As more high potential startups grow out of university research, it’s critical to understand how government, industry and academia can align to accelerate commercialization.
A panel discussion at the Canadian Science Policy Conference was held last month, with industry experts in the Canadian startup ecosystem. Panellists included Bettina Hamelin, president and CEO of Ontario Genomics, Farnoud Kazemzadeh, co-founder and VP Engineering at Vital Bio, Maura Campbell, president and CEO of Ontario Bioscience Innovation Organization (OBIO), and Akash Vaswani, general partner at Velocity Fund, where they explored how to increase the likelihood for Canadian startups to succeed in order to boost Canada’s industrial productivity.
Panel moderator Adrien Côté, executive director at Velocity, said that year-over-year, Canada is becoming less competitive amongst global indices related to productivity according to multiple studies.
“Canadian companies are not investing in new technologies and equipment to help employees be more productive and research and development at Canadian businesses is in the bottom quartile of OECD nations,” Côté said. “One antidote to this decline is to inject high-growth innovative, research and development intensive companies into the Canadian economy.”
As it stands, there are influences hampering startups from finding their footing to flourishing into profitable companies that could otherwise have a large, positive impact on the Canadian economy.
Maura Campbell, who leads OBIO, a not-for-profit membership-based organization to further human health sciences companies across Canada, said companies coming out of universities need to be investment-ready because they will rely on funding and financing cycles.
But governments continue to be focused on funding basic academic research when there is a lack of funding for research commercialization efforts.
From left to right: Adrien Côté, executive director at Velocity, Bettina Hamelin, president and CEO of Ontario Genomics, Maura Campbell, president and CEO of Ontario Bioscience Innovation Organization (OBIO), Farnoud Kazemzadeh, co-founder and VP Engineering at Vital Bio, and Akash Vaswani, general partner at Velocity Fund.
“We see hope, for example the government recently announced research hubs for vaccines and therapeutics with pressure to commercialize and there is funding going towards intellectual property protection, but the concern is we don’t really know what the long-range plan is,” Campbell said. “These are good developments and signals of a more supportive ecosystem creating productive collaborations between academia and industry.”
Farnoud Kazemzadeh of Vital Bio, a health sciences company founded at Velocity, said while leaning on resources from OBIO and Velocity was a critical component to getting the company off the ground, it is crucial for startups coming out of universities to secure more funding to find success.
Vital Bio unveiled its desktop computer-sized blood diagnostics device publicly this summer. That milestone took almost five years, which included many highly trained staff, and the company could only get there by raising venture capital funds to undertake the research and development necessary, Kazemzadeh said.
“Once a company generates revenue everyone wants to give them money. But there’s an uncanny valley in the middle where the company is not quite revenue generating, but more than a research project — if you don’t bridge that gap financially, there won’t be a future,” he said. “The ecosystem has been great to Vital Bio but compared to other jurisdictions there is a funding gap — while the provincial and federal government are doing some they simply aren’t doing enough.”
Akash Vaswani, general manager of the Velocity Fund, said big outcomes for startups are what the Canadian economy needs. But programs that take too much equity up front can have massive ramifications.
“Founders will work on their companies for more than a decade before seeing a return — it takes 14 years on average for a company spinning out of research to actually have a profitable return for investors,” Vaswani said. However, we frequently see issues with cap tables where non-contributing stakeholders capture too much equity early on, which can negatively affect the size a company can eventually grow to. What we need to see in Canada are more multi-billion- dollar outcomes, and this requires an abundance mindset.”
Bettina Hamelin, the lead of Ontario Genomics, a genomics innovation not-for-profit, said by looking at other jurisdictions it’s clear that tight collaboration between industry, government and academia is key to a productive economy.
She painted a picture of how the Netherlands became the second largest exporter of agricultural food products in the world by investing in innovation. To compare, the Netherlands is one-twenty sixth the size of Ontario, while Canada as a whole places fifth on that same list.
“These investments attract multinational companies that come to build research and innovation hubs on the grounds of the universities, providing incredible opportunity for students and academics for mentorship and co-creating technologies,” Hamelin said. “But the bottom line is, there is a tight connectivity between all stakeholder groups and a willingness to think outside the box.”
