Year In Review: Kathryn Lockhart On A New Crop Of Founders Shaking Up Atlantic Canada’s Startup Ecosystem
To cap off 2021, Huddle sat down with some of the most important figures in Atlantic Canada’s business community – folks representing everyone from tourism operators to energy producers to housing advocates.
We asked each to reflect on the challenges, successes, and surprises that most impacted their industries, and the lives of Atlantic Canadians, this year.
In the latest of several conversations we will bring you over the next week, Huddle associate editor Trevor Nichols spoke with Kathryn Lockhart, the CEO of Atlantic Canadian tech accelerator Propel.
Her answers have been edited for length and clarity.
Q – What is the most significant challenge your industry faced in 2021, And what impact did it have?
I think as an Atlantic region we’ve identified and put our foot down and said, ‘this is a challenge regionally. We need to solve this problem.’ And that is angel investments.
There are siloed investment policies for angel capital investments within each province. And that prohibits the flow of capital at a very critical stage for entrepreneurs.
Founders are forced to rely too heavily on non-dilutive government funding. We love non-dilutive government funding and all founders should take advantage of non-dilutive government funding, but there’s a gap.
So what happens is founders will secure some non-dilutive government funding and then their next step tends to be, ‘okay, so now I have to pitch to venture capital.’ And they’re often not ready yet. They often don’t have the traction that institutional investors need because the angel level was missing.
So they hang around and write grants and then they can fail in raising venture capital funding because they’re too early.
They end up spending a lot of time trying to find money when they should be spending that time focused on customers and growing their business. It’s a total distraction.
Our ecosystem is doing incredible things but that has been a gap for us, to have a proper regional Angel Network. Propel is involved with a broad, Atlantic-wide committee called the Atlantic Investment. Hopefully having that the line—it won’t happen until 2022 but a lot of the legwork has been done this year—will address that. We’ve long needed this problem to be solved and I think we’re right on the cusp of solving it in a way that is going to make a huge difference.
Q – What is the coolest thing that happened in your industry in 2021?
I’m going to just tell a story and I think it will answer your question.
We had a founder who was in our vision and validation program. The point of that program is that a founder can truly validate if there is a problem in the market someone’s willing to pay to solve: not your mom, not your friend, not your buddy, but actual customers in the market.
We had that founder say to their coach, after 30 customer discovery interviews, ‘I am certain there is not a market here for my idea for my business.’ And the whole Propel team was like, this is amazing. This is a huge win. This person gets it.
They have not failed, they have not spent seven years pushing a rope up a hill and burning cash they don’t have. We have taught them and empowered them with the skills to take the smartest first step as an entrepreneur.
So it’s a mindset shift that starts to take shape. It may seem small but if we can see this more consistently we’re going to have just smarter entrepreneurs taking better first steps.
Q – How do you think your industry most impacted the lives of Atlantic Canadians in 2021?
I think it’s maturing incredibly and, week after week, there’s a great news story: there’s a great new startup that’s opened a new office or there’s a startup from Ottawa and they’ve moved to Charlottetown.
There are big exits; there’s big capital raises, like Introhive raising $100-million; there are companies that are relocating to Atlantic Canada; there are companies that are raising capital inside and outside of Atlantic Canada.
We have all of the data points that suggest the ecosystem is maturing beautifully.
That tells you that this ecosystem is not only maturing with great success stories, obviously, there’s Verafin and Introhive and Metamaterials and CarbonCure, those are the big ones. And then there’s a lot of alumni that we get to see, whether it’s CoLab or Milk Moovement, that are raising double-digit rounds and Series A rounds.
The impact on this region, the economic impact, is fantastic. The top of our funnel tells a great story, like the fact that we at Propel are going to support 100 companies this year. And we expect more and more success stories to continue to follow.
It makes our region economically sound and also very inclusive and diverse. Our numbers show 50 percent of our founders are new Canadians. And we now have data that shows up to 42 percent of our companies have female founders.
We actually have a founder who’s doing really well, he came from Morocco. He wanted a better life for different reasons and chose Atlantic Canada. He had no link or association or affiliation with it previous to this region, and is now growing their financial securities company from here.
And then we also see a really strong pool of new Canadians coming directly from universities. So education has been the front door for them.
Q – What excites you most about what’s happening in your industry in 2022?
We’re seeing the quality of our founders continue to increase — and that is great. I know I’ve said we’re on track to serve 100 companies. That’s fantastic. What I would rather have is 75 of the best founders I’ve ever seen.
Our founders these days are coachable; they’re analytical; they are good people to work with. So from a hiring perspective, and the future culture of their organizations, you trust that they’ve got this.
They’re really focused on learning. They’re coachable. They’re solving customer problems. And one of the things we like to we love to see at Propel is this total mindset shift. They enter our program talking about their product, and they leave our program obsessed with their customers and their customers’ problems.
It’s a breath of fresh air.
Other feature interviews in this series:
- Monette Pasher On How Covid Forever Changed Atlantic Canada’s Airline Industry
- Fredericton Chamber CEO Krista Ross On Supporting Businesses Through Tough Times
- Mayor Mike Savage On Managing Growth In Halifax