the world. Each startup will receive advice and one-on-one mentoring from a group of experts including the likes of Shopify’s Harley Finkelstein and former Mitel CEO Don Smith.
“(Enterprise software) is an area that Ottawa and eastern Ontario are really good at,” Mr. Lazenby said. “We really know how to build those kinds of companies. With that kind of focus, and with a longer and richer program, we think we’re going to get better companies in the front door, which means better companies coming out the back door. The whole objective here is to build the next IPO company in Ottawa or in Kingston – the idea that it could be the next Shopify or the next Halogen or the next Kinaxis.”
Invest Ottawa was one of just 15 agencies across the country to receive CAIP funding out of about 125 applicants. Kanata-based investment firm Wesley Clover is also a partner in L-Spark, and Mr. Lazenby said being linked to such a successful angel investor helped put Ottawa’s bid over the top.
“We had the heart, but we didn’t have the track record,” he said. “So we needed somebody who had a track record.”
Between L-Spark and programs at Invest Ottawa, Mr. Lazenby said 25-30 local startups will benefit from the new funding each year.
“We really want to surround these companies with everything they need to be successful,” Mr. Lazenby said.
Wesley Clover founder Terry Matthews said Friday’s announcement is one more sign that momentum is building in the region’s technology sector.
“The environment for Canada, the environment for Ottawa in high-tech, the needle’s starting to get pretty positive,” he said.