Employees are pictured working at Toronto tech incubator OneEleven.FRED LUM/The Globe and Mail
OneEleven, the Toronto-based technology accelerator backed by the Ontario Municipal Employees’ Retirement System pension fund, will permanently shut down in May because of financial strain from the novel coronavirus.
The accelerator’s alumni include financial-technology companies Wealthsimple Inc. and Borrowell Inc., as well as legal-software firm Themis Solutions Inc., which operates as Clio and last year completed one of the largest venture-capital financing rounds in Canadian history, at $333.5-million. Its present startup cohort includes startup-data company Hockeystick.co Inc. and predictive legal-tech business Blue J Legal Inc.
“As the particulars of a post-COVID world remain uncertain to all of us, there is also no doubt that a safe return to office environments will require changes to the way we work, and in particular the required de-densification of physical space will fundamentally threaten our business model,” OneEleven executive director Siri Agrell and chair Dean Hopkins wrote in a statement Wednesday afternoon.
The accelerator is housed in an Oxford Properties Group building on Front Street, in the shadow of the Rogers Centre. In a statement, Oxford said that OneEleven made the decision on its own, despite an offer to provide “additional support and subsidies” to remain. Oxford has submitted a rezoning application to eventually tear the building down for a development called Union Park, though it does not expect to break ground until 2023.
Oxford, another division of OMERS, had financially subsidized OneEleven’s original move to the building and was a partner in the accelerator. “OneEleven has made a tremendously positive impact to the Toronto tech community over the past seven years, so we’re very sorry to see it close its doors,” said Daniel O’Donnell, Oxford’s vice-president of communications.
OneEleven was one of Toronto’s most prominent startup accelerators, and was the brainchild of former OMERS Ventures head John Ruffolo. Under the guidance of Mr. Ruffolo and former OMERS CEO Michael Nobrega, OMERS Ventures took a keen interest in early-stage Canadian startups, though both have since left, as did others such as managing partner Sid Paquette.
Ms. Agrell and OMERS Ventures declined to comment. Mr. Hopkins did not respond to a comment request.
While OneEleven gave its startup tenants rent abatement for April and May, as well as programming to help those startups adjust their business models because of the pandemic, its managers wrote that it had to absorb the risk of its startup tenants failing.
While this is natural for accelerators – which also usually benefit from tenants’ success – the sweeping economic shutdown of the past five weeks has drained many young businesses of revenue. OneEleven did not discuss the financial state of any of its tenants.
“We could not ignore that our own model was existentially threatened,” OneEleven’s leaders wrote. The accelerator “does not receive government funding. Our membership and partnership fees represent our entire operating budget, and we have always done great things with slim margins.”
Member companies will still be able to enter the premises and access their things, they added, noting that they can arrange new terms with Oxford to remain in the space.
Raymond Luk, CEO of OneEleven tenant Hockeystick, found out about the shutdown by reading the public statement while waiting in line to get into a hardware store Wednesday afternoon. He called the move a “shock,” but understood that many businesses are now trying to figure out the financial viability of a slow, gradual return to offices.
But OneEleven was about more than just office space, he added. “They’ve really contributed a lot to the community. Their model really brought entrepreneurs together.”
“While we hoped we would never have to make this decision, we will look back on our journey with tremendous pride, and thanks to everyone who was involved in making the community and its achievements possible,” Ms. Agrell and Mr. Hopkins wrote.
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Josh O’Kane