You won’t believe what’s happening in Waterloo!

When a region similar to ours decides to get it’s tech economy in gear, we could learn a thing or two…

The View from up North I was on another road trip last week, traveling about 60 miles west of Toronto to Canada’s version of Silicon Valley, greater Waterloo. I was there to facilitate and speak at a conference paid for by the Province of Ontario to help create policies and best practices for Ontario’s many new regional technology councils. The hosting organizations were the province’s versions of Connecticut Innovations (the ministry of science and technology) and Communitech, a regional tech council covering an area smaller than our state, but filled with many large tech firms such as RIM – Blackberry.

The area reminds one of Michigan, and nearby are Amish villages that have a Lancaster feel to them. So I can’t say the experience is similar to that which our chairman David Reisner reports back about after going to Shanghai or Bangalore – no maglev trains or 50 story buildings, but it did provide an interesting blueprint about how to do everything possible to grow a high value-added innovation based economy in North America.

Three Take Away Ideas: 1. Build undeniably world-class academic departments 2. Encourage a culture that revolves around successful entrepreneurs. 3. Push government money out through well trained intermediates – like tech councils!

Let’s start with their approach to intellectual property. The University of Waterloo has quietly been recruiting the largest and perhaps best faculty in computer science engineering and computation mathematics. As in, the best anywhere.

Check out the current issue of MacLean’s and there it is, Waterloo, the number one school in Canada – I always thought it was McGill or Toronto. As for the stature of the program, well, Microsoft sent a fellow named Bill Gates out to personally do the recruiting of the graduating class of engineers last year.  Microsoft backed up his appearance by saying Waterloo has the top program in the world.

Several entrepreneurs spoke at the conference about how the school built its reputation and why they feel so loyal to the area. For starters, Waterloo, a state school, decided not to retain any ownership of IP in work developed there. Instead, they encourage their professors and graduates to hang around and form businesses in the region. They figure it will all work out in the end.

Guess what? Between the founder of RIM and another firm, Open Text, the school plans to raise some $400 million in donations by grateful tech executives who developed their ideas at the University. So the “free ideas here” sign by the front door seems to have been a good bet. 

Google is setting up shop in town for a new PDA maps initiative and Slipstream, the engineering behind all of the faster dialup and broadband compression codes for almost every ISP in the world, is becoming a big player.

Perhaps we need to look at the income from the IP ownership that UConn keeps to see if this would be a good bet for them to make. It’s something to consider.  It seems to have been an inducement for professors with high commercialization potential to try to find their way to Waterloo from other schools and countries.

But that’s just the beginning. The university earmarked $40 million to provide a landscaped setting for all the new companies they are hoping this great and free IP will become. They have already broken ground on a 600 acre research and incubator park, their version of efforts such as our UConn research park, CCAT’s Rentshler Field project and the older Yale Science Park concept. The land is right next door to the university’s campus and adjacent to RIM’s world headquarters. They have laid out the roads, parking lots and signage and have three of what may end up being 20 or so buildings up.

One gleaming glass and chrome edifice, where we met, is a 60,000 square foot “accelerator centre” with support services and angel groups, and a third of the space in easily configurable incubator space for start-ups. The centre opened a month ago and it is now full, with a waiting list of companies. Because of the desirability of the space firms have to apply and be selected based on their growth potential.

There’s more. Several successful and grateful entrepreneurs have raised money for a $95 million venture fund earmarked just for Waterloo based companies. And the provincial government is contemplating a $50 million early stage seed fund to be spent in units of $100,000 to $200,000. The money would be doled out not by the province, but through the tech councils in a rigorous, peer (as in entrepreneurs) review process. They expect to have this kind of money available at first over a few years and then every year once they hit a certain scale.

Perhaps the most interesting fact from our perspective is the structure for managing the whole process that Ontario – with a population of 12 million and the self professed “California” of Canada – decide to move forward with. 

Rather than have a government agency handle the evolution and design of the program, they took $40 million and gave it to 25 or so existing or new technology councils (they call them Regional Innovation Networks (RINs)) in the form of three year $1.5 million grants.  Read more…

The occasion for the conference last week was the end of the first year for many of the RINs. This has some parallels to the Connecticut cluster program, through which we just received $200,000 for the Innovation Pipeline Accelerator and Database. The difference is that the money in Ontario is going out not to vertical groupings of companies (we are technically the software cluster) but to regional networks that combine software, IT, bio-tech, advanced manufacturing, risk capital and incubator services based on each region’s unique needs. In fact, where there were overlapping IT and Bio groups, both got money with the idea that they should then find ways to work together. 

One nice thing for the CTC, not only were we invited to help move these groups to the next level, but they  all seemed genuinely interested in the CTC’s concept of organizing regional technology based technology policy around the Innovation Continuum,” the same one we have been presenting around the state to business groups and to the legislature.

They also endorsed the general strategic path that the Council has adopted in building a geographically significant culture of innovation.

A few interesting notes. One young scientist who is running a virtual incubator as well as his own mathematics labs told me that when he sought to leave Russia five years ago he first went to the U.S. embassy, but was told his chances were nonexistent to emigrate given that he was only a tenured professor with one book to his name in computational math, “you’re not a Nobel laureate are you?” 

Next he went to the Canadian embassy where we  was told he could move in two months and he would be given the equivalent of a Green Card immediately, so intent on landing his talent were the Canadians.

The other story is an embarrassing admission: you need more than a driver’s license to go to Canada these days. Who knew? The Canadians are happy to have us in their country, but you do need at least a real birth certificate if you want to come back. You’ll need your passport as of January 1, 2007.

Fortunately, the staffs’ of Senator Lieberman, Dodd and Congresswomen DeLauro prepped me with the personal cell numbers of enough INS, Homeland Security and State department people so that I was ready when I hit customs, two hours early. As it happened, the U.S. customs officer just gave me a withering look, told me he could put me in a holding room for a day if he wanted to, then let me back in with a promise not to be a jerk again.

Matthew Nemerson President & CEO Connecticut Technology Council mnemerson@ct.org

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