Vicki Saunders

Startup Genome placed Toronto as the 4th best place to start a new tech company behind Silicon Valley, New York, and London shattering Canada’s reputation as a risk-averse, low innovation economy. Area startups, who provides profiles, rankings and data on 25,000 startups in 25 cities lists more than 660 startups in Toronto alone .

Ontario’s entrepreneurial ecosystem is booming.

Approximately 10 years ago the Ontario Government invested in creating 14 Regional Innovation Centres (RICs) across the province to support innovators to turn great ideas into globally competitive products and services.

Though some would argue how much these RICs have really driven startup innovation, there is no question that an entrepreneurial zeitgeist is firmly planted in the minds of Ontario’s up and coming talent. 2011 was declared the “Year of the Entrepreneur” by the government of Canada, Startup Canada has been on a cross-country tour meeting with thousands of entrepreneurs and ecosystem stakeholders, and successful entrepreneurs like Mike Lazaridis co-founder of RIM have been re-investing their money in their communities to drive further growth.

Out of all of this activity, one of the hottest areas to watch is edtech.

Ontario is considered a global leader in education. It’s education guru, Michael Fullan is highly sought after around the world for his successful Whole Systems Reform.

In 2003, Michael Fullan was hired by the Government of Ontario to drive reform across our K-12 education system. During his tenure, 2003-2012, Ontario increased its graduation rates from 68% to 82%. It was an unparalleled feat in the education space. No other jurisdiction in the world has seen a spike in their graduation rates and education system performance like Ontario.

So, how did Ontario do it? As Michael says, “It’’s simple. Ontario public schools follow a model embraced by top-performing hospitals, businesses, and organizations worldwide. Specifically, they do five things in concert — focus, build relationships, persist, develop capacity, and spread quality implementation”. The Ministry of Education chose three priorities; literacy, math and high school graduation with a commitment to raise the bar for all and close achievement gaps between all groups.

And it worked. Reading, writing and math grades went up 15 percentage points across it’s 4,000 elementary schools since 2003.

And yet, despite Ontario’s success, most would agree that we’ve rung every bit of goodness out of a system that needs significant transformation.

We can all relate to the changes we’d like to see in our education system but no one would have predicted the mass interest of a whole new generation of talented developers descending on the edtech space. Sal Khan raised the profile by creating a grand vision to provide a “world-class education for anyone, anywhere” feels very much like the equivalent of Bill Gates’ mission to put a computer on every desktop, in every home. The sheer audacity of the vision seems to draw people into the space with hopes of creating a whole new approach to education.

And venture capitalists are following in droves. Venture funding in the space has increased threefold in the past 3 years and doesn’t look like it’s going to stop anytime soon.

Across Ontario, there are somewhere north of 200 self-identified edtech startups. Not all of them are globally-ambitious high growth firms but every one of them wants to be part of the transformation of K-12 and higher education. And the transformation is underway.

One of Waterloo University’s young graduates, Rohan Mahimker co-founded SmartTeacher which uses a wireless biosensor (worn like a watch) to measure galvanic skin responses to track a student’s emotions and adapt learning games (math-focused at this point) based on those emotional responses. The technology has been around for decades but it had never been tied into adaptive learning strategies by tracking thousands of data points per minute.

Rohan operates in a particularly hot area in Ontario called Waterloo. It’s University is renowned for it’s developer talent. Their co-op program, in place for over 25 years has given students the opportunity every four months to go on placements with leading tech companies in Canada and the U.S. During the dotcom times, Waterloo was prime recruiting ground for Microsoft and Nortel before RIM started to gobble up all of the local graduates. Google has moved in with an office and Silicon Valley investment is back again looking for the next big thing.

It’s Regional Innovation Centre, Communitech, is housed in a renovated tannery and home to hundreds of startups and growth companies including edtech darling-of-the-moment Desire2Learn. They just raised the largest ever VC investment in a software startup in Canada – $80M. Their cloud-based teaching tools are already being used by 700 customers and 8 million students. Investors, New Enterprise Associates and Omers Ventures believe that Desire2Learn is the clear market leader in the rapidly transitioning $1 trillion education market.

Another Regional Innovation Centre, MaRS Discovery District, has built up a cluster of early stage education startups in it’s SiG (Social Innovation Generation) practice. They now list over 100 edtech startups that are focused on K-12 and higher education including Acadiate which improves student employability, Planboard which enables easy lesson planning, and Spongelab a platform for science content.

One thing that is readily apparent in all of these startups is the importance of understanding what teachers and educators want. Rohan works closely with schools to test his product and was recently introduced to the Education Research and Development Corporation (ERDI) by their former Chair, Bill Hogarth (himself a former Director of the York Region Board of Education).

ERDI is a closely knit association of the top 50 education directors in Canada who meet regularly with business leaders who have products and services that would help to make a more positive impact on education in Canada. ERDI has panels where startups can come and present to key decision makers and get critical feedback and advice to improve their business. John Myers, co-founder of Edsby, a cloud-based social learning platform that helps schools and districts transform communication has joined ERDI and used ERDI panels to “assess the market openness to new solutions, test our pricing ideas, and understand trends and issues across school districts. Getting early feedback on your product is critical to getting it right the first time. ERDI is invaluable for startups trying to break into the education market.”

And universites are getting into the venture game as well. Ryerson’s Digital Media Zone is the talk of Toronto. Started in 2010 when a group of students went to the President of the University, Sheldon Levy, looking for space to work on their startup ideas, the DMZ has launched and housed over 65 companies. They have almost-daily tours of corporations, partners and influencers which has helped companies get their first clients. Just over 10% of the companies in the DMZ focus on edtech including: team story writing for young children PingPongStory; the ‘ebay of tutoring’ Rayku, digitized bubble exam form creator Akindi and Tiny Hearts which build edu-games.

One of the most interesting decisions Ryerson took from the start was to open it’s space to non-Ryerson students. By cross-pollinating later stage companies and diverse talent, the DMZ has built out a unique mini-ecosystem of entrepreneurial talent that feels very much like Silicon Valley.

Other universities are also picking up the ball and running with it. The University of Toronto has launched a Creative Destruction Lab. Waterloo has it’s Velocity incubator and Simon Fraser just launched a social innovation incubator.

Given the small size of the Ontario marketplace (one-tenth the size of the US market), startups need to be looking to expand and grow their audience in other geographies if they want to scale. Math guru, John Mighton, who founded JUMP Math in 1998 has reached over 100,000 students in Canada with his unique scaffolding approach; a systematic method of small steps which are tested at each stage to make sure students get it before moving on. It was when John met Bill Gates who was fascinated by JUMP’s approach that they began discussing ways to rollout their program in the U.S.

Back in Waterloo, everyone is a-buzz with the latest news that Paul Graham of YCombinator fame has just said that Waterloo students are the best applicants to his program . There is no greater validation or call to action for the next cohort of grads who want to create the next big thing.

There are new accelerators, shared work spaces and developer-training programs popping up every day in Toronto, Waterloo and Ottawa. A short list below:

If you want to tap into some of the newfound entrepreneurial energy check out;
Ryerson’s DMZ – http://digitalmediazone.ryerson.ca/
Communitech – http://www.communitech.ca/about/start-here-communitech-101/
Extreme Startups – http://www.extremestartups.com/
Center for Social Innovation – http://socialinnovation.ca/
Ladies Learning Code – : http://ladieslearningcode.com/
HackerYou http://hackeryou.com/
Bitmaker Labs – http://www.bitmakerlabs.com/
Jolt Program at Mars Discover District – http://jolt.marsdd.com/program
HubOttawa – http://ottawa.the-hub.net/

Vicki Saunders is a serial entrepreneur who is a mentor and advisor to over 30 startups in Ontario. She has worked with MaRS leading their SiG Practice from 2011-2012 and is now working with Ryerson University on a new Social Innovation Zone and is an Advisor to the Government of Ontario’s Office of Social Enterprise.

“And that is the final lever that I want to highlight briefly. Because the jury is in, the evidence is absolutely indisputable: If women and girls everywhere were treated as equal to men in rights, dignity, and opportunity, we would see political and economic progress everywhere. So this is not only a moral issue, which, of course, it is. It is an economic issue and a security issue, and it is the unfinished business of the 21st century. It therefore must be central to U.S. foreign policy.”

Nothing else to add…. It’s time. Bring it.

I’ve been thinking a lot about our financing models and touched on it briefly in my previous post The SheEO Returns. Our current VC model says to expect 1 winner out of 10. Seriously? Who would design a system where 1 out of 10 people ‘win’ and think that’s a good thing?

And what does winning mean in this realm anyways? Going public? Creating a $1B company? Clearly this model is not working.

Social finance is creeping it’s way into this space talking about new models of financing and “impact first” investment approaches. As the challenges we face continue to grow on the planet and our current business models don’t offer solutions to these challenges we are experiencing all kinds of innovative approaches that need alternative forms of financing.

Increasingly people are talking about having philanthropic and equity mash-ups in order to finance long term approaches to systemic transformation that is going to take 20 years. And, almost all examples of significant social innovation take that long to move through the system.

So, one thing that needs to happen for us to make this shift is to get our high net worth individuals who consider themselves to be impact investors to start thinking differently about how they deploy their capital. I’ve watched people with a lot of money make $50K donations to charities without even thinking about it (ok, maybe they think a little) over and over, year after year. But when it comes to making a $50K angel investment they stress about it, run the entrepreneur through endless questions about business risks and financial projections and then they check out their thinking with friends and advisors and put a LOT of effort into it.

So, why is it that we think so differently about donations versus investment if we are using an impact lens? If the impact is being achieved, who cares about the structure of the organization?

I’d like to experiment with a model that focuses more on the impact and looks at how we can deploy capital in new ways instead of using this old, broken construct of donation vs investment. We don’t need any more either/or’s in our work we need and-and-and approaches.

I’ve been passionate about supporting women-led businesses for over a decade.

In 2000 I was running an incubator and venture fund and excited to be able to fund people’s dreams. However, in the first three months, we only had 4 funding requests from women out of over 400 applications.

I sat down with one of my amazing colleagues, Kim Parlee and we riffed on what we could do to support more women. How could we let them know that we wanted to invest in them? I mean, it was pretty clear to me that I hadn’t worked so hard to end up only investing in guys! No offence….

Kim and I came up with the idea of a business plan competition for women under 30 years old and we called it the SheEO Competition. It was focused on technology related businesses from across Canada. The winner received a $250K investment that was provided by 5 women ($50K each). Two of the women were from Microsoft Seattle including Melinda Gates.

The venture we invested in failed, the market crashed in 2000 and no one wanted to invest in ‘young, unexperienced businesses’ but the SheEO initiative captured people’s imagination, and has been oscillating from the front to the back of my mind ever since.

On December 13th 2012, I wrote a note to the amazing Kaela Bree asking her if she thought there were 10 high potential, fundable young women-led startups in Toronto that we could gather and create a cohort over the next year to support and help grow.

Last night (a month after that email was sent) we hosted an event of 30 young globally ambitious women-led businesses in Toronto. What a complete and total breath of fresh air. The room was full of energy and excitement and dreams and love…and AMBITION. It was fantastic.

We are starting with small cohorts of women -5 per group- who will meet weekly to discuss their personal and business goals and then they’ll help one another along the way. We will come back together as a group monthly and share what they are learning. Do they need more help, more mentorship, resources, or, is the peer network sufficient?

My personal passion is to help those with big ideas get funded, get mentored and scale in the way that they want to. I’m done with this model of ‘how we do things’. I want a personalized approach to venture financing that taps into the uniqueness of everyone who has a dream.

Why is our entrepreneur financing system set up the way it is? We invest in 10 companies and expect one to ‘win’. That’s just ridiculous. Who invents a funding system that has a bar of one winner out of 10? And who decided that winning meant going public?

I’m out to change that. This year we’ll pilot a couple of models that go in different directions than what we’ve been doing for the past way-too-many-years. But first things first, we need a pipeline of fundable women entrepreneurs. That’s where we are starting. If you know women who should be part of our group please send me their names and we’ll invite them in to this special community.

At the same time, I’m going to continue conversations with the 60+ high net worth, passionate more experienced women in my network who would like to help the next generation along but are also not huge fans of our current financing model. If you are one of those women and I don’t know you, send me an email and I’ll invite you in.

It’s a big year. 2013 is going to bring forth a lot of new perspectives, models and innovation and women are going to be at the center of it. Stay tuned.