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Campus incubators hatch the entrepreneurial spirit

Students have been starting up businesses at such a feverish pace that the biggest challenge for universities that house such programs is keeping up with the talent and energy they’ve unleashed.

By DIANE PETERS | DEC 05 2011
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Christopher Alleyne, a Digital Media Zone member and graduate of the Ted Rogers School of Management at Ryerson, is co-founder of a virtual employment network called fanfare. All photos by Joanne Ratajczak.

In Fall 2009, second-year Ryerson University business student Brennan McEachran and some buddies were sitting around complaining about the annoying quirks of campus life and came up with a list of solutions. That night Mr. McEachran was so fired up about the beefs – things like student groups’ notices clogging up inboxes – he zipped off an e-mail to Ryerson President Sheldon Levy.

Two weeks later, the famously hands-on president replied, suggesting a meeting. By the time Mr. McEachran walked into Mr. Levy’s office, he’d not only compiled a list of suggestions from his peers but also had created a mock-up for SoapBox, an online portal that organizations could set up to collect opinions from employees or members – a sort of virtual comments box – and also rank them so leaders would know which ones were the most popular.

Everyone at the meeting liked Mr. McEachran’s suggestions and loved SoapBox. He was soon talking to various campus departments about setting up the portal at places like the Ryerson library. Meanwhile, Mr. Levy had promised just a few months before, in public at the Empire Club, that Ryerson would play an active role in making its campus and Toronto a “digital destination.” He’d already enlisted Valerie Fox, an inventor and businessperson who now worked for Ryerson on special projects, to create a digital media incubator – a space on campus devoted to helping students create tech-oriented businesses.

Mr. McEachran connected with Ms. Fox and he became one of the first students to join Ryerson’s new Digital Media Zone business incubator when it launched in April 2010. Mr. McEachran’s company HitSend now has a team of four and six clients who pay for a customized SoapBox portal (it also runs the application for Ryerson’s library).

And the Digital Media Zone, dubbed DMZ is buzzing, too. Along with the fifth floor of the university’s AMC Building overlooking Dundas Square – an open concept office decorated with orange walls, black beanbag chairs, exposed silver heating vents, and a mishmash of desks, computers and whiteboards – the Zone has taken over another floor and soon will expand further. It’s run by a staff of six that organizes workshops and recruits experts for mentoring. It now houses at least 25 startups, which are creating everything from Facebook games to 3D technology and computer equipment for disabled kids. Six companies have already grown big enough to “graduate” and move out, including Burstn, a mobile app for photo sharing, and the group-buying website TeamSave, whose technology is being used by eBay’s Kijiji.

In a recent speech to the Economic Club of Canada touting the success of the DMZ, Mr. Levy said that governments often ask universities how many of their graduates have jobs six months after graduating. “They never ask universities how many of your students started a company. … That is what the DMZ does. The young innovators in the Zone aren’t working on a class project. They are trying to build a real business around their own innovations.”

The DMZ joins a growing list of business incubators on Canadian university campuses cultivating startups begun by current and recent students. While business incubators have been around for decades, the more traditional model offers cheap or free office space near campus for anyone in the area, plus support services like workshops and mentorship in return for equity and a promise to hire students.

But that was before Facebook, dramatized in the movie The Social Network, was hatched in a Harvard dorm room. Safe money says the next Mark Zuckerberg is a student right now. So universities are testing new ways to groom the next generation of young entrepreneurial minds.

Campus incubators are a great fit: innovative new businesses need knowledge, which schools specialize in, and entrepreneurship is tricky to teach in the classroom. With small and medium-sized businesses now driving our economy, schools can stimulate the local economy by sprouting start-ups and they also garner clout and prestige. Even better, they bring in money when, after the superstars make their millions, they give back.

University of Waterloo staff member Sean Van Koughnett had his own Facebook epiphany back in 2007, when he heard a telecom CEO say at a conference that the next big tech innovation “will probably come from a 20-year-old working in a dorm room.” At the time, Mr. Van Koughnett was upgrading the technology infrastructure for the school’s residence buildings. The 72-bed Minota Hagey Residence was slated for renovations, so he suggested the university fill it with students interested in starting their own businesses.

In the fall of 2008, the VeloCity residence incubator officially opened with a busy September of workshops and presentations in the residence’s main hall. Students got their fill of business basics early on and then spent the following months on school work, coding late into the night and yakking with dorm buddies about ideas.

In its short lifetime, VeloCity has nurtured software developers NeverBored Studios and the website Giftah, which lets consumers turn unused gift cards into cash. As well, in the winter of 2009 at VeloCity, engineering student Ted Livingston invented the mobile texting app, Kik Messenger, which now has more than three million users.

And talk about paying back: Mr. Livingston thanked his alma mater this past March by donating $1 million to the university in support of VeloCity. The incubator program now has three full-time staff and two co-op students, and a little over a year ago it expanded to include VeloCity Workspace, an open-concept office in downtown Waterloo for startups at a more advanced stage.

Launched around the same time as VeloCity was Venture Connection at Simon Fraser University. SFU’s Innovation Office had been running its TIME Incubator for startup companies in downtown Vancouver for a decade and noticed more student ventures were joining its lengthy waiting list of applicants. “The feeling was it was time to provide campus-wide support for student entrepreneurship,” says Ian Hand, associate director of the Innovation Office.

Venture Connection launched with two office spaces – one on the main Burnaby campus and the other at Surrey – and a team of paid and volunteer mentors, plus a busy schedule of events. Students with an early-stage idea can work with a mentor through the Venture Sparks program and then graduate to Venture Labs with office space if their idea becomes a viable business. Right now, the program supports 40 teams. Its considerable honour roll includes an online medical textbook store in Mexico called Librerialeo.com.mx, the international job site HireTheWorld, and Layerboom Systems, a cloud computing software company that was acquired by San Francisco-based Joyent, a cloud-computing service provider, in 2010.

With such successes, it’s not surprising that these programs get great reviews from students who’ve participated, particularly those who don’t know their way around a balance sheet.

“I’m a science student, I didn’t really understand how I could turn my idea into a business,” says 23-year-old Suraaj Aulakh, who’s doing her master’s in biology and biochemistry at SFU. She joined Venture Connection a year ago and her mentor is helping her turn her free website, LabTricks.com, which runs videos showing students how to do lab experiments, into a money-making venture.

On the downside, the demand on campuses for these incubators is growing so rapidly that the teams that run them struggle to get enough space and staff to keep up. “We function like a startup ourselves,” says Jesse Rodgers, the day-to-day manager of VeloCity who has pulled a few late nights on the job. “It’s nerve wracking at the best of times.”

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Monica Mei (foreground), who has a design degree from Ryerson, has developed the mobile app What I’m Wearin’ while at the Digital Media Zone. Beside her is Priscilla Reidt, who is serving as a social media intern for Ms. Mei.

At Ryerson, Ms. Fox worries that rapid growth will impact the DMZ’s creative, laid-back vibe. “We have a very successful culture here. When we get bigger, how do I keep that culture going?”

Keeping a set of loose rules and focusing on relationships and collaboration has worked so far, but that’s harder as the program expands to more spaces on campus. SFU’s geographically spread-out Venture Connection already has faced this issue. Its manager, Vaune Kolber, is trying to orchestrate more events so that all her teams can meet up.

Funding these programs can also be a challenge. None of these incubators ask for equity, so that means money is a going concern. For Ryerson’s president, Mr. Levy, the cost and effort of running the DMZ is worth it: the Zone furthers Ryerson’s reputation as a place that trains students for the real world. “We care that students get careers, and part of this is an evolution of our mission,” says Mr. Levy. “We’re ensuring the brand is strong in the digital age.”

Waterloo also happily invests in VeloCity for all it brings back. “It draws students, it enhances our reputation with government, with corporations and with alumni,” says Mr. Van Koughnett, who still oversees VeloCity as part of his current job as director of student success. Incubator grads also come back to offer volunteer hours as mentors and to host workshops.

But no gift has been quite as stellar as Mr. Livingston’s $1-million donation to support VeloCity. The money was used to establish a seed fund that will provide $25,000 grants for student start-ups. The Ontario government also recently kicked in $1 million from its Experiential Learning Program to support VeloCity.

One quibble with these on-campus incubators is that they’ve been successful fostering online, digital-media enterprises, but not so much with offline businesses. That is beginning to change. Venture Connection at SFU has nurtured perhaps the widest array of non-digital startups, including clothing company Express Athletics and marketing company Ads on Naps (which prints ads on napkins and distributes them at no cost to bars and restaurants). The DMZ also has a number of non-digital-media companies, including Bionik Laboratories, now developing a prosthetic arm and other medical technology.

“The low-hanging fruit is the tech stuff,” admits Mr. Rodgers at Waterloo. “That’s where we started, but there’s lots of other stuff.” Digital companies can be created with an idea and a PC, and can scale up with minimal capital. There’s considerable demand for tech ideas right now, but the market will eventually become saturated. With that in mind, Ryerson’s Mr. Levy would like to see DMZ launch more “zones” across campus, recruiting students from various departments and offering expertise in starting bricks-and-mortar ventures.

Expect to see more of these types of initiatives at universities across the country. And not a moment too soon, according to the Canadian Federation of Independent Business. Their survey of 8,900 members, conducted in early 2011, found that 56 percent of entrepreneurs believed Canadian colleges and universities didn’t focus enough on teaching how to start a business from scratch. Around the same time, the national fellowship program Action Canada released a report that concluded more young, innovative companies are needed to keep Canada economically competitive.

Student-centric incubators are not the only solution, and not every student’s business idea is going to come to fruition. But these programs are a relatively straightforward way that universities can do their part – plus, students love them. They’re thrilled to be able to use the experience to leverage a job for themselves after graduation, or simply to meet some great people, enjoy a few late nights over a computer keyboard and pick up some business skills. Says DMZ alumnus Mr. McEachran of his own experience: “The worst thing that could happen is I learn something.”

The idea of seeding student innovation is growing at universities across Canada:

Don Pether Incubation Centre

McMaster University’s new Don Pether Incubation Centre opened in October to recognize the $1 million donation, made to the engineering faculty in 2010, by the former chief executive and president of Dofasco Inc. The centre will offer select students and recent graduates of the engineering entrepreneurship and innovation master’s program with startup support for their technology businesses. Four teams will each have one year in the incubation centre to move the development of their businesses forward.

UBC Seed Accelerator fund

In a partnership between the B.C. Innovation Council, the University of British Columbia and UBC alumni, the entrepreneurship@UBC Seed Accelerator fund is a UBC-owned-and-operated venture fund offering investments of up to $100,000 to support “the next generation of entrepreneurs.” The fund’s purpose is to provide UBC students, faculty, staff and recent alumni with early-stage capital “to set their new companies up for the greatest chance of success.” The first round of investments was announced in October.

Nicol Entrepreneurial Institute

Ottawa entrepreneur and Carleton University graduate Wes Nicol donated two $1-million gifts to Carleton that combined to create the Nicol Entrepreneurial Institute, launched in August. The institute oversees paid internships designed to give students “the skills and experience they need to launch and grow their own companies.” Carleton undergraduate and graduate students from all faculties are eligible to apply for the internships.

The Next 36

The Next 36, started in 2010, is an “entrepreneur boot camp” to help launch the business careers of 36 promising and innovative Canadian undergraduates. The program has two parts. First, a venture challenge gives nine teams of four tudents $50,000 and guidance from industry mentors and business leaders to build a mobile-application business. Second, a four-month summer residency at the University of Toronto’s Massey College allows the students to study with world-renowned faculty and prominent Canadian entrepreneurs. Financial support for The Next 36 has come from Canadian business leaders. The first cohort finished this past August and the next group of 36 students was to be selected in late November.

Diane Peters writes about a variety of social issues for national publications. She also teaches feature writing to journalism students at Ryerson University.

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  1. S C / December 13, 2011 at 12:00 pm

    Great news ! Thank to UA for putting up this story here. Too bad such ‘good news’ stories don’t get any feedback from people who are too eager to comment (whine, actually) on ‘bad news’ stories. The glass is always half full 🙂

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