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Waterloo’s Startup Success Story - 100 Years in the Making
An interview with Tom Jenkins of OpenText discusses the successes of Waterloo startups over 100 years.
Most startup founders will tell you that it’s tough to attract capital investment – particularly in a company’s earliest stage. And it’s a common-held perception that Canadian startups find it more difficult to attract investors than their counterparts in the US. But raising capital anywhere and at any point is hard work, says Tom Jenkins, Chairman of OpenText Corporation, one of Waterloo’s most celebrated success stories.
“It is always difficult to raise capital,” says Jenkins. “The very nature of it is hard. Friends and family only take you so far. Eventually you have to move yourself up to angels.”
Jenkins explains a startup community’s ability to attract capital investment is not a national issue, but rather a by-product of the region and its track record (or lack thereof) of entrepreneurship.
“There are places in the United States where entrepreneurs can’t raise money, just as there are in Canada,” he says. “What entrepreneurs need to understand is that there are regions where there have been very successful entrepreneurs, and where there is an established track record for raising funds. If a startup is in an area of Canada that happens to have a tradition of entrepreneurship – of any nature – then that company has a higher probability of attracting capital and being successful.”
OpenText’s founder points to Minneapolis/St. Paul, Minnesota – a region in the US where startups have a successful track record in raising funds, greatly due to the area’s strong business foundation in medical and chemical industries. In Canada, Toronto has traditionally been the Mecca for angel investment, but is now being rivaled by other regions such as Waterloo. “Waterloo is quickly rising within the North American landscape as a region known for entrepreneurship and angel investment,” says Jenkins. “We have that heritage of entrepreneurship that I believe is so key to regional success. Waterloo has over a century of experience in breeding startups, and that is why it is relatively easier in the Waterloo area to raise capital and build a company.”
It’s that regional entrepreneurial spirit found within Waterloo that is now helping to spearhead the generation of technology companies emerging from incubators such as the Accelerator Centre and Velocity. In a strategy that brings business, government and the venture capital community together, OpenText is taking a leadership role in filling in the funding gaps that still exist for startups.
“There has been a lot of activity to identify where the funding gaps exist in the country,” says Jenkins. “The Federal and Provincial government have been very busy of late, working with banks and industry partners, such as OpenText to create a $300 million fund of funds – sort of like mothership financing if you will – to finance a whole series of venture capital firms, who will in turn finance entrepreneurs.”
Minister of State for the Federal Economic Development Agency for southern Ontario, Gary Goodyear, and Ontario Premier Kathleen Wynne announced this fund of funds, called the Northleaf Venture Capital Fund II, in January 2014.
At the same time, Tom Jenkins and the OpenText team also announced a new $100 million fund for the development of enterprise applications. The ‘OpenText Enterprise Application Venture Fund’ (OTEAF) will focus on growing the ecosystem for applications here in Canada, and is now accepting applications.
“We want to create a robust ecosystem of small startups coming with ideas, so OpenText can then partner with these companies,” explains Jenkins. “Take for example MappedIn, which came out of the Velocity program. MappedIn has some very clever ideas for indoor mapping and navigation that could complement OpenText’s offering, in such fields as HR and asset management.”
Jenkins notes that in conjunction to the $100 million fund, OpenText has introduced an entire development program and platform along with the venture capital program to make it easier for startups to develop on OpenText tools, coupled with a funding envelope that allows them to make investments and grow the business.
He adds, “These kinds of synergies are good for all involved. Because of a relationship with OpenText, the startup gains access to international markets. And in return, OpenText can drive more value for our customers by offering the startup’s products as add-ons to our solution. It’s truly a synergistic relationship where everyone benefits. And that is the mark of a strong and lasting partnership.”