Yedlin: Creative Destruction Labs provides window into Calgary's innovation ecosystem
The Rockies chapter of Creative Destruction Labs is helping fund and mentor Calgary startups
Calgary is making its own reality.
As the city’s economic downturn enters a fourth year, there are days when it feels the surfeit of discouraging news has no end. Whether it’s low natural gas prices, concerns about competitiveness and regulation or the persistent lack of certainty around pipelines, there is plenty to feed the Eeyore mindset.
But it needn’t.
No, we are not headed into another crazy boom time driven by high commodity prices and business investment. But we are starting to grow new companies — created through the application of technology — that will one day be self sustaining contributors to significant economic growth.
An important catalyst to this is Creative Destruction Labs-Rockies, which launched in December at the University of Calgary through the Haskayne School of Business.
The mandate of Creative Destruction Labs is to change the way deep science and technology ventures are commercialized by leveraging resources in the private sector. It first came to life in 2012, under the leadership of University of Toronto and Rotman School of Management professor Ajay Agrawal.
The idea is to tap into the talents of individuals, companies, family offices and private equity funds able to support new business ventures in terms of both time — in the form of mentoring — and seed funding.
There are now five CDL chapters across the country, and the pace at which CDL-Rockies came together astonished Agrawal. What took Vancouver and Toronto six months to achieve — raising $3 million to start a CDL chapter — happened here in one night. Other chapters are located in Montreal and Halifax.
The launch illustrated three important Calgary characteristics for Agrawal: the availability of capital, the local motivation to diversify the economy through private-sector initiatives and the importance of an inspirational leader.
“One person can have an outsized impact — and the person I will use to illustrate that in Calgary is Chen (Fong),” said Agrawal.
Fong, professor emeritus in the faculty of medicine at the University of Calgary, has been funding and nurturing startup companies for 25 years, mostly in the energy and medical device sectors. He had attended CDL sessions in Toronto and Vancouver before he approached Agrawal about establishing a Calgary chapter.
Fong is as passionate about medical breakthroughs as he is about technology that can improve the efficiency and environmental footprint of the energy sector. It’s his credibility as an investor and thought leader that enabled him to assemble the founding partners and associate members to form CDL-Rockies.
The endgame, said Agrawal, is to create an innovation ecosystem across the country that can compete with places like Silicon Valley and China, and to stop losing Canadian companies to the United States.
A long list of companies got their start in Canada but could not get funded due to a lack of understanding of concepts and potential.
This means we need to broaden the language of investment beyond the comfy silo many investors find themselves in.
That is exponentially true in the energy sector, where investors are comfortable with oil and gas plays, but lack the conviction and comfort to take financial risks outside the sector.
“The oil and gas community has the smarts to have instincts about opportunities outside their fields but not enough to give them the courage to go ahead and invest,” said Agrawal.
From Agrawal’s perspective, that’s what makes Fong so critical since he straddles the fence in terms of being able to validate a medical technology, as well as having established himself as a credible investor in the oilpatch.
So when Fong — and others with similar qualities who cross disciplines — support a particular company in the startup phase, it can unlock more capital.
The same holds true when someone like Paul Lee — who came from Vancouver to be part of the CDL event in Calgary on Thursday — sees potential in locally based startups.
A former president of Electronic Arts and the founder of Vanedge Capital, Lee embodies what Agrawal wants to see happen across the country; the breaking down of investment silos and spreading of cross-discipline expertise across the country to support and grow businesses.
In many respects, it follows what Mac Van Wielingen, Phil Swift and John Stewart did in 1989, when founding what is now ARC Financial as a western-based source of capital for the oilpatch. Today, the firm is the largest private equity, energy investor in the country.
Creative Destruction Labs is doing something similar but across disciplines and the country.
And it’s no coincidence Van Wielingen — with his continued passion for entrepreneurship — was in the room Thursday as the first cohort of CDL-Rockies went through its second round of presentations.
In the eight weeks following their first appearance, selected companies have had the opportunity to meet with investors and mentors and hone their business plans. Thursday was another opportunity for the remaining 23 to be presented — and in some cases, dissected — to investors.
Some make it through to the next round, others don’t. And that’s largely because they need to incubate longer.
To outside observers, the daylong session is a trip into a new world of technology — big data, artificial intelligence and machine learning, health care, software platforms and yes, energy.
It’s exciting. It’s outward facing. It’s about what’s possible, in Calgary. And it comes with the potential to transform not just the economic landscape, but the lives of Canadians.
Deborah Yedlin is a Calgary Herald columnist