An incubator’s litmus test for tech start-ups

Entrepreneurs starting up new technology businesses need government support in two critical areas—money and mentorship—to succeed in an extremely competitive global marketplace, according to Susan Gorges, chief executive officer of SpringBoard West Innovations Inc., a Saskatchewan business accelerator with offices in Regina and Saskatoon.

Susan Gorges, chief executive officer
of SpringBoard West Innovations Inc.

SpringBoard West, founded in 2007, specializes in mentoring. It provides management services in a way that mitigates risk for start-ups—entrepreneurs run a “bar tab,” but do not pay if their business hits a brick wall. In effect, the government bears the risk. SpringBoard West, a non-profit group, has received financing of nearly $10 million for its first six years from the federal and provincial governments, including a consortium known as the Western Economic Partnership Agreement. SpringBoard West also serves as a consultant on a fee-for-service basis to existing companies looking for advice on markets and competition.

Before she joined SpringBoard West, Gorges, 64, helped launch two global companies that grew to more than $150-million in annual revenue.

Why do start-ups need services like yours?

Because of the acceleration curve in the adoption and replacement of new technologies. If you start out as an inexperienced person in a market, the odds against you succeeding are astronomical. You can’t get there fast enough. You need someone who has connections with suppliers, partners, investors and customers; someone who can open doors for you. You need a team of people who can gather data as quickly as possible, and then monitor that data, because regulations in international markets change all the time, and new competitors are coming on board all the time. It’s a very high-paced world—very exciting, highly risky. So to mitigate all of those risks, you put a senior person in a team of data gatherers. With a team, you increase your odds of success.

How many businesses have you mentored?

Since 2007, we have interviewed 320 potential clients. We have taken on just under 100, and coming out the back end of the process and getting “into the marketplace,” we’re probably talking about 20. That’ll tell you how long the odds are.

What have you learned as a mentor?

As a team, we have learned to be a little more critical and assess the personality of the founder a little more crisply.

How did that come about?

We found that in the early days, we had founders with great technology but they simply wouldn’t take advice or didn’t want to work hard enough to be the CEO of a company that would make it in the marketplace.

How did you get over those two hurdles?

We ask prospective clients to take a test. There are all kinds of entrepreneurial skills tests, but this one’s a little bit different. It breaks down the skills that you need, like vision, strategic thinking and communications. It scores you in those skill areas and then gives you, and therefore us, ideas of where you have strengths and weaknesses, with recommendations on how you can overcome some of these weaknesses.

You can tell if someone’s going to work hard or take advice from a test?

No, that you do in an interview. There’s a lot of interaction that goes on in our diagnostic stage. We ask, “Have you looked at this?” And if you answer, “I don’t need to look at that,” that’s a black mark in the left column. If it’s, “Oh my goodness, I hadn’t thought of that before, what should I do?” that’s a mark in the right column. Are we able to do this 100%? No. People are people and we get all kinds of surprises.

What is the broader lesson for global entrepreneurship in Canada?

Government support of entrepreneurs is essential for early stage start-ups. The best practices of innovation intermediaries, as we call ourselves now, is that money must be matched with mentoring. There is an organization called the International Commercialization Alliance with 22 countries represented. All follow that model—money alone is not sufficient and mentoring alone is not sufficient. Governments need to look at how to support programs that combine the two together.

I think the biggest value our mentors provide is connections. As a new start-up, to get the door open to even begin a sales cycle is almost impossible, but our staff can call up folks they’ve done business with before and say: “This technology is ready to go, would you please let this client come in and do a presentation for you?”

What’s the critical hurdle for a start-up?

Their first hurdle is understanding what the market really needs. The second hurdle is understanding how to take new technologies and solve problems in a way that will be superior to the competition, not only in function but in cost-effectiveness. The next hurdle is financing the whole enterprise through the cycle of prototyping and then scaling up and certifying the product, and the fourth major hurdle is building the management team. The role of our team as mentors is to be the management team before this raw start-up can afford to hire an executive team.

How do you become a management team for a start-up?

If you look at the background of our senior staff, we’ve worked in every role, from product development R&D to operations to marketing and sales and finance.

What do you charge to be a management team for an entrepreneur?

Our clients might come out of the program with a “bar tab,” anywhere from $20,000 to approaching $100,000. Think of it as your student loan.

How willing are they to take that risk?

If they don’t get to end of game, because we’re funded by the government, we don’t ever send them an invoice. Until you get to the marketplace, there’s always a risk that your new technology will not be viable.

There’s a risk to you as well. What do you do, in terms of due diligence?

There’s an application process. There are two ways you can come into our program. You can work with us in a structured workshop setting that helps you explore the commercial viability of your idea. This is for someone who’s very early in the innovation stage. Or you can apply to us directly and we go through a diagnostic. We look at your intellectual property. Is it competitive? We look at the market. Is it sizable and approachable? We had one client who had a great idea but IBM was already there. We make a judgment call as to whether there is commercial feasibility.

In Saskatchewan, how important is the global marketplace to an entrepreneur?

It’s a 100% fundamental requirement for a technology-based entrepreneur because our market in Saskatchewan is too small. Indeed, our market in Canada is too small. You have to go international as quickly as possible.

What kinds of businesses are you seeing in Saskatchewan?

The majority of them are ICT [information and communications technology], either in software, telecommunications or the use of sensors that communicate. At this moment there are fewer hurdles to get into an international market in the ICT space than in, say, biotech or life sciences.

How entrepreneurial are the people of your province?

They are very entrepreneurial because of our farming background—very self-efficient, inventive, great problem-solvers. Of course, there are a couple of generations “off the farm” that have never had that experience of having to fix something in the middle of the harvest season when you didn’t have time to get to town to get a repair part. But the younger generation are very imaginative and quite self-confident. We have good entrepreneurial DNA, but not necessarily the mechanics, the skills. They wouldn’t start out and say, “I’m going global with my idea and I want to be that big.”

This interview has been edited and condensed.