Keeping startups here can be tricky business

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No matter how exciting the startup community may be in Winnipeg, the elusive secret to success continues to be finding enough local startup cash to keep the new companies going -- and keep them in Winnipeg.

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Opinion

Hey there, time traveller!
This article was published 22/04/2015 (2844 days ago), so information in it may no longer be current.

No matter how exciting the startup community may be in Winnipeg, the elusive secret to success continues to be finding enough local startup cash to keep the new companies going — and keep them in Winnipeg.

Not every angel investor or venture capital fund requires they be in close physical proximity to the client companies — but many do.

One active adviser to the startup community said recently, “When was the last time you heard about a company landing a round of financing for more than $250,000?”

BORIS MINKEVICH / WINNIPEG FREE PRESS files Sheri Governo and Zach Wolff, former U of M MBA students, created Exigence Technologies Inc.

The point being that companies need more than that to get off the ground and while the number of angel investors is growing, it is clearly not enough to keep up with demand.

Since there are very few companies that will relocate to Winnipeg, a key element of economic growth and job growth in the city is the evolution of startups into growing companies that employ ever more skilled people (some who will need to be recruited from out of town).

Those are the companies that will stay in Winnipeg and become the employers in the new economy.

Farmers Edge, a precision farming-technology company, has landed two senior rounds of financing from venture capital firms as far away as Silicon Valley and has not had to leave Winnipeg.

Over the years, there have been examples (not that many) of companies that started here but were forced to move to follow the money.

Most recently, the mobile app developer for contractors, Joist, moved to Toronto where it found the financial backers it needed.

In the past, companies such as IMRIS and Novadaq felt the need to relocate for better access to capital.

Despite that scenario, there exists an active startup scene in Winnipeg that may or may not be busier than any other city in North America.

Organizers of the Tuesday’s Fundica Roadshow startup pitch event indicated it was harder finding qualified applicants to participate in Winnipeg than in most of the other 10 cities across the country that hold similar events.

Still, there was vibrancy was on display Tuesday, where judges (including your’s truly) heard pitches from seven excellent examples of new enterprises.

Exigence Technologies Inc. was the winner. It is the poster child for the startup ecosystem that exists in the city.

It was created by former University of Manitoba MBA students led by Zach Wolff and Sheri Governo, who developed a business plan around an anti-microbial technology developed by Song Liu, an associate professor of polymer chemistry at the University of Manitoba.

The company now operates out of the Eureka Project, the business incubator at the U of M that offers a host of operating services for companies getting off the ground.

Exigence gained access to the technology through the U of M’s technology transfer office under a new initiative that is attempting to allow more commercialization of academic discoveries. It means partners do not have to negotiate dense legal agreements before they know whether there is a market for the technology, let alone the possibilities of royalty payments.

In less than a year, Wolff, Governo and a growing team have raised about $250,000 and leveraged another $1 million or so in research funding.

Its next-generation microbe-fighting compound draws bacteria or virus microbes in like a magnet and then eliminates them through a combination of their novel molecule and old, reliable chlorine.

Its unique properties include extremely fast action, the ability to be recharged and the current understanding it does not promote bacterial resistance.

The company is already in advanced partnership discussions with two of the three largest chemical companies in the world, even while it is still applying for regulatory approval in the U.S.

There’s much work to begin and it is still at a stage where it could go either way, but Wolff and Governo are not being mocked when they say they believe the company could be worth $100 million in five or six years.

Whether they are still in Winnipeg by that time may well be determined by the source of the capital they ultimately raise.

martin.cash@freepress.mb.ca

Martin Cash

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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