Four years ago, Propel ICT set out to create 36 start-ups in 36 months. There were doubts, but they did it. Now they have a new target, 1,066% bigger than their first. What makes them so confident?
In October 2011, a tech sector industry group called Propel ICT announced what it labeled an “ambitious” campaign: to launch 36 new technology companies in New Brunswick in three years.
Though not particularly well known outside its home base of Saint John (it was originally called Propel SJ), the non-profit and private-sector led group already had an impressive record of mentoring entrepreneurs and aiding tech start-ups. Its organizers were behind local tech successes such as Mariner Innovations (the largest independently-owned IT company in Atlantic Canada), and Radian6 and Q1 Labs (which were eventually purchased in separate deals totalling $1 billion).
The goal of Propel was to grow the New Brunswick tech sector by providing mentorship, cash, incubation, and other resources to entrepreneurs with tech start-up ideas. The long-term objective was to push more of New Brunswick’s traditional and staid economy toward technology businesses. Between 2004 and 2011, the group quietly supported the creation of 10 New Brunswick tech companies. According to the group, more than 210 new fulltime jobs were created in the Saint John region from 2006 to 2008.
Still, Propel’s plan for assisting the creation of 36 start-ups in 36 months seemed, potentially, overly ambitious. Yet the goal was eventually exceeded, with 49 Atlantic Canadian start-ups emerging from Propel’s Launch36 accelerator in 33 months.
“I think we even surprised ourselves to some extent,” said Trevor MacAusland, who as Propel’s executive director oversaw the Launch36 program. MacAusland recently departed Propel, but before leaving noted: “I can say now, looking back, I never thought we’d hit the 36. It was just a goal. If we launched 20 we probably would have been happy.” Will the same someday be said of Propel’s new and even grander goal?
The Launch36 accelerator has been shuttered and replaced with two separate accelerator programs: Launch (for start-ups in their infancy) and Build (for later-stage start-ups with customers and “traction”). The target: helping to create 420 companies in five years.
“The idea of doing that many companies in five years is ambitious, but we think it’s also doable,” says Gary Dinn, Propel’s new CEO. “The only good goals are ambitious ones.”
With Dinn’s replacement of MacAusland, along with the creation of Build and Launch and the 420-start-up goal, Propel is in a new phase. The organization, funded through private and public sources, is calling it “Propel 2.0.”
The Build and Launch streams were initiated last fall with a total of 20 companies. The programming was run in Moncton, Fredericton, and Halifax.
Programming for the current cohort of 33 companies is being run in those three cities through partners such as the Halifax-based Volta Labs start-up house and Fredericton’s Planet Hatch, as well as in St. John’s, N.L. where Dinn is based. The organization aims to soon run a program on P.E.I.
The idea is to unify the efforts of the main East Coast organizations currently aiding tech start-ups and promoting entrepreneurship. There’s also a desire to present an alternative to the region’s sagging resourcedependent economy.
Volta Labs, for instance, was founded, in part, with support and cash from Jevon MacDonald, the cofounder of Halifax-based GoInstant, which San Francisco-based Salesforce bought in 2012. MacDonald and others in the sector have stressed the need for regional cooperation, not competition, when building the local tech scene.
“We’re not really in competition with any of these places, because it takes a community to raise a start-up,” Dinn says.
“That holistic approach is what I preach to different groups (that might) feel like they’re in competition,” he adds. “A city with 300,000 people is really not on any of the major investment radars. But a region with two million people? Yeah. That is on the radar… We’ve got to get it together and have a regional view that’s big enough to get the attention of investors.”
In 2014, Propel companies raised more than $4.5 million. Launch36 alumni Resson Aerospace secured more than $3 million of that total, from a variety of venture capital sources. The Fredericton-based company uses drone technology and data analytics to help agricultural companies manage their crops.
Propel companies also created more than 350 jobs between 2011 and 2015. The average salary in 2014 was $70,000.
Dinn notes 127 applicants sought entry into the current Launch and Build cohorts, the largest number yet. (The 33 companies accepted also marked a record.)
Not only are there more start-ups applying, but they are better prepared. Still, Dinn says it will be a “challenge” to ensure the “pipeline” of start-ups exists to hit the 420 mark. He argues there’s a need for more university programs focused on entrepreneurship and start-up creation, similar to Dalhousie University’s Starting Lean program and the University of New Brunswick’s Technology Management & Entrepreneurship (TME) program.
“The biggest challenge is understanding how to encourage more people to have a look at this as a potential (career) while they’re young and full of energy,” he says.
Dinn, an engineer, started his first company in 1985, at age 26. He later co-founded and took public Rutter Inc., which sold voyage data recorders, basically black boxes for ships. Thus he’s been involved in all stages of a successful start-up.
“I wish we had lean start-ups back then,” he says laughing. “I say to people now that you can do in four months with Propel in an accelerator what would probably take you two years to do without it.”
Entrepreneurs selected for entry into Propel programs get access to mentors, investors, and programming. The Launch program includes weekly video lessons, bi-weekly Q&A webinars with mentors, five personalized coaching sessions, and weekly in-person Fireside Chats. The programming runs for 12 weeks. At the end, participants can apply for funding from a variety of agencies, including the New Brunswick Innovation Foundation, and Nova Scotia’s Innovacorp.
The organization’s volunteer mentor network includes tech sector players such as Dan Martell (who recently sold his expert advice site, Clarity.fm, for an undisclosed amount) and Jeff White (the former chief financial officer at both Radian6 and Q1 Labs). In all, Propel mentors commit 1,500 hours per year in supporting early-stage businesses.
But Propel’s organizers want more than a slew of start-ups.
The goal, particularly with the Build stream (and its emphasis on sales and international marketing) is to create one or two billion-dollar tech companies.
“If you look at the average of how many companies you need to put through an accelerator to get some real home runs, we should be able to do at least one billion-dollar company in the five years,” Dinn says. “We’ve had some spectacular successes in Atlantic Canada but there’s no reason why we couldn’t have more.”