Lab brings moneyed mentors to the table
Sometimes the road to business success isn’t easy to see. A year ago, Karl Martin and Foteini Agrafioti had a new company, awesome technology, and no clear path. Both were engineering PhDs from the University of Toronto, he was a specialist in biometric identity systems and privacy; she developed the first technology to identify users based on their unique cardiac rhythm, and would be named U of T’s 2012 “inventor of the year.”
But great technology alone does not a business make. Puzzled why big companies never came to the table with licensing deals, Agrafioti and Martin wondered what to do next. A year ago, a solution appeared. The university’s Rotman School of Business was opening a “Creative Destruction Lab” to provide mentoring and monitoring from seven of Canada’s most successful entrepreneurs — all of whom had steered tech companies to lucrative exits. Who could say no?
A year later, the pair’s company, Bionym, has $1.4-million in funding and a new cause: changing the way identification works. By early next year, it will be selling Nymi, a Bluetooth-powered wristband that authenticates your identity to smartphones, tablets, computers, and eventually your car, your home, and the weight machines at your gym.
Bionym is one of just eight companies that survived the first year of the Creative Destruction Lab (CDL), coming out stronger, more certain, and capitalized for success. Its success shows what can happen when you connect new entrepreneurs and promising technology with veteran mentors who understand business and know how to get things done.
And despite its ruinoussounding name — based on the work of Joseph Schumpeter, who theorized the economy could best be understood as a continuing series of disruptive innovations — the Creative Destruction Lab is showing how to build a better economy by fast-forwarding young companies that could be the next Research in Motion.
The CDL is looking for 18 new businesses to mentor from November to next June. The application deadline is Sept. 17; details are at creativedestructionlab.com.
Warning: This lab is hard to get into, and easy to get out of. Last year, 76 companies applied, and 18 were accepted. All got the mentoring of the G7 Fellows — seven millionaire mentors. But those that fail to meet their milestones face constant threat of being sent packing.
What makes the CDL different from the many other accelerator and mentorship programs, besides its access to Rotman professors and use of MBA candidates to write financing plans, is its ability to provide mentors who are also willing to invest. The G7 Fellows this year included Dennis Bennie (Delrina Technology), Nick Koudas (Sysomos), Nigel Stokes (DataMirror), Lee Lau (ATI Technologies) and Dan Shimmerman (Varicent). They invested seed money in three of the Lab’s companies; some have already made a profit. In June, the Lab’s most prominent graduate, gesturecontrol device maker Thalmic Labs of Waterloo, Ont., raised $14.5-million in a Series A round that valued it at about $50-million.
After two years of hoping big companies would build products using their technology, Bionym’s founders were advised that they should make their own product. That led to the development of Nymi, “the wristband that knows who you are.”
People have too many passwords, and sophisticated access systems are easily foiled by intruders carrying other people’s identity cards, Martin says. Agrafioti’s work has proven that electrocardiogram rhythms are as distinctive as fingerprints, but impossible to steal.
This fall, Bionym will reach out to software developers to encourage them to build applications for the Nymi; Martin contends it will have more uses than he and Agrafioti could ever imagine. (With a bit of code, the Nymi could easily mimic a Nike FuelBand.) This month, the company closed a $1.4-million seed round with five of the seven Fellows, along with Toronto venture capitalists Relay Ventures. It will start taking orders for the Nymi in September (for 2014 delivery), and hopes to close a $10-million to $15-million funding round by year end.
Martin sounds creatively unCanadian as he surveys Bionym’s prospects: “We don’t see ourselves in a position where we have to raise money [this fall]; we could survive on presales. But we’re looking for big growth, not just survival.”