East Coast Startups Hit the Growth Stageentrevestor.com/images/uploads/Entrevestor_June2016_Digital_II.pdf · Proposify is an example of a recent trend in the Atlantic Canadian startup

JUNE 2016 • VOLUME 5 , ISSUE 3THE JOY OF SCALING

Our Most Infl uential Company 7 The Scaling COO 13 Tech in PEI 16

East Coast Startups Hit the Growth Stage

June2016•Volume5,Issue3EntrevestorIntelligence3

When theHalifaxstartupProposifywanted to tell theworldhow ithadgrownin2015,itputoutapressreleasewithsomeprettygaudynumbers.

FoundedbytechentrepreneursKevinSpringerandKyleRacki,Proposifyhadalreadybeengoing forhalfadecadewith thegoalofproducingaSoftware-as-a-Service product that would help agencies and othersproduceabetterqualityofpitches. It changednames,spunoutof thewebdevelopmentcompanywhere itwasborn, tookonabitofcapital.Butitwasn’tuntil2015thatProposifyreallybegantogrow.Thenumberstellthestory:

Monthlyrecurringrevenue,orMRR,rose1500percentto$66,517.

Paidcustomersincreased746percentto1,617.

Thestaffdoubledtoeight.

“IttookyearstogetProposifyofftheground,andIcan’tcountthenumberof timesmostpeoplewouldhavegivenupandmovedon,butwekeptpushingforward,”saidRacki.“Aswesitonthecuspof$100,000inMRR,I’mincrediblyproudofwhatourteam–now12–hasaccomplished.”

ProposifyisanexampleofarecenttrendintheAtlanticCanadianstartupcommunity – scaling companies. Therewas a baby boom in theEastCoaststartupworldforthepastfewyearswithalotofyoungcompaniesforming,andnowsomeof thoseyoungstersarehittingagrowthspurt.They’re gaining customers, hiring staff, and exporting products aroundtheworld.

Thisgrowth isgreat for thecompaniesthemselves, theirstaffandtheirinvestors.Italsohasamassiveeconomicbenefit.Allthepeoplewhohaveinvestedsomuchblood,sweat,toilandtearsinthestartupcommunityinthelastfiveyearsdidsowiththevisionofcreatinganinnovativeeconomyontheEastCoast.Inorderforthatcommunityofinnovatorstoreallyhaveanimpactonthebroadereconomy,someofthestartupshavetogrowintobonafidecorporations.That’sbeginningtohappenacrosstheregion.It’snothappeningwithease,andtherearestillplentyofchallenges.Buttheseedshavebeenplantedandshootsareappearing.

Now several organizations are beginning to formulate ways to helpestablished companies scale. For example, the regional acceleratorPropelICTisworkingonaprogramforscalingcompanies.

“We’veallwitnessed thegrowth in startupactivity inAtlanticCanada,”saidCalvinMilbury,PresidentandCEOoftheNewBrunswickInnovationFoundation.“We’repleasedaboutitandexcitedbyitbutwecan’tjustbecontentwithstartups.Wehavetobeinternationallycompetitive.”

Milburyrefersfrequentlytotheneedformore“gazelles” intheregionaleconomy.While“unicorns”areknowntobehigh-growthcompanieswithabillion-dollarvaluation,gazellesareaslightlylesswellknownspecies

Stalking the East Coast GazelleCompanies growing 20% or more annually over several years are becoming more common in Atlantic Canada. There’s a movement to keep them growing.

thoughno less important.Gazellesarecompaniesofanysize thataregrowing revenues by at least 20 percent per year over four years. ItmaybehardtofindmanyofthesecompaniesinAtlanticCanadasimplybecausenotmanyofourstartupshavefouryearsofrevenuehistory.Buttherehavebeenmorefrequentsightings.

“Ourphilosophyhereistogrowthesecompanies,”saidMilbury.“It’sthosecompanies,theonesthataregrowingquicklyoveraperiodoftime,thatarecreatingwealthintheeconomy.”

Though it’s difficult to get public statements on revenue growth,there is evidence of these companies blossoming. Halifax-based STITechnologies, for example, which helps pharma companies distributesamples,wasnamedtotheDeloitteFast50lastyearwhenitrevealedrevenuegrowthof204percentover four years.Thatplaced it 41stonDeloitte’sannualtallyofthefastest-growingcompaniesinCanada.

STIwastheonlyAtlanticCanadiancompanytomaketheFast50,thoughDeloittedidnameSmartSkinTechnologiesofFrederictoninitsOnestoWatchlist,indicatingit’sontracktomaketheFast50beforetoolong.

St.John’s-basedfinancialtechnologycompanyVerafinsaidlastyearthatitsrevenuesin2014hadgrown45percent,andthatitscompoundannualgrowthratein2012-2014hadbeen51percent.Lastautumn,Dartmouth-basedmulti-channelmarketingcompanySimplyCastsaiditsthird-quarter2015sales increased105percent fromthesameperiodayearearlier,andthatitexperienceda99percentretentionrateamongitscustomers.

Thesecompaniesarebynomeansalone.Entrevestorestimatedthatattheendof2014therewereabout80AtlanticCanadiancompaniesthat

Halifax-based Proposify doubled its team to eight people in 2015, as it began to gain traction after years of laying the company’s foundation.

4EntrevestorIntelligenceJune2016•Volume5,Issue3

Examples of Gazelles Are PlentifulWHAT’S INSIDE

Stalking the East Coast Gazelle Companies growing 20% or more annually over several years are becoming more common in Atlantic Canada. There’s a movement to keep them growing..................................................................3

Our Most Influential Company Though it keeps a low profile, Mariner Partners is a multi-faceted conglomerate with its own world-leading businesses and investments in a portfolio of startups.....................................................7

Affinio: Staffing Up and Selling Hard After Affinio closed its $4 million funding round late last year, the social media analytics company went on a hiring spree that is continuing.........................10

The Scaling COO As HotSpot Merchant Solutions has grown rapidly in recent years, so has the role of COO Erin Flood..........................................................13

A Wave of Funding in St. John’s Led by Pelorus Venture Capital and Killick Capital, a group of St. John’s startups have received seed rounds and are executing on their business plans...................................................14

Digital Charlottetown For years life sciences have captured all the attention in Charlottetown, but there is new momentum in the IT segment.................................16

Channeling Money into Drug Discovery In less than a year, Appili Therapeutics has raised $3.3 million in funding, built up a team and established a base in Halifax. ................................ 17

What’s Wrong with Halifax? There’s more going on in the Nova Scotian capital than the naysayers acknowledge .......................19

Entrevestor Intelligence Entrevestor Intelligence is the quarterly publication of Entrevestor, which provides news on the startup and innovation communities in Atlantic Canada and the Waterloo Region. These reports provide a deeper analysis of the startup world than can be delivered in daily news stories. To receive our daily reports, please leave your email address at entrevestor.com.

Cover photo: Tim Burke, left, and Stephen Hankinson are on a hiring spree at Affinio, the fast-growing social media analytics company based in Halifax. Read the article starting on Page 10.

Entrevestor Intelligence Design: Roxanna Boers

hadmorethan$100,000inannualrevenueandsalesgrowthof30percentayearormore.Bytheendof2015,thefigurewasprobablycloserto100companies.

ThegoalofMilburyandotherpeoplethroughouttheecosystemistokeepthesecompanies growing and scale them intomajor companies headquartered in theregion.Andcomingupwithprogramstosupportsuchgrowth isn’teasy. It’sonethingforpublicagenciesorgovernmentagenciestodeviseprogramstogiveseedfundingtocompanies;it’sriskier,moreexpensiveandhardertoselltothepublicprogramstohelpmedium-sizedcompaniesgrow intobigcompanies.Andat theendoftheday,goodcompanieswillhavetofigureouthowtoscaleontheirown.

“Theecosystemitselfisatthepointwherethecompaniesarefacingallthesescalingissues,”saidDawnUmlah,Entrepreneur-in-ResidenceatInnovacorp.Shesaidthebigissuealotofcompaniesarefacingiswhatshereferstoas“operationaldebt”.Essentially, that is theweaknesses inacompany’sstructureororganizationthatcreepintothebusinessasitgrows.Theyhavetobeaddressedbeforethecompanygrowsfurther,andtheprocessofremovingoperationaldebtcanbepainful.

“Operationaldebtcanbefound inabunchofdifferentareas,”saidUmlah.“OnethatisprevalentinmanystartupsistranslatinganR&Dorganizationintoascalablecompany.Youhaveagreat,smartteamandyouhaveafewcustomersandnowwhat?Howcanyoueffectivelyreplicatethisatscale?Someofitisculturalanditrequiresculturalchanges.Thecompanytypicallyneedsadifferenttypeofurgency,accountabilityanddiscipline.”

Asahypothetical exampleof theproblem, she saida companymight not haveanindividualwhounderstandsstrongsalesprocesses.Thecompanymighthireaseasonedsalesleader,butthatpersonmayendupreportingtooneofthefounders,

‘Our philosophy here is to grow these companies. It’s those companies, the ones that are growing quickly over a period of time, that are creating

wealth in the economy.’

– Calvin Milbury, President and CEO New Brunswick Innovation Foundation

Calvin Milbury


whostilldoesn’tunderstandfullyhowsaleswork.Thecompanythereforehastoadjusttomakesuretheexpertiseofthenewpersonpermeatesthecompanyculture.

NBIFhasraisedthebannerofhelpingcompanieswithrevenuetogrow,andrecentlyheldaninformationsessiontitled“FromStartuptoScaleup”thatoutlinedthreewaysitwillhelpgrowingcompanies:

Governanceandleadership–WhileNBIFwantstohelpstartupfoundersprogress intoexecutives, italsowantsstrongergovernance.Researchhas shown that companies with boards of directors outperform thosewithout boards. Some founders resist establishing boards, but NBIFandothersinthecommunitysayboardscanextendacompany’sreachand talentpool. “Thinkabout itasagreatsituation thatyoucannotdowithout,”saidDaniellaDeGrace,CEOofGembaSoftwareSolutions,attheMonctonevent.

Sales –Most startups have a few customers or early adopters. But toscale,companiesneedtomastermodernsalesproducts.Forbusiness-to-consumerSaaSproducts,thecompaniesneedtolearnthemethodstogettheirproducttomillionsofclientsandtomeasureandamplifythethingspeople pay for. For enterprise products, companies need to learn howtodevelopandexecuteonasalesfunnel.Theymayhavetoopensalesofficesclosetotheircustomers.

Capital–NBIFhasaceilingofinvestingupto$1millionineachcompany,andwill in rare exceptions increase that ceiling. The real change in itsfundingstrategyisthatthefoundationisnowwillingtotakealeadroleinAandBrounds.Whereasitpreviouslywouldjoinfollow-onroundsledbylargerpartners,NBIFnowcouldwritethetermsheetsitselfsothetargetcompanycouldshowotherfundersanofferonthetable.

“Whencompaniesareperforming-to-planorexceedingtheirplans,wewillnotbeafraidtostepup,”saidMilbury.“We’llworktogettothose[biggerdeals].We’rehopingtotakethaton,hopefullythroughpartnerships.”

AcrossAtlanticCanada, throughout thespringof2016,moreandmorecompanieshavebeenbringing inmillion-dollar-plus financingdeals.Asofpresstimeforthispublication,thisamountedtoalmost$13million inequityinvestment,mostofitcomingfromprivatesources.AtEntrevestor,wehearofdealscomingdownthepipe,andthroughthesummertherewillbemoresignificantdealsannouncedbyscalingcompanies.

This issue of Entrevestor Intelligence examines trends in scalingcompanies.We profile a few that are gaining revenues or hiring staff.WelookattheburgeoningcommunitiesinSt.John’sandCharlottetown.Andweprofile thegranddaddyof theAtlantic techcompanies,MarinerPartnersofSaintJohn.We’redoingthisnowbecausescalingisthemostimportantissuefacingourcommunity.

“It’s of the utmost importance,” said Innovacorp’s Umlah. “From aneconomicstandpoint,startupsontheirowndon’tcreatealltheopportunity.Youneedmultiplebigcompanies–andafewofthemthatgrowbigandstayhere.Ifyouhaveeveryonestillatthestartupstageyou’renotreallybuildinguptheskillbasethewayyouneedto.”*

There are Challenges in Nurturing Scaleups.

‘From an economic standpoint, startups on their own don’t create all the opportunity.

You need multiple big companies – and a few of them that grow big and stay here.’

– Dawn Umlah Entrepreneur-in-Residence, Innovacorp

Dawn Umlah

RECENT SEVEN-FIGURE FUNDING DEALS

COMPANY CITY BUSINESS FUNDING

IceJam Charlottetown Gaming $3M

AppiliTherapeutics Halifax Drugdiscovery $2.3M

LifeRaft Halifax Socialmediaanalytics $2M

SpringLoaded Dartmouth Bionickneebrace $1.9M

Fiddlehead Moncton Predictiveanalytics $1.8M

CarbonCure Halifax Greenbuildingmaterials $1.75M

EigenInnovations Fredericton InternetofThings $1.4M

UbiqueNetworks Toronto/Sydney Serveracceleration $1M

SkySquirrel Halifax Vineyardanalytics $1M


By Peter Moreira

Lastautumn,MarinerPartnersconcludedasizeabletransactionthewayitdoesmuchofitsbusiness–quietly.

TheSaintJohntechnologyconglomerateworkswithahostofstartups,andonethatcapturedalotofitsattentionwasShiftEnergy,anIndustrialInternetofThingsconcern thatprovidesautomatedenergycontrols tolarge facilities.Mariner and several of its principals had great faith inShift’stechnology,sotheysankbothtimeandmoneyintothecompanydespiteseveralsetbacks.Thenlastfall,theydecidedtobuythecompanyoutrightandmakeitawhollyownedsubsidiaryofMarinerPartners.

“Thisyear,webegan toget tractionwith theownersandoperatorsoflarge buildings who are taking the lead in sustainability and energyefficiency”saidMarinerCEOCurtisHowe.“Thisisamarketmeasuredinbillions,soitisareallysignificantopportunity.We’velearnedenoughaboutthebusinessthatwereallybelievewecanmoveitforward.”

The Shift acquisition transitioned the entire Mariner group. Emergingfromthedeal,Marinerhasfourmainbusinessdivisions,oneofwhichisShiftEnergy.Shifthasthepotentialtogeneratesignificantrevenuesforthegroup,saidHowe,andthiscanbedonepartlybysellingtoexistingMarinercustomers.AsadeveloperofIIoTtechnology,it’sactiveinahot,hot space,with companies such asCisco, IBM, andGeneral Electricincreasingly involved in the IIoTsegment.And the investment inShiftrepresentedasubstantialamountofmoney.

“Itwasa lot,”saidHowewitha laugh. “More thanIever thoughtwe’dinvestinastartup.”

Here’soneinterestingthingaboutthistransformativedeal:itwascarriedoutwithnofanfare.Therewasnoannouncementthatthisstartupwas

now a unit of one of the most powerful tech companies in AtlanticCanada.Therewasmerelyaredesignof theMarinerwebsitetoshowthatShiftwasnowoneoftheprincipaloperatingunits.

Interesting,butnotsurprising.

Mariner should be far better known than it is in Atlantic Canada andacrossthecountry.Ithadrevenuesineachofthepasttwoyearsofmorethan$25million(growthwasstuntedin2015becauseithadclientsintheAlbertaoilpatch).Itoffersworld-leadingvideostreamingtechnology,anditsportfolioofstartupsrepresentsuntoldpotential.Itsexecutives,someof themveteransofNewBrunswickTel,werethedriving forcebehindPropelICT,theregionalaccelerator.

What’smore, thecompany’schairmanandco-founder isprobably thebest knownmember of theAtlanticCanadian startup grouping.GerryPond, the former head of New Brunswick Tel, has been celebratedacrossthecountryforhiscontributionstostartupsandtechnology.HeisthefaceofMariner,andisbetterknownthanthecompanyitself.

“It would be difficult to overstate the impact Mariner has had in theregionalecosystem,”saidDougRobertson,PresidentandCEOof theVennCentre inMoncton. “Building on the transformative innovationsthatcharacterizedtheirdaysatNBTel,GerryPondandhiscolleagueshaveplayeda significant leadership and catalytic role, from initiativeslikePropel in its various iterations to investment inandmentorshipofsomanydynamicITcompanies,topolicyandthought leadershipbothprovinciallyandregionally.ThepositiveimpactofMariner’scontributionwillbefeltacrosstheregionformanyyearstocome.”

Mariner Partners is the most infl uential tech company in the region, with its own world-leading businesses and investments in a portfolio of startups.

OUR SILENT GIANT

‘It would be diffi cult to overstate the impact

Mariner has had in the regional ecosystem.”

– Doug Robertson, President and CEO, Venn Centre


MarinerInnovationshadbeengrowingstronglysoitbecameoneofthefourpillarsofthegroup.However,2015provedtobeachallengingyearbecause several of its clientswere in theAlberta oil patch andwerecuttingback.

Shift Energy

Mariner itself started Shift in 2009 to develop data-based productsaddressing energy consumption of large facilities. In May 2013, thecompanychangeddirection,buildinganIIoTapplicationthatwouldreactautomaticallytothedataitcollected.Withthesoftwareinstalled,alargebuildingorgroupofbuildingscanautomaticallyreduceenergyuseinkeyareasbasedondataanalytics.

Toachievethisgoal,itsEOSsoftwareusesatechniquecalledIntelligentLiveRecommissioning,whichappliessophisticatedalgorithmstothedatatodetermine theoptimal settings instantly through theexistingbuildingcontrol systems. Ina typical largebuilding,EOScollectsandanalyzesabout5milliondatapointsperday,andusesthatanalysistofinetunetheenergy performance of centralized heating and ventilation componentssuch as boilers, chillers and air handlers – about 2,000 adjustmentsdaily.Thosesmalladjustmentscanreduceenergycostsinalargeofficebuilding,hospitalorarenaby10to20percent.

Mariner issoexcitedabout theShift company that itboughtoutotherinvestors and now showcases the IIoT unit as one of its four pillars.Ayearago, theShift technologywasbeingusedbyRogersCentre inVancouver and an Ontario hospital. Now it’s being installed in officetowers, hospitals and arenas across Canada and the company hassigneditsfirstU.S.customer.

TheMarinergroupworkedhardtotweaktheproductsoitwouldfindamarket.

“Findingtherightmarketforthiswasarealpuzzle,”saidHowe.“IfEOSwere deployed into the top 10 percent of the world’s building stock, itwoulddecreasetheworld’senergyconsumptionby3or4percent,andtheworld’scarbonemissionsbythesameamount.”

Shiftisnowintalkswith50potentialcustomers,andisfindingstronginterestespecially insports facilitiesandconventioncentres.HoweexpectsShiftEnergytobeamajorcontributortoMariner’stoplineby2017.

A close examination of Mariner’s four divisions shows why it shouldbe considered the most influential company in the East Coast techcommunity.

Mariner xVu

Mariner xVu (pronounced “X-View”) is an analytics system that allowsonline video content providers to identify and correct problems withInternetvideodeliverysystems.

“The internetwasn’tbuilt todelivervideo”,saidHowe.“Andthepiecesboltedontosupportvideoarequitesophisticated.Whentheydon’tworkproperly,it’sreallyhardtofigureoutwhatwentwrong.”

Mariner xVu can figure out what went wrong even when the issue ishiddendeep in the largest systems. It’sadifficult taskbecauseonlinevideodelivery–whichhasgrownevenmorecomplicatedwiththeadventofmobilevideo–involvesdifferentcomponentsbasedindifferentplaces.Infact,thexVusoftwarenowsearchesoutissuesinmorethan135billionvideonetworktransactionsannually.Howecallsit“findinganeedleinacontinentalhaystack.”

It’s an attractive business because video is by far the fastest growingsegment of the internet and that growth is nowhere near reaching aplateau.We’llseethatgrowingstronglyforthenextfewyears,”saidHowe.

Mariner Innovations

ThisisaconsultancybusinessthatspecializesinapplicationmodernizationandITprofessionalservices.Ithelpscorporationsandotherorganizationssolve ITproblems. Ithasstrongclient relationships inAtlanticCanada,anditscustomersextendacrossCanadaandintotheU.S.

Curtis Howe

Mariner’s Four Divisions Set it Apart

‘We realized we had one of the world’s best talent pools in internet

video. We are now the world’s leaders in what we do.’

– Curtis Howe, CEO, Mariner Partners


East Valley Ventures

This is theunit thatmakesMarinerPartnersunique in the region.Noother techcompanyhasan investmentportfoliocomprisingdozensoftechstartups.

Headed by Pond and finance specialist Jeff White, East Valley isalmost a club inwhichMariner andpeople associatedwith thegroupinvest in startups. Mariner itself has invested in about half a dozenof the25startups listedon theEastValleywebsite.Allbut twoof theinvestmentsare inAtlanticCanada (Ottawa’sgShift boughtaMarinercompanyInNetworkinanall-stockdeal;andMarinerinvestedinVictoria,B.C.-based Tutela Technologies for strategic reasons.) Some pastinvestments have failed.A fewhave exited.A few– likeFredericton-basedSmartSkinTechnologiesandCharlottetown-andMontreal-basedSpotful–arebuildingrevenuerapidly.

“Theyconsiderthemselvessomethingverydifferentthananinvestmentcompany,”saidDavidBaxter,PresidentofMoncton-basedFiddleheadTechnology,oneof theEastValleyportfoliocompanies.“Theybelievethey’retheretohelpthesecompanies.Moneyisnotthefirstthingtheyoffer.Theyofferasupportnetworkrightoutofthegate.”

OnefinalpointaboutMarinerPartnersisitspedigree.Theoriginsofthecompanybegan inNewBrunswickTelecom.Before itmergedwith itsAtlanticCanadiancounterpartstoformAliant,itwasknownasoneofthemostinnovativephonecompaniesanywhere.Itsexecutives–likePond,HoweandoperationswhizBobJustason–arestillmainstaysofMariner.

Thenduringthedotcomboomofthe1990s,manyoftheNBTelalumniworked at Saint John-based iMagic TV. It blossomed into a publiclylisted company by helping phone companies offer TV and Internet tocustomers.AfterAlcatelboughtiMagicforaboutUS$30millionin2003,thepeoplethatbuiltiMagicworkedonotherventuressuchasRadian6andQ1Labs(bothofwhichexitedin2011-12)whileotherswantedtoworkinonlinevideo.

“We realized we had one of the world’s best talent pools in internetvideo,”saidHowe.“Wearenowtheworld’sleadersinwhatwedo.”

Headdsthatthesecompanies–Q1Labs,Mariner,Shift--shareseveraltechnologicalelements.Thetalentpoolhasgrown,andMarinerrecentlymovedintoanewlargerofficeonthetopfloorofBrunswickSquareinSaintJohn.Howesaidthecompany’srevenuegrowsatabout15percentperyear,andhedoesnotforeseeanyslowdowninthatgrowth.

Aquestionaboutthefutureprospectsiswhetherthecompanywillraisecapitaltoaccelerategrowth.Howesaidapubliclistingis“nottopofmindforus”buthewouldn’t rule itouteither. If thecompanywere to raisecapital,amorelikelyvehiclewouldbeastrategicinvestmentfromoneofitsblue-chipclients.OneideathatHowedousesimmediatelyisanexit.

“It would be easy to sell the company but that’s not our goal,” saidHowe. “We definitely think that Atlantic Canada needs to buildcompaniesthatcanattractforeigninvestmentasQ1LabsandRadian6… have done so successfully, but we think it’s equally important togrowheadquartersoperationshereintheregion,andwe’vepositionedMarinerinthatlattergroup.”*

The Company Strives to Remain in Atlantic Canada

Gerry Pond: He is the face of Mariner, and is better known than the company itself.

East Valley Ventures has one of the most exciting portfolios of startups in the region. Here are milestones reported by a few of its companies in the past few months:

• EyeRead, a Halifax-based educational-technology company, was accepted into the Google for Entrepreneurs program in Kitchener, Ont.

• Eigen Innovations, a Fredericton-based Internet of Things company, placed third at the second annual Cisco Innovation Grand Challenge in Dubai.

• Automotive technology company Selectbidder of Moncton has signed auction partners in California, Florida, Maine and Pennsylvania.

• Halifax-based Swept (formerly Clean Simple) raised $575,000 in equity funding, becoming the first Atlantic Canadian portfolio company of the venture capital fund Highline.

• Spinzo, the Saint John-based developer of a crowdsourcing platform, signed on the Arizona Coyotes of the National Hockey League as its first professional sports client.

Highlights from the East Valley Ventures Portfolio


becauseit’sanenterpriseSaaS[software-as-a-service]salesstructure.It’sverysimilartoRadian6,andweseeveryaggressivegrowth.We’regoingafteraccountswethinkwecanandshouldwin.”

There’s no shortage of buzz in Halifax about Affinio, given its rapidexpansionplans.Thecompanydoesnotreleaserevenuedetails,butitsstrongfundingandgrowingstaffhaveturnedheads.

“They are definitely one of the rising stars,” said Dawn Umlah,Entrepreneur-in-Residence at Innovacorp. “Even in terms of talentacquisition,they’reworkingverywell…Ihatetosay‘killingit’,butthat’swhatthey’redoing.”

ThebuzzisnothingnewforBurkeandStephenHankinson,histechnicalco-founderandlong-timecollaborator.Inthefirstdecadeofthecentury,theyformedQuarkEngineering,asmallteamofproductwhizzesthatbuiltproductsforthemselvesandothers.Itwasateamwithdiversetalents,andat thecorewereBurke,anengineerwithanentrepreneurial flare,andHankinson,aprogrammerwhoothercodersspeakofinreverentialtones.Theystruckgoldin2009whentheyproducedTetherBerry(latercalledTether),anappthatletpeoplegainanonlineconnectionfortheir

From 9 to 60 Staff in 14 Months

By Peter Moreira

Tim Burke wandered through the empty half of Affinio’s office to themeetingroomwheretheinterviewwouldtakeplace.

In the earlymorning sunshine, this half of the open-plan officewas anexpanseofempty tables,andapingpong table,butnosignofanyoneworking–sofar.

“Oh,itwillfillup,”Burkesaidwithaneasysmilewhenhewasseated.

When Affinio, the company Burke heads,moved into the space in thespringof2016,theco-founderswantedalotofroomforgrowth.Thethree-and-a-half-year-oldsocialmediaanalyticscompany isstaffingup– fast.It had nine employees when it raised $4million in venture capital lastNovember.Sixmonthslater,therewereabout37employees,allbutthreeof themintheHalifaxheadquarters.Bytheendof2016,Burkeexpectstohaveastaffof60,andheforeseesthecompany’sgallopinggrowthtocontinuethrough2017.

“It’sprettyaggressive,”Burkesaidofhishiringspree,adding thatmostof thehiresare insales,marketingandcustomersupport. “It’sprimarily

After Affinio closed its $4 million funding round, the social media analytics company went on a hiring spree that is continuing.

‘Even at [the early stage], the response to the demo was overwhelming. The most common response we

got was, “We’ve never seen anything like this before.”’

– Tim Burke, CEO, Affinio


Helping BBC Worldwide to Fathom its Audience

In April 2015, BBC Worldwide announced that it had selected Affinio to help it better understand its audiences around the world.

The announcement included a sample of Affinio’s simple but effective graphics that show how different groups of an audience are connected.

“Affinio allows us to see patterns in our audience that we’ve not seen before,” said BBC Worldwide Executive Vice President of Insight David Boyle in the statement. “Crucially, it shows the different segments of consumers that follow our brands, allowing us to better understand and engage each of the different types of consumers who love our brands.”

Affinio analyzes the interests, affinities, and social connections of each user to develop a social DNA profile for every user, said BBC Worldwide. It segments members with high affinity to one another into communities of like-minded people. Within each community, Affinio details an unprecedented understanding of the culture of the tribe through how members describe themselves, how they communicate, what interests and affinities they have, and what content is important to them.

BBC Worldwide, the main commercial arm of the BBC, has annual revenues of about $2 billion. Its goal is to build the BBC’s brands, audiences, commercial returns and reputation around the world.

laptopthroughtheircellphoneplan.Thatconsumerproductbroughtinmorethan$100,000inrevenueinthefirstthreedays,andwontheteamInnovacorp’s2010I-3TechnologyStartupCompetition.

TetherwasacashcowforQuarkandprovidedrevenueswhileBurkeandHankinsonbuiltouttheteam,includingArdiIranmanesh,anexpertinSaaSmetrics,andPhilRenaud,who isnowAffinio’sVPEngineering.Aswellasworkingontheirownprojects,theteamdidcontractworkforseveralcompanies,includingstartups.Hankinsonisknownthroughouttheregionforthespeedandprecisionofhiscoding,andclientscametoQuarktogettheteamtobuildouttheirtechnology.

Thenin2013theQuarkteambegantoworkonanewproject,whichtheycalledAffinio.Itisanadvanceddatabasetechnologythatallowslow-cost,real-timeprocessingofsocialnetworkdatatodeterminehoweverypersonon theweb isconnected. Itminespubliclyavailablesocialmediapostsandotherbusinessdata to findpeoplewhoareconnectedbycommoninterests,experiencesornetworks.

Burke admits there are other similar products on the market but whatsetsAffinioapartisitseaseofuse,itsinterpretivefunctionsanditsvividgraphics.Fromtheoutset,itdrewattention.

“Evenatthatstage,theresponsetothedemowasoverwhelming,”saidBurke. “The most common response we got was, ‘We’ve never seenanythinglikethisbefore.’”

The company launched in 2013 with $1.5 million in investment fromHalifaxventurecapitalfundBuildVentures.BuildPrincipalRobBarbarasayshisfirmlikestoinvestintechnologythat“afewreallysmartguyscan’tduplicateinacoupleofmonths.”Affiniofitthebillasitimmediatelydrew international attention. In the past three years, Affinio has beenshowcased at the O’Reilly Strata Conference in New York, and hasparticipated in the Canadian Technology Accelerator in New York,theBBCWorldwideLabs incubator in LondonandMicrosoft’sSeattleAccelerator. Hankinson and Burke won Innovacorp’s 2010 I-3 Technology Startup Competition

for Tether, a product that made more than $100,000 in its first three days.

12EntrevestorIntelligenceJunel2016•Volume5,Issue3

Tim Burke: An engineer with an entrepreneurial flare.

And, the company is having success in sales, with 80 percent of therevenuecomingfromtheU.S.,ledbytheNewYork-basedVice-PresidentofCustomerSuccessJohnGleeson.

“ItwasareallysmartmoveforustohaveaguyinNewYork,”saidBurke.“Johnhasadailypresence thereand it’sbeensignificant indevelopingandretainingclients.…We’vegota lotmore traction in themediaandentertainment industries thatareusingourplatformtoguide theirbrandstrategy.”

Alongwith thesalescamemore funding.WhitecapVenturePartnersofTorontoleda$4millionroundlastNovember,joinedbyBuild,NewYork-basedSocialStarts,NewYork-basedBRaVeVenturesandseveralangels.Andthatmoneyisfundingthehireofasignificantstaff.Fromnineto37insixmonthsandthenanexpected23moreinthenextsevenmonths.

“We’rehiringalotofgreatyoungtalent,”saidBurke.“It’sareallyyoung

group,mostofthemstraightoutofuniversity.”

Aboutone-quarterofthestaffisinproductdevelopment,with35percentinsalesandmarketingandtherestinexecutivepositionsandcustomersupport.Ashe focusesonbuildinghisstaffand thecompany,Burke isleaning heavily on some key mentors. First there are Marcel LeBrun,Chris Ramsey and the team that built Fredericton-basedRadian6, oneof themost successful tech companies in the region. Burke talks withthemregularlytodiscussscalingofacompany.Andhe’sfoundthattheMicrosoftacceleratorhasatremendousalumniprogram,whichhasbeeninstrumentalinintroducingAffiniotoclients.

Asthesummerdeepens,BurkeisturninghisattentionmoreandmoretoaSeriesBroundoffinancing,whichhehopestocloseinearly2017.Hedidn’trevealmanydetailsbuthesaidsomeclientsinthemediaindustrieshave investment arms that have noticed Affinio. The company is alsoworkingwithclientstoadaptnewproducts,someofwhichanalyzedataownedbytheclientsthemselves.

“Withalotofthenewproducts,growthwillcontinueonareallyfastpace,evenmorefastthanwhatwe’redoingnow,”saidBurke.“Ourrevenuepercustomerisgrowingandthesizeofdealsiscontinuingtoriseaswell.”*

The Founders of Radian6 Have Been Great Mentors

‘They are defi nitely one of the rising stars…. I hate to say ‘killing it’, but that’s

what they’re doing.’

– Dawn Umlah, Entrepreneur-in-Residence, Innovacorp

Stephen Hankinson is a programmer known for the

precision and speed with which he develops products.


COO Role Changes as a Startup ScalesErin Flood of HotSpot Merchant Solutions has had to grow as she oversees operations of the evolving business.

By Carol Moreira

Threeyearsago,HotSpotMerchantSolutionswasasmallFrederictonstartup.Today, it’s growingwithamajorU.S.partner.ErinFlood, thecompany’sChiefOperatingOfficer,saidgrowthisdrivenbyprioritizingrelationshipsandcommunication.

TheHotSpottechnologyallowstheremotepaymentofparkingmeters.The product produces data for downtown businesses, and allows thebusinesses to advertise to customers through their cellphones. Thecompanycanalsotrackcustomerresponserates.

HotSpotoperatesinFredericton,SaintJohn,MonctonandCharlottetown,and has about a 30 percent penetration rate in each. Last year, thecompany began a partnership with North Carolina-based mobilepayments company Passport. It’s expected the move will increaseHotSpot’saccessiblemarketby100times.

Flood has been with HotSpot since the beginning and her role haschangedwiththegrowthofthecompany.

“Iwasbroughtontomanagemarketingandsocialmediaanddevelopabrandpresence.I’dbeenworkingforanon-profitontheirsocialmedia,”saidtheyoungwoman,whohasalsoworkedintheITsector.

Her role rapidly expanded to include customer services and humanresources. Now, she is also responsible for hirings and strategicpartnerships.

“Instartuplife,youwearalotofhats,”saidFloodwhograduatedfromNova Scotia’s St. Francis Xavier University in 2011 with a focus inpsychologyandsociology.ShehasalsocompletedSethGodin’sAltMBAandisaC100TopTechWomaninCanada.

“The hats allow you to gain more experience, although it did seemoverwhelmingatfirst.Welivedandbreathedthecompany.Westilldo…Buildingacompanyhasbeenanunmatchededucation.”

HotSpotiscurrentlyhiringaccountmanagersanddevelopersandcouldtakeonuptofivenewhiresinthenextfewmonths.Thenumbercouldgrowto15bythefall.

Growth israpid,but the teamhas learnedtobecautiousabouthiring,aftertakingonalotofpeoplein2013andthenhavingtodownsize.

“Wejumpedthegun,”Floodsaid.“Wewentupto15staff.Weweren’tfocusingondevelopingourpeople,wewerepushingtheproduct.Now,we’relearningfromourmistakes,andinvestingingreatpeople.”

There are currently three on the executive team—Flood, CEO PhillipCurley and CTO James Lockhart. They are assisted by veteranentrepreneurDavidWagner.Withpart-timeandcontractstaff,therearetenpeopleinvolvedinHotSpotoperations.

FloodsaidHotSpotisnotabouthierarchy.

“Atthestartofeveryweek,weholdabigmeeting.Thatcommunicationiscrucial,”shesaid.

“We aim to ensure hires fit with our culture. It’s not just qualifications.Weseetheirstrengthsfromconversation.We’relookingforpassionate,humble,empathetic,positiveandself-directedpeople.”

Investing in trustedstaffallowstheexecutive teamto lower theirstresslevels.

“Inastartup,you’realwaysstressed,butifyouweren’tthere’dbeabiggerissue,”Floodsaid.“Youneedtobeawareofyourcompany’spositioninthemarketplaceandwhatisgoingonelsewhere.

“When you’re not worried, I don’t think you’re learning. You might bemissingsomething,”sheadded.

Stressmaybelargelyinevitable,inFlood’sopinion,butshedoeskeepitincheckbyensuringshehasanhouraday,tech-free,toexerciseoutside.

Atthemoment,theexecutiveteammembersarealltrainingtotakepartintheDuncanHadleyTriathlon.

TheteamisalsobusylearningthecultureofPassport.TheU.S.companyhasraisedUS$7.5millionininvestment,hassatelliteofficesinBarcelonaand Bangalore, and operates in more than 1,000 locations, includingChicago,TorontoandBoston.

“WehavetoensurecommunicationswithPassportarestreamlinedandconsistent,” Flood said. “We travel quite a bit.Whenour technology isintroduced to a new city we’re there. It’s exciting.We’re learning howthingsaredoneintheU.S.”*

‘In startup life, you wear a lot of hats.

The hats allow you to gain more experience, although it did seem

overwhelming at first.’

– Erin FloodErin Flood


By Peter Moreira

AfterthefundingannouncementsemergedfromSt.John’s,thepostingsbegantoappearforjobopeningswiththecompanies.

Clockwork Fox Studios, Sentinel Alert,HeyOrca!, and Sequence Bio had all justraisedmoneyfromlocal institutionsandwerenowhiring.

In the past year,St. John’s haswitnessedanevolutionthatmanyinitsstartupcommunityhadbeenworkingonforalongtime.Ithashadanactivecommunity,mentorshipandworkareasfor a while, but now there are new fundingstreamsinplacethataregeneratinggrowth.

“It’s incredible for the community,” saidPeter Gifford, Propel ICT’s St. John’s-based�Entrepreneur in Residence. “At themoment,we’ve got very active seed-stage investorswho are not only investing their capital inthe companies but are also investing theirexpertise.”

Two factors led to the funding growth. TheNewfoundland and Labrador governmentteamed up with several parties to form theVenture Newfoundland and Labrador fund,whichismanagedbyPelorusVentureCapital.Meanwhile,KillickCapital, the investment fundoftheDobbinfamily,realizedgainsfromafewexitsandwasinapositiontoredeploycapital.

“Whenwelookedattheinvestmentopportunitiesavailable in St. John’s they were skewed toearlier stage companies,” said Mark Dobbin,whoheadsthefund.“Wedecidedtorespondtothismarketby investing inmorecompaniesatsmalleramountspercompany.”

Through last autumn and winter, Venture NLandKillickspearheadedafundingdriveintofourgrowth-stagecompaniesinSt.John’s:

Sequence Bio, $1million, co-foundedbyTylerWishandChrisGardner.TheSt.John’scompanythatanalyzesgeneticdatatoimprovemedicaloutcomesreceived$500,000inequityfunding from both Killick and Venture NL.

New Funding Sources in St. John’sFour companies have received funding in the past year from Venture NL and Killick, and they are now accelerating their growth.

Foundedin2013,Sequenceworkswithpartnerstoanalyzevastsetsofdatafromgenepoolstogetadeeperunderstandingofwhichpeopleareatthegreatestriskofcontractingadisease.

Clockwork Fox,$1million,foundedbyEdMartin.Theeducationalgameproducerlanded$750,000 in new investment from Killick andVentureNL.ItalsoreceivedfundingfromPlutoInvestments, Petten Holdings, and Joe Antle.Thecompany’sflagshipproductisZorbit’sMathAdventure, a game-based learning system forearly math that aims to improve K-3 learningoutcomes.

HeyOrca!,$625,000,co-foundedbyTeoandSahandSeifi. HeyOrca! is an online platformthat helps marketers collaborate on socialmedia content. The company, which operatesoutoftheGenesisCentre,isagraduateofthePropelICTBuildprogram,allowingittotapintoa$150,000convertiblenotefromBDCCapital.TheotherinvestorsinthisroundareVentureNLandKillick.

Sentinel Alert, $525,000, co-founded bySarah Murphy and Jason Janes. Sentinelproduces software that can detect when aworkerhashadanaccidentormaysoonhaveone. The software is originally being used ondevices like smartphones, but the companyhopes to eventually partner with a hardware

company to produce a wearable device. Thecompany received investment from Killick,VentureNLandaprivateangelinvestor.

These deals amount to just over $3 million,which is significant but not earth-shattering.What’s interesting about the recent fundingwave is the various sources. In addition toindividual and family investments, severalinstitutions have invested in Newfoundlandlately.BDCCapitalisadirectpartnerinVentureNLandmadeadirect investment inHeyOrca!Inadditiontotheseinvestments,Halifax-basedBuildVenturesinlate2014invested$3millioninSt. John’s-basedCeltx,whichmakessoftwareforthefilmindustry.

The greater significance is what comes next.These companies are now in a position toraise more money, assuming they build theiroperations significantly. And as theSt. John’ssuccess story Verafin has demonstrated, therealeconomicbenefitcomesinthelaterstages.

“Apercentageofourfundisdedicatedtofollow-on investment,” Pelorus investment managerChrisMoyer recently toldEntrevestor. “Privatefundsalloweveryonetoworktogethertopushthecompaniesforward….Inallourinvestments,angels that invested inour fund invested theirownmoneyinthecompaniesaswell.”*

Sarah Murphy of Sentinel Alert won the Women Entrepreneurs’ Bootcamp in Kitchener last year.


By Peter Moreira

GillianMcCraesmiledasshelookedbackatthemakeshiftstagewheresixPrinceEdwardIslanddigitaltechnologycompanieshadjustpitched.

McCrae,thePropelICTVice-President,hadjustoverseen her organization’s first Local DemoDayinCharlottetown.IthadtakenplacebeforeapackedhouseattheUpstreetCraftBrewery,the crowd full of mentors, entrepreneurs andpoliticians.And,shehad toagree thingsweredifferentwhenshestartedherownITcompanyontheIslandfouryearsearlier.

When McCrae went through the Propelaccelerator, then called Launch36, she hadtodrivetoMonctoneachweekforinstruction.PropelandtheCharlottetowntechcommunityweretooyoungtohaveacohortinP.E.I.Bothhave grown up, aswas evident at the LocalDemoDay.

“Youcanseehowmuchsupportthereishereto help companies succeed,” said McCrae.“There wasn’t anything like this when I wasgoingthrough.”

Withitsrichtraditioninagricultureandveterinarymedicine, thePrinceEdwardIslandinnovationcommunity until recently was skewed heavilytoward life sciences.Yes, thereweregreat ITsuccess stories, like video display advertisingcompany ScreenScape Networks and digitalarchive manager discoverygarden. But withinstitutions like the PEI BioAlliance and theRegis Duffy Bioscience Fund, the supportnetworkforlifesciencesteamswasfargreaterthanfortheirbrethreninIT.

Butthatischangingforafewreasons.

First, therearemore IT companies springingup in P.E.I. Consider this: the latest PropelICTcohortreceivedarecord168applicationsandP.E.I.(whichhasabout6percentoftheregion’spopulation)accountedfor18percentoftheentries.

Second,therearemoreestablishedplacesforthem tomeet and work. Some of the youngstartupshavebeenworkingintheLaunchpadPEI co-working space, which is where thePropel cohort met. And as this report wentto press, Charlottetown’s Startup Zonewas about to open. This startup house wasexpectingtowelcome16companiesinITandother segments, offering them office space,programmingandpeer-to-peersupport.

And third, there is Propel itself. Islandcompanies are still able to join the advanced

Build accelerator and travel to Moncton onceaweekformentoring.OnsetCommunications,aCharlottetowncompany thathelps filmcrewmembers communicate with one anotherinstantly,didjustthatinthefirstcohortof2016.

ButthereisalsoanoptionofjoiningtheLaunchprogramforentrepreneurialbeginners,whichforthefirsttimethisyearmetinCharlottetown.Fivecompanies completed the Launch acceleratoron the Island thisspringandpresentedat theLocal Demo Day. They included companieslike Airbly, which has developed hardwareand software that automates the process ofkeepingaflightlogforsmallaircraft,andKingDingProductionsInc.,whichaimsto improvefoodsafety.

“IT is the fastest growing industry,” said J.Heath MacDonald, the minister of EconomicDevelopment and Tourism. “It just continuestoexpand.Andwhat’sgoingoninP.E.I.isjustphenomenal–especiallytheinvolvementofouryouthastheyareourfuture.”

McCrae knows the importance of buildingIT companies, and the challenges thesecompaniesface.BeforejoiningthePropelstaffin 2015,McCraewas theCEOofGetGifted,anIslandphenomenonthatletmerchantsgivegiftstocustomersaslongastheystoppedbythe shop or restaurant. The company wentthrough Launch36 but shut down when theproblems of expanding in a big city becameobvious.Now,basedinHalifax,McCraeworksmentoringcompaniesacrosstheregionandislookingforwardtothenextcohort–forwhichapplicationsarenowopen.

She said the entrepreneurs and expertsthroughout Charlottetown have come out tohelpmentorthenewtechentrepreneurs.“Thishascreatedanintegratedprogramwithsupportfromthecommunityandfromthepeoplewithintheprogramitself.”*

Digital CharlottetownLong known as a stronghold of life sciences, the P.E.I. capital has developed a strong ecosystem for ITC companies. Here’s how it happened.

‘What’s going on in P.E.I. is just phenomenal – especially

the involvement of our youth as they are our future.’

~ J. Heath MacDonald Minister of Economic Development

and Tourism

Gillian McCrae: ‘There wasn’t anything like this when I was going through.’


Duringhisworkinthebiotechfield,SullivanmetupwithBrianBloomandJolyon Burton, the principals of the Toronto-based healthcare-focusedinvestmentboutiqueBloomBurton&Co.Together,theydecidedtoformacompanyinHalifaxheadedbySullivanthatwoulddevelopdrugcandidates.

The first is ATI-1501, which aims to remove the nasty taste from anexistingdrugthattreatsClostridiumdifficileinfection,orCDI,anurgentantibiotic-resistantbacterialthreatthatcauses29,000deathsannually.AdrugcalledMetronidazolehasbeenusedtotreattheconditionsincethe1970s,butkidswithCDIdon’twanttotakeitbecauseofitsdreadfultaste.ATI-1501removesthebittertaste.

The Food and Drug Administration recently granted orphan drugdesignation to ATI-1501, meaning Appili could have an acceleratedregulatorypathandprotectionagainstcompetitionforsevenyears.Thecompanyexpectstobeginclinicaltrialsnextyearandhaveaproductonthemarketinthreeorfouryears.

The second drug candidate isATI-1503, a drug that could fight deadlyinfectionssuchasKlebsiellapneumoniae.Themedia is fullofwarningsaboutviruses thatareresistant toantibioticsandSullivansaid thisdrugcouldhelpcombatthem,butit’salonger,riskierprojectthanthefirstdrug.

“We’renowenteringapostantibioticera,whereacommoncutcouldbedeadly,”saidSullivan.“That’swhatkeepsusupatnight.”

SullivandescribedAppili’sstrategyasonebasedon“hittinghomerunsandsingles.”TheideaisthatthedrugforCDIcangettomarketquickly,butaddressalimitedmarket.Bysellingtheproduct,itcouldproduceasteadyincomestream.Thatwouldhelptofinancethedrugforantibiotic-resistantviruses,whichcouldbecomeablockbusterdrug.

ThestrategyhelpedSullivanattract$2.3millioninequityfinancinginthelatest round -- $1.8million from individualsbrought togetherbyBloomBurton,and$500,000fromInnovacorp.AppilisupplementedtheraisewithfundingfromtheAtlanticCanadaOpportunitiesAgencyandNRCIrap.

“Thisisaseedround,”saidSullivan.“We’llbelookingtogobacktothecapitalmarketsinthesummerandcloseanotherroundoffinancinginthefall.”*

Channeling Funds into Drug Development

In less than a year, Appili Therapeutics has raised $3.3 million in funding, built up a team and established a base in Halifax.

By Peter Moreira

KevinSullivanhadtheprideofaguyshowingoffhisnewCadillac.Butit wasn’t a car he was displaying, it was the new laboratory that hiscompanyhadrecentlymovedinto.

ThecompanyisHalifax-baseddrugdiscoveryoutfitAppiliTherapeuticsInc.,whichinMayannounced$3.3millioninfunding,comprisingequity,debt and grants. On the same day, Sullivan unveiled the company’snew lab in the InnovacorpEnterpriseCentre inHalifaxand introducedtheteamofPhDsworkingforthecompany.Amonthearlier,Applihadannounceditreceivedaspecialfast-trackapprovaldesignationfromtheFoodandDrugAdministration.

Notbadforacompanythatbeganlastyear.

“Appili is a company that hasn’t been around long, and coming fromwhere they started to where they are today is truly impressive,” saidScottMoffitt,theManagingDirectorofBioNova,thelifesciencesindustryassociationinNovaScotia.

Appili isanotablecompanybecauseof its leadership, itsstrategyandthestoryofhowthecompanycametogether.Sullivanisabusinessmanoperatinginasegmentthatisoftenknownforthehighconcentrationofacademics.He’s raisedmore than $40million for various companies,andhebringsadeepexpertiseindevelopingnewdrugs.

SullivancametoNovaScotiain2013totakethehelmatDeNovaMed,aHalifaxcompanyworkingonacureforantibiotic-resistantviruses.Hehad previously spent 10 years (including four as COO) with London-basedVironTherapeuticsInc.,whichwasdevelopingacardiovasculardrug.Vironraisedmorethan$35millioninequityandnon-dilutivecapitalandtookitsleadproductthroughPhase2trials.

Kevin Sullivan: Home runs and singles

You want to reach The part of the economy that’s growing. Young entrepreneurs in high-growth companies. The Atlantic Canadian Innovation Community.

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Contact us at [email protected] our free daily reports at entrevestor.com

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By Peter Moreira

InlateMay,aprofessionalsteepedinstartupstoldmehewasdisappointedwith the lackofqualityhe’sseeing in theHalifaxstartupcommunity.ThenextdaywereportedinEntrevestorthatAppiliTherapeuticshadraised$2.3millioninequityfunding.

Thedayafterthat,atechconsultanttoldmehehadn’theardofmuchnewhappeninginHalifax,andwereportedthatMetamaterialTechnologiesInc.hadboughtthebusinessofSiliconValleypeerRolith.

It’sacommoncomplaint that I’veheardcountless times in the last year,especiallyintheITcommunity:theHalifaxstartupcommunityisdead.Orit’stooquiet.Orthere’salackofquality.

ThisisusuallytheplacewhereIjumpinandpoint out how wrong this impression is. I’mnotgoingtodothatinthiscolumn.WhatIwillsayisthesituationismorecomplexthanthenaysayers realize, and that theyaremissingsomething. But I will agree on two points –there is a lackof buzz in theHalifax startupworld, and the city ismissing a groundswellofnewITcompaniescomingupbeneaththeestablishedcompanies.

The lack of buzz is a stark contrast to fiveyears agowhen the firstDemoCampwas held inHalifax.Organized byMilanVrekic(thenCEOofTitanFile),therewasafestiveatmosphereattheshowcaseforstartupsinthecity.Theauditoriumwaspacked,withpeoplesittingintheaisles.Andtherewasagiddyjoyaboutallthenewcompaniesthatwerelaunching–righthereinHalifax.

Fiveyearsdown the road,wecanpointout that theharsh realityof thatlovefest was that most of the companies that presented there havefallen by the wayside. There were only two demoing companies at the2011 DemoCamp that can be called no-questions-asked, Halifax-basedsuccesses:Compilr,whichexitedfor$20million,andPitchPerfect,whichcontinuestogrowunderthenameProposify.

WhatHalifax offers now thatwasmissing in 2011 is a fertile ecosystemthatincludesabroadrangeofsuccessfulcompaniesattractingcapitalandcustomers.Therearemorescalingcompaniesthanwe’veeverseen.We’vefeaturedseveralinthisreport,likeAffinioandProposify.SportsmedicinetechnologycompanyKinductTechnologieshasparticipatedintheDodgersAccelerator program in Los Angeles and has secured a host of sportsteamsascustomers.STITechnologiesmadetheDeloitteFast50lastyear.PACTA,whose technologyhelpsbig companiesmanage their contracts,recentlypitchedattheGoogleDemoDayinSiliconValley.CompanieslikeDashHudson,QRAandB4Checkincontinuetobuildtractionwithpayingcustomers.

That’s just in the techspace. In lifesciencesand medical devices, companies like Appili,Densitas and ABK Biomedical are pushingahead. Ditto for cleantech with companieslike TruLeaf and CarbonCure Technologies.Inmanufacturing,SpringLoadedTechnologyreceived $1.9 million in funding from BuildVenturesandissellingitsbionickneebrace.

High-growth companies of this quality havenotexistedinHalifaxinsuchnumbersbefore.Whatwe’renotseeingisenoughnewstartupscoming up behind these companies. Again,thereareintriguingcompanieslikeAthletigen,

QRHealth,andSite2020thataregrowing.AndVrekichasreturnedtothestartupworldwithZora,whoseproducthelpslandlordsvettenants.Afewmorewouldbenice,butit’snotlikethecupboard’sbare.

Thefact thatVrekichasstartedhissecondstartup inHalifaxhighlightsatrend towatch.We’regoing tostart seeingentrepreneurswhohavehadsuccessfulexitsre-enteringthearenawithnewcompanies.Thesepeoplebringknow-how,ahugenetworkofcontactsandtheirowncapital.Itwon’tbeamassivemovementastherehaven’tbeenenoughexits.Butitwilladdtothestartupcommunityandhelptobattlethenotionthatthere’snothinghappeninginHalifax.*

What’s Wrong with HALIFAX?There’s a lack of buzz in the city’s tech community, but that’s not to say nothing is happening.

What Halifax offers now that was

missing before is a fertile ecosystem

that includes a broad range of

successful companies attracting

capital and customers.

Documents

East Coast Startups Hit the Growth Stageentrevestor.com/images/uploads/Entrevestor_June2016_Digital_II.pdf · Proposify is an example of a recent trend in the Atlantic Canadian startup