by Stephen Kishewitsch
So you have an innovation that will produce more power cleaner, send it over the grid faster, conserve it better, than anyone else? Want to get it into the market? Do you know how to get a financier to listen to you? MaRS does.
The MaRS Centre, in downtown Toronto, and Ontario Centres of Excellence, are like the two hands of the innovation process in Ontario. More, they’re the big brothers of more hands, since many other organizations also perform their functions (see “Ontario’s innovation network,” in the online version of this issue): OCE, the research side, works with the innovator with the new idea to bring it to workability; the other, MaRS and its regional siblings, work with the innovators to develop a business plan and find the venture capital.
MaRS (it looks like an acronym, but it doesn’t actually stand for anything) has several sectors that it works with. Its most recent is clean tech, established only in April 2009, which covers as many kinds of business as you care to imagine. It already has some eighty clients, people whom MaRS is helping turn their idea into a market-competitive company with a product that can improve Ontario’s power system (for example). In a phone interview with IPPSO FACTO, MaRS’ Cleantech sector Practice Lead Tom Rand explains what MaRS does for innovators:
“MaRS sits in the centre of the Ontario innovation network. We work directly with startups, from a couple of guys with an idea to people going through an A round or a B round, in ‘venture capital’ lingo.
“I work with some of the same companies that have been working with the OCE. What I do is help them be a commercial success, make connections in the business community, figure out the business plan, raise venture capital, build a board, find the first customer. My work is directed toward commercialization of the technology, not development of the technology. But we collaborate. I have companies that I take to the OCE for a gateway to the universities. They may have a company with a great technology, and come to me to help commercialize it.”
A brief list of some of Rand’s leading prospects will illustrate the effect he, and MaRS, has. On the storage side, Hybrid Energy Technologies has a rechargeable alkaline battery, in a flat-plate format, suitable for large industrial applications. It can compete with lithium at roughly 80% on performance, but at a quarter of the price. They now have the exclusive right to develop this flat-plate format. They have been working with the National Research Council, and he is helping them build their company from scratch.
Rand is also working with a company that has a flywheel technology at the demonstration stage. The flywheel is magnetically suspended, so there’s very little friction, and it can hold power for up to eight hours with very little loss. The company has an agreement with the OPA for a prototype.
In the smart grid department, another client, MMB Research, is adding a usability layer to the widespread, but little-heard-of, ZigBee protocol that allows wireless devices to speak to each other. For example, when the thermostat tells the air conditioner to cycle down as part of a demand response function, those devices communicate via a ZigBee protocol. The protocol is complicated and unintuitive. This company is already working with major vendors on the tools to take advantage of that functionality more quickly. MaRS is providing strategic advice as to possible routes to funding, licensing models, and general corporate and go-to-market strategy.
In renewable power generation, Morgan Solar has a technique for concentrating light onto a photovoltaic cell, using a light guide rather than lenses. They’ve invented an injection-moulded piece of Plexiglas to guide light onto the solar cell. They have a window that will redirect any light striking it above a certain angle of incidence and guide it down to a PV strip at the bottom of the frame – so you can see through the window, but an entire building front’s windows are also generating electricity. MaRS helped them raise funds in their A-Round, and provide on-going strategic advice, including introduction to key international project developers.
“When we take a client to a venture capital provider or some other strategic partner, we’re viewed as a trusted third party – partly because we have nothing to gain financially from the transaction,” Rand says. “Those we approach know that we’ve done some diligence on our clients, and we wouldn’t be approaching them if we didn’t think there was something of interest.”
Tom sees MaRS acting as not just a service helping startup companies, but a key transformative agent.
“With the Green Energy Act coming into play, MaRS is acting as a catalyst to accelerate the movement of large-scale capital into the sector,” he says. “On January 10 we held the GEA Finance Forum, to educate Bay Street about the Feed-in Tariff, and it was very well attended. The big financial players are waiting for the first round of FIT contracts to be issued, but some of the more nimble players are already in.
“The Green Energy Act, and the Feed-in Tariff, are the beginning of the biggest infrastructure play in history, de-carboning our economy over the next 20 years. If you’re a financier, this is your opportunity to shape the play and the policies that drive it. Deutsche Bank, for example, was not a passive recipient of policy in Europe, it was at the table while those policies were being formed. So I’m saying that to the Canadian financial institutions – develop the internal expertise to understand these things, because you’ll be a participant in how they unfold.”
Preston Manning, whom most readers will recall as the founder of the Reform Party, in an opinion piece in the Globe & Mail March 2, complained that “despite years of discussion and hand-wringing, research and development by Canada’s private sector consistently lags that of most of our OECD competitors.” Tom Rand agrees: “The amount of risk capital in this province and country is tiny, and it’s going to hurt us in the long term. The Ontario government has done its best to step up – they have three funds, to try to compensate for the fact that we have very little funding here. But in truth, Americans simply have a bigger appetite for risk. There is more venture capital at play, on a per-capita basis, never mind in absolute terms. So I bring a stable of thoroughbreds down to San Francisco to have them pitch to American VC. We had a Canadian VC day at MaRS, just before we went to San Francisco, inviting them to take a first stab at what we were bringing, because you’re going to miss the boat if you don’t take advantage. We have a couple of deals cooking in the States now. When we close, and announce, that’s going to wake up the Canadian VC community.”
But asked, is the Canadian innovation sector growing up, he says, yes it is.
For other articles in this feature, see the following related stories:
• Ontario research companies taking on the world
• Feature interview with Tom Corr, the new President of OCE
• Ontario Centres of Excellence - ready to respond
• Ontario’s burgeoning research infrastructure
• Stories on the MaRS centre , Making the grid even smarter and biomass work at Atikokan
• How to get more value out of a transmission line / Pushing the limits of what the grid can carry