Kanata incubator’s success sparks optimism

Tom Pechloff
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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.

Organizations: Mistral Venture Partners, The Better Software Company

Geographic location: Ottawa, Canada, Montreal Toronto Waterloo

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Recent comments

  • Andrew Rees
    February 27, 2016 - 16:41

    I attended last year's L-SPARK showcase and found myself struck by both the confidence and the finesse of the portfolio company CEOs. Notably, one of the CEOs (Sarah Daniele from Mydoma) was interrupted half way through her pitch by the Museum of Nature's public address system (not something you want to happen to you when you're pitching your company in front of a crowd of a hundred or so people) but she casually waited unfazed until the end of the announcement and then carried on as if nothing had happened. I walked out of the showcase wondering how much of the CEOs confidence and finesse was attributable to natural talent and how much was attributable to mentoring of that natural talent. I concluded that it was probably different in each case, a balance of both, but whatever the split, the value of L-SPARK as an incubator/accelerator was undeniable. Congratulations to this year's cohort and best of luck to all 175 fledgling SaaS businesses that applied. I'm looking forward the next L-SPARK showcase.