Posted: August 7, 2015
When Chris Lumb arrived at TEC Edmonton in 2010, he brought with him a culture of accountability.
“I came from the private sector,” says the CEO of Startup Canada’s #1 ranked business incubator. “Being accountable to investors, suppliers and customers was critical.
“TEC Edmonton is a not-for-profit joint venture, which is partially funded by all three levels of government. We are accountable to Canadian taxpayers. We have to show them, as well as our clients and stakeholders, that they are receiving value for their money.”
Four years ago, Lumb set in motion an annual “TEC Edmonton Client Economic Outcomes Survey” to determine if TEC Edmonton was actually helping its clients, and, if so, by how much?
Measuring outcomes isn’t easy. It requires a considerable commitment of human resources – about 25% of the time of a full-time in-house research analyst.
Clients need to be tracked down and asked to complete a short survey. With encouragement, about 80% respond. Enough, Lumb says, to provide an accurate picture.
The questions, Lumb says, were not difficult to frame. Just ask them from a taxpayer point of view.
How much, year over year, are client company revenues growing? Are new jobs being created? How many? Are private investors coming to the table? Are client companies ploughing profits back into research & development? Do these companies have better survival rates?
All of which would be rather meaningless, if there were nothing against which to compare TEC Edmonton client growth.
But there is.
Industry Canada tracks the performance of all early-stage entrepreneurial Canadian companies. It has found, over the last four years, a consistent revenue growth rate averaging less than 10% per year.
And over those same four years, TEC Edmonton’s ~125 active clients have collectively grown revenue by 25% per year. They have increased employment by 25% annually as well and now employ over 1800 people in the region. They have raised more than $230M in investment capital. And they have an annual survival rate of greater than 95%, significantly better than the benchmark rate of about 83%.
“We have learned,” says Lumb, “that early-stage companies, using services such as TEC Edmonton offers, do significantly better than those not using such services. We credit this not to TEC Edmonton per se, but to the entrepreneurs who choose to use services of high-quality accelerators and incubators. Over the four years we’ve been doing our survey, the largest indicator of entrepreneurial success is that the companies that access external services do better. This makes sense: no small business has all the resources, networks, and capabilities it needs to succeed. Externally focused entrepreneurs who understand this and reach out for assistance are significantly more successful.
“These results give Edmonton credibility as a leading location for innovation and entrepreneurship,” says Lumb. “TEC Edmonton was ranked (in the 2014 University Business Incubator Index) as the tenth best university business incubator in the world. Having a client outcome measurement system was a big plus. It’s good for Edmonton, good for our clients, and good for our owners, the City of Edmonton and the University of Alberta.”
In an essay published in the Globe & Mail newspaper, Dan Herman of the Canadian Centre for Digital Entrepreneurship and Economic Performance held up TEC Edmonton’s “outcomes dashboard” as an example of how business incubator performance could and should be assessed.
“This isn’t just about satisfying the demands of funders,” Herman wrote. “It’s about putting accountability measures in place to ensure that the young firms and entrepreneurs who use these services are going to get good value for their participation and investment.”