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Nanaimo’s tech incubator faces uncertain future

Nanaimo council considers ending SquareOne, citing cost and lack of business plan
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Nanaimo city council is considering closing tech incubator SquareOne, citing costs. (News Bulletin file)

A co-working hive where entrepreneurs can grow their businesses faces an uncertain future after the closure of Nanaimo Economic Development Corporation.

This April, Nanaimo council will make an in-camera decision on the fate of SquareOne, a co-working and tech incubator space in downtown Nanaimo.

The idea behind the 28-desk hive, the brainchild of the NEDC and Innovation Island, was to coax business people out of the home and into a space where they could immerse themselves in a culture of startups with other companies, create new technologies and tap into coaching and mentoring resources. It launched in 2014, with anticipation it would be the first of its kind north of the Malahat.

But according to Amrit Manhas, the city’s economic development officer, SquareOne is currently operating like a co-working space or hot-desk rental, not a tech incubator, and can be viewed as a local government competing with the private sector with public dollars.

She said she’s never seen a business case for the incubator nor criteria, which would outline how to assist startups with a timeline to scale up and move out. The cost structure is also significant due to existing lease agreements and limited income, said Manhas, adding the net loss was $144,208 in 2015 and $115,394 last year.

Tenants and the building owner have been given a letter by the city that it’s committed to SquareOne until the end of June.

Manhas said the city has spoken with three different parties, whichexpressed interest in keeping SquareOne, about the cost structure, and everyone understood the city’s position.

“We would be happy to work with anyone who wants to take this on and move forward with it, but to be honest, I think that we need to start with a blank slate,” said Manhas. “We need to start with a lower cost structure overall and build it over time; start with a business plan. You can’t start something fresh and new when [you’ve] already got these lease agreements, which are significant in dollars and hamper your ability to move forward in a positive way.”

Phil Stiller, chairman of Innovation Island, said the site was controlled entirely by NEDC and the city and Innovation Island helped advise. It started out as a game-changer that was going to create innovation, energy and a good vibe, but he said that vision has to be backed up by all the key players within the facility and requires financial backing and “those obviously didn’t transpire.”

That the future is in question is disappointing, he said, adding it’s an opportunity missed.

Mayor Bill McKay, chairman of the economic development commission, looks forward to a report from staff and seeing what council believes is the appropriate next step.

“We simply weigh the advice that we’re given and while I would encourage us and council to put their minds to continuing with some sort of an incubator … it needs to be done properly and let’s see what it looks like,” McKay said.

Manhas believes in the concept of tech incubators, but said the current cost structure is turning it into a bit of a challenge.

“We want to be supporting technology startups in Nanaimo and starting the growth and expansion of the existing technology companies; it’s a way to develop talent in our community,”said Manhas, who also pointed to incubators as a worthwhile investment, with taxes generated through spin-off companies and job creation, but said successful ones need to start small and nimble and grow over time with a solid business plan.

On April 10, separate from the question of Square One, a report will go to council about the future of economic development. Manhas said that process of looking at what’s wanted for economic development in Nanaimo could be a good opportunity to also explore an incubator.