Edmonton denied $4.2M in tech innovation funding

Edmonton is missing more than $4 million for tech innovation after the agencies in charge of securing that funding repeatedly failed to persuade the province to grant it.

The Edmonton Regional Innovation Network was the only RIN in the province to be denied funding for the cycle beginning April 1. It is now dissolved.

The decision was not made lightly, said Rollie Dykstra, vice-president of investments for Alberta Innovates.

“They were not inclusive of other entities, like Edmonton Economic Development, for example,” he said in an interview in May. “Being part of their ecosystem, it appeared to be a very closed proposal. It did not demonstrate our community-based principle; it did not show collaborative governance. So, we were challenged with supporting that.”

Edmonton’s network was given two opportunities to revise its proposal with input from the review board before a third proposal was ultimately denied, Dykstra said.

E-RIN was one of eight regional innovation networks, along with ones in Calgary, Red Deer, Medicine Hat, Lloydminster, Grande Prairie, Lethbridge and Fort McMurray. All but the Fort McMurray branch were established in 2016 and were applying for Alberta Innovates funding for a cycle beginning April 1, 2019.

The other six RINs were all approved for a total of $10.8 million over the next three years, Dykstra said. The seventh, in Fort McMurray, receives $1.5 million over a funding cycle that started in 2018.

The agencies that comprised E-RIN, along with other members of Edmonton’s tech community, are encouraged to regroup and reapply for funding in the fall, but the approval of a new application is not guaranteed.

“$4.2 million is available,” Dykstra said. “But the next proposal needs to be clear about how that money will be spent and how it will benefit Edmonton’s entire tech ecosystem. We’ve made it very clear that we want to fund the innovative side of this.”

RINs: Agencies to unlock potential

Where is Alberta’s tech innovation happening?

Well, obviously it’s happening at the universities, the research labs of private corporations and within the province’s many incubator hubs for new businesses. But it is also happening in rural areas, in someone’s garage, and in the dreams and computers of budding entrepreneurs. The point is, tech innovation can be happening almost anywhere and there’s a challenge to ensure the innovators get support.

Alberta Innovates was established in 2010 as an arm’s-length body of the Alberta government, with a mandate to find and fund smaller organizations and entrepreneurs that are developing technologies, apps and businesses with regional, or even global, importance.

That means finding ways into every corner of the province in search of interesting inventions, Dykstra said in an interview in early March.

“We have to be in the communities, we have to have our reach into those garages and basements where people are working on things, so that they can tell us what they need and how we can enable them to, hopefully, be able to commercialize their technology and access markets that they’ve never even thought of.”

To that end, Alberta Innovates created Regional Innovation Networks, a program to help support budding tech entrepreneurs from around the province.

The networks are a series of agencies that receive provincial funding to oversee programming related to each region’s unique needs for industry development, in particular, technological innovations. Alberta Innovates dispersed $14.4 million among the seven active RINs during the three-year cycle ending March 31, 2019.

The networks are coalitions of local agencies. Some — like the Central Alberta Regional Innovation Network, the Calgary Innovation Coalition and the Regional Innovation Network of Southern Alberta — have large, decision-making bodies comprised of representatives from various tech-adjacent sectors including academia and industry.

Each network operates in a slightly different way, as determined by a proposal it submits to Alberta Innovates for approval before the beginning of every new funding cycle.

But all RINs exist to serve a clientele of members of each region’s tech and innovation communities, from established businesses to individuals who might have a product or service but no formal business.

Dykstra said the RIN program has been a success.

The Alberta government does regular third-party reviews of all its programs, to ensure they are an effective, relevant and good use of taxpayer dollars, he said. The RIN program has been reviewed three times since 2010, most recently earlier this year.

“Each review has progressively come back saying, ‘This is one of the most effective programs under the suite of programs the government offers,’” he said. “[The most recent review] was quite positive in that we have the outreach to the community.”

E-RIN: How Edmonton’s network operated

The Edmonton Regional Innovation Network was a coalition of three local agencies: TEC Edmonton, NABI (Northern Alberta Business Incubator) and NAIT.

Under E-RIN, the three received $1.4 million a year, or $4.2 million total over three years. E-RIN’s job was to administer programs for entrepreneurs and related organizations in the Edmonton region, and to help others access this funding.

In applying for funding, prospective clients had to provide a detailed account of what they would use the money for and which service provider would be hired to execute the task. RINs aren’t allowed to provide discretionary funding — that is, an entrepreneur or business couldn’t apply for general funding and then determine how best to use it on an as-needed basis. When a project was funded, the money was paid directly to the service provider, and not to the applicant.

E-RIN was hoping for the same amount for the three-year funding cycle that began April 1, 2019.

In interviews with Taproot earlier this year, E-RIN’s administrators said its revised proposal to Alberta Innovates included changes that would fundamentally change its membership and operations.

“The way we’re engaging folks outside of our groups has to change,” Noreen Hoskins, NABI’s executive director, told Taproot in February. “We really do not want to have an exclusive club.”

Hoskins did not respond to requests for comment that followed Dykstra’s confirmation that E-RIN was dissolved.

In March, before Alberta Innovates made its decision, TEC Edmonton’s outgoing CEO Chris Lumb told Taproot that community-based program development was at the heart of E-RIN’s new vision.

Lumb said the proposal to Alberta Innovates outlined a board-based, collaborative decision-making process to look at needs that weren’t being met and projects E-RIN should support financially. Entrepreneurs have very direct needs as they grow their enterprise into a successful business: funding and financing, networking access to markets, marketing plans and business strategies, he said.

“A critical outcome would be that entrepreneurs will get a clear picture of how the innovation ecosystem can help them, and they will get the right service from the right service provider,” said Lumb.

Each of the three member organizations all directly received RIN money for programming. Under the new proposal, Alberta Innovates funding that they had accessed in the past would now be distributed among more organizations, for projects approved by the newly created board.

This important change was the “right thing to do,” said Hoskins.

“We’re not excluding ourselves, we’re just saying let’s open it up to everyone else, and we’re being mindful that there are other people who have ideas,” she said. “Whether it involves funding my organization’s program or another organization’s program, I think there will be healthy competition and trust that the board is approving good products.”

The first organization that E-RIN recruited was Startup Edmonton, which operates under the umbrella of the Edmonton Economic Development Corporation. Startup joined the conversations to begin drafting the new proposal with E-RIN.

“Being new to the group, I saw first-hand how challenging unpacking and rebuilding roles, responsibilities, and budgets that were in place for many years was,” Startup CEO Tiffany Linke-Boyko told Taproot in April.

The funding renewal process

For a year and a half leading up to the new funding cycle, Alberta Innovates worked with the RINs to help them understand a new set of key principles it expected them to address when they applied for renewed funding.

The goal of the guiding principles was to ensure that all of the agencies were hitting the same standards — and not, as Dykstra emphasized, to create cookie-cutter agencies. It would be unrealistic to expect Edmonton’s RIN to behave the same as Calgary’s, let alone the same as those in rural areas, he said.

“Everybody in the province was very diligent in providing us with responses that were in alignment with those principles and followed the program guide,” Dykstra said. “E-RIN decided, for whatever reason, that they were not going to follow all the principles, and did not respond in a manner that was consistent with the program guide.”

Dykstra said Alberta Innovates rejected E-RIN’s first two proposals, submitted in January and February 2019, and gave them two subsequent opportunities for revisions. Alberta Innovates had already approved most of the other RIN proposals when E-RIN was revising its third draft.

“In the first proposal, there were some things my review team was confused about,” Dykstra said. “For example, E-RIN had submitted a budget but they had not broken down how the money would be spent and by which partners.”

According to Dykstra, each new version had very limited changes. None of the proposals completely aligned with the new principles that had been set out. Ultimately, E-RIN was denied funding and dissolved.

“There are just so many other things that could have been there in the Edmonton proposal. There was no recognition of a Small Medium Enterprise community with a voice at the table,” he said.

“If you look at what Calgary’s done, they have two SMEs, they have two industry people at the table that represent their industry, and I think that’s crucial.”

Since the funding decision was announced, Lumb has taken less of an active role in advance of his departure as CEO, which was announced in January. On May 15, interim leadership of TEC was given to Bobbi Elliott, who has been overseeing the organization’s finance, human resources and administrative functions since 2015.

“We’re disappointed in the lack of funding for the Edmonton innovation ecosystem, but we respect Alberta Innovates’ decision,” Elliot said in an interview on May 16, confirming that TEC had received the same feedback from Alberta Innovates.

Other options for Edmonton entrepreneurs

In the meantime, Edmontonian entrepreneurs still have access to other funding programs from Alberta Innovates as well as to the agency’s technology development advisers, Dykstra said.

Entrepreneurs can also access incubator funding via new money that was given this year to Startup Edmonton, he said.

The $500,000 given to Startup came from the Alberta Entrepreneur Incubator Program, a two-year pilot program established under the NDP government. That program had ended and leftover money was dispersed amongst the RINs. In the absence of a RIN in Edmonton, Startup got the money to continue an incubator program.

“I don’t want to lose the momentum that we had with the startups,” Dykstra said. “We do have our ears to the ground and we listened to what’s going on in the communities.

“The feedback from the entrepreneurs was actually quite positive, that Startup Edmonton was effectively using that program to help them out.” Under the new provincial government, it is unlikely that the funding for the incubator program will continue, he said.

Likewise, TEC Edmonton, NABI, and NAIT all still continue to offer programming, albeit without the Alberta Innovates funding.

TEC Edmonton will lose about $1.4 million from its budget of $7 million, Lumb told Taproot in April.

That money was used to support a program for early-stage entrepreneurs to access practical advice from senior advisers and executives. “[The removal of funding] is disappointing because we know that that was a highly valued service,” Lumb said. “But in some ways, this funding drop from AI actually helps us focus on that core mandate a lot more strongly. It means that we can be significantly more pro-active about how we search for and seek out university technologies to commercialize and build industry-university partnerships and create more spinoffs.”

Elliott added that TEC Edmonton receives most of its funding from its joint venture partners. They will still be available to support technology management and other programs for entrepreneurs.

What’s next?

Alberta Innovates and the three former E-RIN partners are in a “cooling-off period,” Dykstra said. Money for Edmonton under the RIN program is “on pause” and has not been discontinued or dispersed elsewhere.

In the fall, Alberta Innovates will revisit the discussion of whether Edmonton needs a regional innovation network, and if so, what it looks like, he said. However, Dykstra expects that those conversations will begin happening in Edmonton’s tech community well before the formal discussions get underway.

“Part of the regional relation network principle is that [a RIN] is required to be collaborative and co-operative,” Dykstra said.

“There are a number of people that have felt that they were not heard, and there are a number of people that felt that they were actually forced out of the [previous] conversation, and I have to listen to all of those voices,” he said, listing groups such as Rainforest Edmonton and The A100 network.

“The activity that Edmonton Economic Development has undertaken to try and stimulate the dialogue or continue the dialogue with the entrepreneurs — I applaud it and I want to make sure that it’s going to feed into this in the future in some manner.

“They were not at the table [for the proposal] and I think that’s a partner that should be. Because of the community that they’ve got together, I think that they should be heard.”

Dysktra warned that whatever the next RIN proposal looks like, it must be a collaborative effort.

“If grassroots organizations don’t come to the table to lead this effort in the fall, I will do it, and I will run the room, and I don't want to run the room, let’s put it that way,” he said.

“I need to see a community that wants [a RIN]. If there’s somebody that wants to get involved they need to have a dialogue with the existing entities that are continuing, or start a new dialogue.”

NABI, NAIT, and TEC Edmonton are still welcome to be part of the future of Edmonton’s RIN.

“We’re certainly open to any discussions with Alberta Innovates and our ecosystem partners [in the fall],” Elliott said. “We are also in a time of transition, so we’re waiting for responses from the TEC Edmonton Innovation Task Force as well as direction from our board of directors.”

(This story has been corrected to reflect that Chris Lumb announced his resignation as CEO of TEC Edmonton in January of 2019, not November of 2018.)