Toasting the Creative Destruction Lab

I don’t want to startle you, but I’m a bit giddy about the UofT’s Creative Destruction Lab.

I had the opportunity to sit through a complete day of CDL sessions last month, and couldn’t have been more impressed with what the team at the Rotman School of Management have developed over the past ~5 years.  It’s professional, fast-moving, focussed, far-reaching, internationally-minded and appears to serve every need that I could ever dream of in a University setting.  The need to bring university-linked research and intellect together with external capital isn’t novel, as I advocated for a decade ago (see post “Waterloo Investing Trends 3” Feb. 12-07), but CDL’s approach is worthy of a patent application.

You can’t call it a traditional incubator, nor a meet-up, and it certainly isn’t a pitch contest.  While Founder Ajay Agrawal would do it more justice than I, one might describe CDL as a fusion of talent and capital in a state-of-the-art academic setting, with the discipline of the private sector, the luxury of best-in-class corporate and public sector access, and the results-oriented mantra of an Olympic training program.  That might sound hyperbolic coming from someone who often sees the glass as being half-empty, but I couldn’t have been more impressed.  And the CDL’s growing reputation is part of the reason, I suspect, that the Toronto’s tech ecosystem is buzzing right now (see prior post “Toronto’s tech buzz is awesome, but results are what will ultimately matter” Nov. 20-17).

To be more precise about CDL’s mandate, here’s what Mr. Agrawal would say himself:

The CDL is a seed-stage program for massively scalable science-based companies. Some start-ups come from the University of Toronto community, but we now also receive applications from Europe, the U.S. (including Silicon Valley), Israel and Asia.

We launched the program in September 2012, and each autumn since, we’ve admitted a new cohort of start-ups into the program. Most companies that we admit have developed a working prototype or proof of concept. The most common type of founder is a recently graduated PhD in Engineering or Computer Science who has spent several years working on a problem and has invented something at the frontier of their field.

The program does not guarantee financing, but the majority of companies that succeed raise capital from the CDL’s Fellows and Associates — a carefully- selected group of individuals who themselves are serial entrepreneurs and early-stage investors. Throughout the year, our MBA students work with the start-up founders as part of a second-year elective course, helping them develop financial models, evaluate potential markets, and fine-tune their scaling strategies.

In my time there, I witnessed a highly constructive collaboration between the Rotman School’s multi-disciplinary team, successful local entrepreneurs, such as Helpful’s Dan Debow (himself one of the visionaries behind CDL),  Canadian and U.S.-based venture capitalists, domestic and international corporations as well as the right mix of public sector representatives, and the odd Angel, to boot.  I couldn’t help but think that the late Joe Rotman (see prior post “To know Joe Rotman was to love Joe Rotman” Feb. 9-2015), himself a co-founder of MaRS, would have been delighted by the commercial beauty of what was going on within the confines of his school.  That Mr. Rotman’s original dream for MaRS had manifested itself in a different fashion on St. George Street, speaks volumes about his legacy and the impact that any one of us can have on our country’s future.

In that vein, our innovation ecosystem can be encouraged that other knowledge centres, such as Vancouver, Calgary, Montreal and Halifax have started their own local CDLs.  Whether or not there are enough fantastic companies and local Angels to feed and finance the required national funnel, particularly with the arrival of TechStars and the like, remains to be seen.  I’m hoping these new regional CDL organizations will link arms with the established tech transfer offices of places like Parteq, at Queen’s University, to ensure that every entrepreneur and Angel is aware of what the program can offer.

That non-Canadian firms are drawn to CDL was also an eye-opener for me.  Although Canada is known as the global financial centre for the resource sector, Canadian investment bankers will tell you that the only innovation firms that ever left the U.S. or U.K. for our market were the ones who failed at raising capital in their own backyards.  That Toronto’s CDL might help change this long-standing dynamic will only serve to improve the health of the Canadian early-stage investor experience, which might encourage more institutional backing of VC our funds over the long haul.

In the meantime, dozens of entrepreneurs are getting the attention they need.  Gotta admit it: I’m smitten!

MRM