The Innovation Gap

The average time for a start-up to innovate in the software sector is 1 to 5 years. The average time for a start-up to innovate in the energy sector is generally much longer – in many cases, between 10 to 15 years. This long innovation cycle hinders the appeal of investment in early stage start-ups within the energy sector. For investors looking to expand their portfolio quickly, investment in the energy sector becomes less appealing.

“Historically, start-ups looked to investors for more than funding. They didn’t just put their capital into the start-up, they rolled up their sleeves and offered their expertise,” explains Henry Kutarna, Vice President of Investment and Market Development at Innovate Calgary. “The investors of today have the capital but are short on time. They expect someone to be there to facilitate the process of the start-up.”

Early start-ups are also dealing with syndication. In the past, investors would typically invest in their local region. Now investors can look at opportunities all over the world through tools like the Angel Gateway, which allows entrepreneurs to connect with funders. This increases competition for capital for start-ups, making them compete not only with the local markets, but the international ones.

“Calgary is in the heart of the energy industry. There is tremendous opportunity here for investment and growth,” says Kutarna.

With investors having less time to offer, start-ups are finding it hard to get the attention of the major players in the energy sector to assist in development. The lack of capital for technologies that have not yet been proven in the field and the slow adoption of new technologies by industry cause start-ups to hit a wall.

“In order to create a truly disruptive energy technology we must compress the time from bench to field,” says Stace Wills, Vice President of Company Creation at Innovate Calgary.

“The key for early start-ups is getting a chance to test their product or idea in the field. Without the relationship with an industry partner or customer it is hard to commercialise their technology, therefore harder to attract investors,” says Wills. “If the industry can be a sounding board for early start-ups and researchers then the time from bench to field can be dramatically reduced, helping to close the innovation gap.”

Innovate Calgary is a full-service organisation, offering technology transfer and business incubator services to researchers, entrepreneurs, and businesses within the advanced technology sector. With 30 years in experience supporting the technology community, they continue to build relationships within the oil and gas and energy sector through a focus on commercialisation.