Company Logo Friday, November 10, 2006

Waterloo as Technology Ecosystem: an Interview with Jacqui Murphy

A burgeoning crop of startups, fast-growth companies going public and blue chips arriving from south of the border. Red Canary explores why Waterloo is a tech haven.

By: Trevor Stafford

With appellations that include successful startup executive, university professor and VP of an early-stage venture capital investor, Jacqui Murphy's familiarity with Waterloo's technology industry is matched only by her support for it.

Red Canary sat down with Jacqui to talk about how Waterloo has emerged as a robust tech community.

Waterloo and the KW area is increasingly seen as Canada's technological hotspot. What, in your opinion, has been the keystone to growth and success?
Post [dot-com] bubble, we ended up with a bunch of big companies and a bunch of tiny companies - there was nobody in that middle ground to give KW critical mass.

Now we have a fertile ground of early-stage technology companies, a middle layer of companies that have traction and are going public, and mature, acquiring companies.

...a technological ecosystem

Now, because Waterloo is raising its profile, we're seeing more attention from Venture Capitalists from outside the region. It's being viewed as more successful, and it's getting a larger percentage of Canada's venture investment every year.

Much of the support and championing of your tech community comes from your industry association, Communitech. Tell me more.
Communitech was started by the heads of what are now big technology companies. At the time [they] were small and needed peers to interact with, an organization to lobby government and a way to recruit employees.

Over the years other associations started up or services started up and the community had to fight to push those types of services back into Communitech. But as a result we have an industry association that is incredibly strong.

Iain Klugman (Communitech's current president) is kicking some serious ass. He's out promoting the region and he has built this fantastic advocacy machine that is getting stuff done.

"In 2003, 3% of venture capital was going to the Waterloo region. In 2004 it was 4%. In 2005 it was 5%." - Jacqui Murphy

You had Guy Kawasaki, Heather Reisman and Gerald Schwartz speaking at your Entrepreneur Week event last month. What are you trying to do with it?
Entrepreneur Week was developed by Communitech to educate, support, encourage and inspire the entrepreneurs in this environment. It's a forum just for entrepreneurs; for supporting and growing the community.

It's not a beauty pageant or a pitch competition. It's not a bunch of VCs getting together and evaluating up-and-coming technology companies. Entrepreneur Week is about educating entrepreneurs. It's peers helping peers.

Lets talk about how Wilfrid Laurier University and the University of Waterloo impact the tech community
The universities are now a part of our infrastructure, a result of the technology community reaching into the universities and saying 'how can we do more?'.

There's more commercial activity coming out of the University of Waterloo these days, they've paired students with professors and grad students who are doing research that could be commercialized.

They've also opened the Centre for Business, Entrepreneurship and Technology, which offers an eponymous master's degree (MBET). It's an MBA on steroids.

"They do beauty pageants everywhere, what's important to us is 'do we have the entrepreneurs? Do we have the technology companies to invest in? Do we have the infrastructure in place?"

So grads not only feed companies but start their own
It's not just the new grads, but current students too. Tons of co-op students go into our technology companies here, so we have this training ground for technology-focused employees. They often go back into the companies in the region.

Wilfrid Laurier has the Schlegel Centre for Entrepreneurship - a whole program focused on entrepreneurship.

We've mentioned Communitech and the schools; let's talk about another Waterloo-area cultivator - Watstart
Watstart gives entrepreneurs a way to talk to each other and learn from each other in a safe environment - to make sure they're not going down the wrong path early on. [It's] a community built by entrepreneurs for entrepreneurs.

It started with an online forum and has pulled in sponsors. There are face-to-face meetings where entrepreneurs have informal networking events and once every six months entrepreneurs can talk directly to a lawyer, accountant or a venture capitalist.

"By the time entrepreneurs get to us [for investment] they're damaged. They've received bad advice, they haven't protected their intellectual property or they've hired someone they shouldn't have hired, etc." - Jacqui Murphy

Nurturing emerging companies seems to be a theme at every level

It is. Communitech also has a program for aspiring and early-stage entrepreneurs. They provide hands-on advice about how to get things going.

It's the same with University of Waterloo Research + Technology Park. We needed more space in the community, so the University of Waterloo stepped up to the plate and devoted a huge chunk of land (400 acres) - which is growing by leaps and bounds.

Editor's Note: the Federal and Ontario govt. each donated 13.4 million for the Research + Technology park. The region and city added 6.7 million.

They have programs focused on developing and supporting entrepreneurs. A [business] accelerator in the park just opened and it's already 85% full.

The accelerator centre also has a full mentor program. If you sign on to be an accelerator centre client (you don't have to be a centre occupant) you get access to a whole suite of mentors that are affiliated with the accelerator centre -- and they are all experienced entrepreneurs.

When do the entrepreneurs find time to run their businesses with all this help?
(laughs) These services tend to be used as [entrepreneurs] are getting started. Once you've started it's heads down and build your business. You come up for air when you really need help.

What's the technology job market like in Waterloo? What kind of people do you need?
Every kind. Right across the board. It's not that any of our companies are suffering, but the more we can get the faster we'll grow.

Tell me about your firm, Tech Capital Partners
We're a very early stage technology-focused venture capital firm, we call ourselves 'institutional angels'. We're not angel investors, but we invest at the same stage.

We make the investment before they have a prototype, before they have a first customer, but we do our due diligence. We'll call people in a market and say 'if we build this, is it something you'd be interested in?'"

We want to know exactly how much money it's going to take us to get from concept (when we invest) all the way through to cash flow positive, and we try and map out how were going to get there.

"We really support this community, our objective is to be the first call for Waterloo region. We try to maintain that reputation."
- Jacqui Murphy

Article from Red Canary -
Copyright - Red Canary - 2006

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