Building a challenger community - The power of shared values

Challenger communities - They are often found away from large technology or population centers, an ecosystem seemingly unable to muster the talent pools and intensity of innovation that larger centers can, yet we find such such small ecosystems and the challengers who drive them can and do thrive in challenging environments.

Why is this the case? What do challengers in such out-of-center environments do differently? How do they connect, collaborate and partner for a unique advantage?

It may sound counter-intuitive, but when it comes to a Challengers work, small can offer some distinct advantages. The location of smaller centers can offer access to unique resources or specialized skills. Whether we look at small island nations or inland ecosystems that are more remote, where challengers operate, small can leverage these advantages to attract investment, foster innovation for specific outcomes, and create new opportunities, which can be repurposed in used in larger centers.

The city of Halifax in Nova Scotia, Canada offers us an example. In 2023, it made Startup Blink’s Top Innovation city ecosystems in Canada. This city, of less than 500 000 inhabitants, nestles on the Atlantic shoreline, the commercial hub of Nova Scotia, hundreds of miles away from the major population centers of Toronto and Montreal.

Yet it plays an outsized role in the fight against climate change, using technology and an intimate understanding of its impact on the ocean ecosystem. Its Center for Ocean Ventures and Entrepreneurship or COVE is recognised as one of the most cutting-edge marine innovation ecosystems in the world, and close collaborations with a growing set of academic and research institutions, such as the city’s Dalhousie University and its Ocean Frontier Institute are developing a myriad of climate change mitigation solutions, with private sector participants. COVE’s CEO, Melanie Nadeau, highlights ‘We have many gems in Nova Scotia and COVE is certainly an exciting one. More and more, the world is realizing Nova Scotias potential.' I guess that facing the Arctic ice melting is quite the motivator...

What skills could challengers in smaller centers, such as Halifax and Calgary, a city of app. 1.5 million inhabitants, in Canada’s Midwest, offer challengers? What innovations could they bring to food production, to cleaner forms of transportation, to how we collaborate in trusting relationships with others?

Over the past decade, the number of business ecosystems we find in small markets has grown significantly. For Startup Blink's CEO, this is no surprise. Eli David founded StartupBlink in 2013. It is one of the world’s most comprehensive start-up research center, providing private and public sector participants with intelligence over more than 1 000 innovation ecosystems around the world.

Its Start-up Ecosystem Index of 2023, innovation ecosystems are featured from over 100 countries, around the world, some in rather unique and smaller settings.

Calgary is found in Canada's Prairie states, a far distance away from Toronto or Vancouver, the country’s largest innovation centers. It boasts just over 1.5million inhabitants. In all, the Prairie States are home to about 20% of Canada’s 36 million population.

How do these smaller centers fare when it comes to building the future we want? I posed to Derek Armstrong, Manager of Innovation Ecosystems at Prairies Economic Development Canada. His work, part of the proactive role the public sector takes in Canada’ ecosystem development, centers on innovation, ecosystem and community economic development. It is, in his words, an opportunity to position the Prairies differently and rely on some of its unique advantages, and where national initiatives, such as Startup Ecosystem Canada and Startup Canada, are working to connect ecosystem stakeholders in the country.

From its agricultural roots, the Prairie states have relied on industries which brought with them a boom-and-bust cycle, Oil & Gas in particular. As oil prices rose, boom times followed and economic migrants flooded into the states, and as oil prices fell, tough economic times followed. The economic fortunes of these states swayed over many years, in line with these two industries.

It was something which Derek and his team were ready to challenge. There were many doubters at first, those who saw the lack of resources as a non-starter, the distance from major metropolitan areas a potential death blow to attracting talent. Yet the region has its advantages, as well, ones which challengers and their teams can rely on and grow an ecosystem of opportunity.

The breadth of the ecosystem across industries is one of the health indicators we look for, when evaluating business ecosystems. Do they attract role players beyond traditional role players? Does collaboration take place across private and public sector role players? How diverse is the funding of the ecosystem?

Funding for Calgary’s innovation ecosystem is an interesting lens to view this. It was historically funded primarily by Government agencies, operating at various levels, from federal to provincial and municipal agencies. Notable examples include The $100m Opportunity Calgary Investment Fund (OCIF),

Academic and R&D role players are also actively growing this innovation ecosystem, among them The University of Calgary. It generated $504 million in sponsored research in 2021 and is ranked first in startup creation among Canada’s research universities, with 20 per cent of startups created by research universities nationally. Those are impressive figures indeed.

The private sector now plays a more prominent role, particularly through Venture Capital funds, and global companies such as IBM, EY, and Infosys making major investments or opened new innovation centers in Calgary.

What may not be as visible as funding or unicorn status achieved by Calgary’s technology startups (in fact, two already did),? is the sense of community and shared values which Calgary’s innovation ecosystem has relied on. This has its roots in the region's development. Here, a strong sense of community, helped foster long-term collaborations and prevented, to a degree, outside investors from inflating prices, as we have seen in larger tech centers.

That said, Calgary startups attracted nearly $650million in 2022, a figure that has been growing from year to year. However, it has not prompted valuations to reach stratospheric levels and the collaborative spirit among role players is still evident. This sense of community, we believe, is driven in part by the unique culture of the Prairies. People in this region are known for their resourcefulness, and willingness to help their neighbors, given the harsh conditions that the region experiences.

Such values translate well into the innovation ecosystem, where challengers often work together to share resources, knowledge, and expertise. The result is a community that is highly supportive of local businesses, even in the face of competition from larger centers like Vancouver or Toronto.

A strong sense of community is also evident in how challengers, senior of age, are being recognized. One of the most in-depth studies into the relationship between age and start up success was conducted by researchers from MIT, Northwestern, Wharton and the U.S. Census Bureau. Published in 2022, the study found that that the likelihood of success as a founder increases with age, until the age of 60. In the main, it proved that the older you get, the more likely your chances of success are – that is good news for many challengers, who are no longer in their fashionable 20’s or 30’s…

A 50-year-old founder, for example, is twice as likely to build a thriving challenger firm that has either an IPO or a successful acquisition as a 30-year-old founder. And you don’t necessarily need practice as an entrepreneur to become one. Most successful founders have worked in corporate and other jobs before starting their venture.

Here we met Calcary's 2023 Top 7 Over 70 winners, who started successful new ventures after the age of 70. At the Awards ceremony earlier in 2023, the Top 7 over 70 Chair Monica Zurowski observed how the accomplishments of these individuals are truly inspirational, making a difference in the community every day and contributing to the economic and social fabric of Calgary in a myriad of ways.

Calgary and Halifax are examples of successful, emerging ecosystems, both now recognized. Here, challengers have shown remarkable diversity, from VC funders who were willing to bank on thier remoteness and size up the affordable talent against a set of opportunity which could bring Canada, and indeed other nations, to net zero.

What others saw as a hindrance, Calgary and Halifax based challengers recognised their sense of community, as an asset. Where their unique location was limited by size, they could avoid many of the pitfalls of funding boom and bust, that has hampered other centers of innovation. There is still much to be done and much we can learn from.

Have a good week ahead.

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