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A Guide to Incubators

23 May 2017 by National Bank
Incubateur startup

Incubators are sprouting up everywhere. Would you know how to pick the right one for your business project?

Our country is becoming a hotbed for entrepreneurship, with a whole ecosystem developing to support it. Business incubators illustrate this trend and are multiplying in Montreal. However, each has its own characteristics. Here is a guide to help you make the right choice, with tips from Christian Perron, Executive Director of PME MTL, a network of experts in financing that supports entrepreneurs in the city.

1- Choose the right incubator for your industry

Some incubators welcome a large number of entrepreneurs in robotics, others in communications and IT, and some in life sciences. “A new entrepreneur needs support when starting a business,” states Christian Perron. “It’s also reassuring for future investors to see that the business is guided by people who know the industry well. We are stronger together than alone in our corner.”

2- Analyze the services offered

A few incubators only offer a work space at low cost for startups, but most also offer support services. “For example, some provide coaching to help complete the different stages related to starting a business, others rely on a training program or offer financing,” explains Christian Perron. Since an office space is no longer a necessity for several businesses in the knowledge economy, many incubators also provide services to entrepreneurs remotely. It is therefore a matter of determining your needs.

3- Evaluate the costs and benefits of using an incubator

What is the cost of a place in an incubator? That is the question! The fees vary from one incubator to another. Often, a business will pay a monthly rent to the incubator and can order customized services,” says Christian Perron. Nevertheless, there are exceptions, such as the incubators of some universities that offer completely free services. Others provide a space at no charge to their incubated businesses, but take share capital.

4- Think of what comes next

An incubator is useful, but all good things must come to an end. “In certain incubators, businesses can obtain a work space for a longer period, but generally incubation is a phase that has a beginning, a middle, and an end for a business that must eventually stand on its own two feet,” states Christian Perron. Many get used to working in proximity to other businesses to benefit from a certain synergy, and subsequently end up in co-working spaces. “There is La Gare in Mile-End,” notes Mr. Perron. “There is also WeWork that now has two locations in Montreal: across from the Bell Centre and in Place Ville-Marie in Espace CDPQ, which has become a Mecca for startups in Montréal with the presence of several venture capital firms.”

A sure sign that society is evolving, Montreal now offers a veritable ecosystem to fuel startups. “In the 80’s and 90’s, when people graduated from university, they wanted a prestigious job in a large company,” notes Christian Perron. “Now, the newer generations have an appetite for risk and want to start their own business.”

It is also easier than before, when it was necessary to find a building and practically buy an assembly line to start a business. “Today, all it takes is a good idea, a little money, and a few clients to start a company in the digital sector that will be a huge success,” insists Christian Perron.

Incubator versus accelerator

The concepts of business incubators and accelerators can be confusing, especially since some play both roles. Put simply, the incubator helps entrepreneurs launch their business, whereas the accelerator steps in afterwards to accelerate growth. Often, the acceleration takes the shape of intensive programs or personalized coaching to quickly bring the business to the next level.

The success of Thirdshelf at the CEIM

After 15 years working for startups, in 2013 Rami Karam decided it was time to start his own business with two other colleagues. Together they created Thirdshelf, a customer loyalty software for small independent retailers. It was clear from the beginning for the entrepreneur that he would be incubated at the CEIM (Montreal Center for Enterprise and Innovation).

“It is the oldest technology incubator in Montreal and it really adds a significant value,” states the entrepreneur, who worked for years for businesses supported by this incubator.

Rami Karam also appreciated the CEIM’s independence, since it is not affiliated with an investment fund and does not take any ownership position in the businesses it supports.

Thirdshelf started in Rami Karam’s kitchen and then migrated to a space that was central for the team. In 2015, once the product was ready to be launched, the CEIM came in to support commercialization.

“The CEIM helped us find skilled resources to meet our needs,” explains Rami Karam. “These people started working with us as consultants, and then, since they collaborated so well with the team, we hired them.”

The business now counts 15 employees and has signed a partnership with Lightspeed, a major e-commerce platform that sells its software to its network.

More than 1,000 independent retailers in Canada and the United States use Thirdshelf, and its revenues have tripled year after year.

“Our relationship with the CEIM is evolving, and we will still need their services for another two or three years,” estimates Mr. Karam.

Suggested incubators

In Toronto

UTEST: This program provides the right mentoring and funding opportunities for tech startups in the city. UTEST is part of the University of Toronto.

Startup Here Toronto: An exhaustive list of most incubators in the Greater Toronto area. Find the incubator that is the best fit for your ideas and skills.

In Montréal

District 3: Launched in 2013 at Concordia University, District 3 provides free programs to entrepreneurs. More than 350 startups have already benefitted from their coaching. The incubator also grants entrepreneurs access to various resources such as lawyers and accountants, in addition to labs to learn how to design and build a prototype of their products.

Notman House: This incubator brings together entrepreneurs from the web and tech sectors. It was created by the OSMO Foundation and established to support the development of startup ecosystems across Canada. In addition to its coffee shop, a community space to work and collaborate, Notman House rents office space to tech startups.

Institute for Entrepreneurship National Bank – HEC Montréal: The institute offers an incubation and acceleration program that aims to unite entrepreneurs who have innovative projects with professors and researchers from HEC Montréal.

CEIM: This incubator and accelerator specializes in IT and life sciences as well as in the green and industrial technology sectors. Located in the Quartier de l’innovation, the CEIM works in partnership with McGill University and offers consulting and commercialization services for startups, in addition to renting office space.

MT LAB:This new Montréal incubator, which specializes in innovations in tourism, culture and entertainment, was created by UQAM and its School of Management (ESG). It offers a one-year incubation program as well as a co-working space.

Centech: This incubator caters to technology entrepreneurs from the École de technologie supérieure (ÉTS) and offers two free programs: Acceleration and Propulsion. It offers coaching and mentoring services, a network of experts, access to labs and cutting-edge equipment, financial support, and office spaces.

You can also consult the map of incubators and co-working spaces in the city created by PME MTL.

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