Toronto-area entrepreneur Mohamad Fakih has offered to fund and reopen OneEleven, which was once one of Canada’s most prominent startup accelerators – but he says its future could be decided by a tug-of-war with a government innovation agency.
OneEleven announced its pandemic-related shutdown in April. The Paramount Fine Foods founder says the accelerator’s chief backers, Oxford Properties Group and its parent Ontario Municipal Employees Retirement System pension fund, are focused on talks to hand the keys to the Ontario Centres of Excellence, a provincially and federally funded agency headquartered in the same building.
The Globe and Mail obtained Mr. Fakih’s proposal to take over OneEleven, which he confirmed he sent to OMERS and Oxford on May 22. OneEleven was most recently a private for-profit organization, and Mr. Fakih believes that it should remain private to complement, instead of replicate, the work of Toronto’s publicly funded startup-support programs. “This needs an entrepreneur-to-entrepreneur approach,” Mr. Fakih said in an interview.
OneEleven said in April that it would shut down for good because of financial constraints caused by the COVID-19 pandemic, and the subsequent expected slow return to office spaces. Dozens of startups were left with the choice to either vacate or arrange new terms with Oxford, and 15 staff were laid off. The Globe has also learned that selling the accelerator was an option presented by staff to its board before the shutdown, but that the board declined to pursue that route.
While Oxford says the accelerator as it was known will still be wound down, naming rights to OneEleven would carry the brand and history of a pre-eminent Canadian tech organization. The accelerator’s alumni include Canadian financial technology companies Wealthsimple Inc. and Borrowell Inc.
Ontario Centres of Excellence is an agency that funds the commercialization of new technologies on behalf of provincial and federal governments. It was a founding partner of OneEleven, which was run as a non-profit from 2013 to 2018. OCE spokesperson Braden Root-McCaig said in an e-mail that the agency had been approached by several OneEleven companies “to explore opportunities to restore the community and maintain continuity."
“We are currently in discussion with numerous stakeholders to consider a not-for-profit model to best support these companies,” he said.
Daniel O’Donnell, Oxford’s vice-president of communications, declined to comment on specific proposals because of continuing negotiations, but said Oxford is "committed to finding a long-term solution for OneEleven’s members. ... We can assure you that all received proposals have been given due consideration.”
Before the shutdown, staff had presented the option of a sale to OneEleven’s Oxford and OMERS-run board as part of a suite of possibilities to stay open, two sources close to the accelerator said. The Globe is keeping their identities confidential because they were not authorized to discuss the details.
The staff plan would have kept OneEleven’s cash flow positive for the rest of the year and not required any layoffs, the sources said. Instead, they said, Oxford hired a restructuring officer and used the accelerator’s cash to pay out its obligations. The majority of OneEleven’s tenants have since left, they added, meaning Mr. Fakih, OCE or another suitor would largely acquire the OneEleven brand.
Oxford confirmed that discussions are around a transfer of naming rights, and the board hired a restructuring officer and outside counsel to determine its future – but did not comment on the staff plan. The real estate company said about a third of OneEleven’s desks had been vacated since the announcement that it would be shutting down.
Mr. Fakih’s Paramount chain has 75 locations in Canada and abroad serving Lebanese and broader Middle Eastern fare. He says he has invested in and mentored early-stage startups, though was not able to disclose his investments because of confidentiality agreements.
His proposal includes an offer to invest his “time, money, and resources to build OneEleven into a pre-eminent technology accelerator.” He said he was willing to spend seven figures to take over the accelerator, and launch a connected seed fund to invest in early-stage startups. While the proposal insisted Mr. Fakih would be OneEleven’s owner, he said it could continue to have a relationship with OMERS and Oxford.
“I believe OneEleven had an important role to play in the city and the tech ecosystem,” Mr. Fakih said. "I wanted to invest in its success.”
To do that, Mr. Fakih proposed to build it as a private organization from revenue generated by rent, sponsorships and returns from investments in its startups.
“We will not be a liability to any institution, public or private sector, but rather a growing asset to the region,” his proposal states. Mr. Fakih said he found out last week that OMERS was moving forward with talks with OCE, but remains hopeful his proposal will be considered.
The Paramount founder has become an increasingly prominent voice in Canadian business circles. His philanthropic endeavours have also earned him headlines in recent months, as he helped cover funeral costs for victims of the Iran plane crash in January.
OneEleven was one of Toronto’s most notable startup accelerators, and had attempted several expansions across the country and beyond. Founded in 2013, it was the brainchild of former OMERS Ventures head John Ruffolo.
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