The L-Spark incubator’s second cohort oversubscribed earlier this month, a sign that more than just Ottawa’s tech community is experiencing a revival, according to venture capitalist Code Cubitt.
Mistral Venture Partners managing director Code Cubitt
“It speaks to entrepreneurism in Canada (being) very healthy,” said Mr. Cubitt who, as managing director of Ottawa-based Mistral Venture Partners, had a seat on the selection committee. “There’s a lot of demand for incubators because what they offer is value add, a very low-cost way to get experienced executives to help you grow your business.”
L-Spark had planned on accepting eight startups but nine ended up making the grade, with companies being selected from Montreal, Toronto and Waterloo as well as Ottawa.
It’s a far cry from how the group started when it opened applications for its first accelerator in September 2014. Back then, it had room for six startups, but only two were selected.
Mr. Cubitt said that first cohort had an extremely high threshold, and for good reason.
“They were only getting started themselves and they wanted to put their best foot forward,” he said. “The judging at the end of the day is the quality of companies they put out. If the quality wasn’t there, then they would lose reputation.”
As it turns out, the quality was there, said Mr. Cubitt, and Mistral ended up investing in one of the accelerator’s two graduates. He said he has been very pleased with the fund’s decision to put money into The Better Software Company.
“L-Spark did a fantastic job of preparing them for us,” he said.
In the latest selection process, 175 applicants were whittled down to 14 startups that were invited to a pitchfest.
“We debated with vigour for quite some time on the best quality and we ranked and ordered them on who we thought would a) benefit from the incubator, and b) have the highest probability of success in the long run,” said Mr. Cubitt.
The committee used a set grading process, and he said he thinks whichever startup finished ninth was probably right “on the line” but had a champion inside the incubator who was willing to work with it.
When considering whether to fund a company, Mr. Cubitt said he looks for a credible team, dependable technology, a unique business model and a large and relevant market. When it comes to selecting a startup for an incubator, he said the quality of the team takes precedence.
“If they’re credible, you assume they’ve done some of the homework,” he said.
Mr. Cubitt said startups looking to enter incubators are “very raw,” making it more difficult to select which ones might be destined for success. He said that’s why groups like L-Spark are so beneficial.
“You get a bunch of founders in the room, they’re drinking their own Kool-Aid,” he said. “The incubators do a really good job of sort of sobering them up.”
As early as it is for the nine companies selected, Mr. Cubitt said he did take note of a couple that he will continue to follow with an eye to possibly funding them down the road.
“I won’t name names, but there were some that I thought had really interesting promise,” he said.