There’s an executive waiting for Ray Walia when he walks into the 12,000-square-foot tech incubator he co-founded in 2012.
“I’ve just got Andrew Reid from Vision Critical here right now,” the CEO of Launch Academy tells Business in Vancouver at the tail end of an interview over a mobile phone.
Reid is the founder and president of corporate innovation at the Vancouver-based tech company specializing in customer intelligence. Vision Critical had five employees 15 years ago and its workforce now sits at about 800.
Walia said visits from local tech executives behind high-growth companies like Vision Critical aren’t uncommon at Launch Academy.
“(Reid is) looking to give back, but he also understands that in order for his company to be successful he needs to be cognizant and connected with all the young companies that are coming up,” he said.
Since its founding three years ago, Launch Academy has helped tech startups raise $57 million in venture capital, according to an in-house impact report released November 25.
Incubators and accelerators like Walia’s provide startups with workspace, networking opportunities to raise cash and mentorship from tech leaders.
Unlike many accelerators, Launch Academy does not take equity in the startups that operate out of its offices.
Instead it brings in revenue through government grants, corporate sponsorship, tuition-based programs for entrepreneurs, charging fees to startups for use of its facilities and hosting events such as the Cascadia Summit.
The impact report revealed Launch Academy has operated on a total of $780,000 — or $280,000 per annum — in government funding since its inception.
And the startups that have gone through the incubator, such as WealthBar and Riipen, have created 635 jobs, according to the report.
The way Walia sees it, if one was to divide the amount of government funding by the number of jobs created, then each job created cost taxpayers just $1,228.
“One of the key differentiators for us is the stage that we come in,” Walia said.
“What we’re trying to do is rip people out of their basement, out of (their) mom and dad’s garage when they’re that one-person, two-person team that’s trying to figure out, ‘Is this idea worth pursuing?’”
And many of those ideas simply don’t pan out for entrepreneurs.
The impact report revealed 350 companies have gone through the incubator, meaning not all have gone on to contribute to the 635 jobs Launch Academy is touting. Instead, about 90 of the startups remain listed in Launch Academy’s portfolio.
Marcus Daniels, CEO of the Highline accelerator, told BIV in April that Canada is facing a "glut of these sorts of institutions" and many accelerators and incubators will have to refine themselves over the next 12-18 months.
A June 2013 report from Toronto's MaRS Discovery District also found the growing number of incubator and accelerator programs aimed at shepherding startups in Canada is creating concerns over an "accelerator bubble."
Walia said this is not actually a bad thing.
“When we say we have 350 companies come through, that’s quite a bit. But the bulk of those have failed,” he said.
“But that failure metric is actually a success metric.”
By going through the incubator, Walia said those startups fail much sooner than they would have had entrepreneurs kept at it in their basements or parents’ garages without any guidance.
If a startup idea is not viable, then better to let entrepreneurs pursue something else sooner rather than later.
“Once you’re doing that, you’re coming in with greater knowledge of how to build a company, greater knowledge of how to set an idea, deeper network, better understanding of the type of resources available to you,” he said.
“So as you’re working on your second or third startup idea, your chance of success is much greater. But also the path to it is that much shorter because of all the learnings you’ve been able to take advantage.”
@reporton
