While Hayley Angus was completing her MBA degree at the University of Toronto's Rotman School of Management this year, she also interned for six months with Hammock Therapeutics Inc., a bio-technology startup accepted into the Creative Destruction Lab (CDL), the on-campus incubator for knowledge-based ventures.
She was among a select group of Rotman students who not only earned academic credit for helping the CDL startups but also the challenge of identifying and solving business problems for them.
"The experience is as valuable for the students as for the companies," says Ms. Angus, who is now a senior consultant at Monitor Deloitte. "You work through problems with an actual venture rather than do a case study."
In her case, she helped Hammock develop a compelling pitch to venture capitalists who were lacking a pharma background.
Creative destruction is the process that early-20th-century Austrian economist and Harvard professor Joseph Schumpeter described as essential to the renewal of capitalism. The two-year-old Rotman incubator, like capitalism itself, weeds out underperformers. Of 18 ventures accepted by the CDL in 2012, just eight were able to meet the program benchmarks and continue. The 2013 cohort did better: 12 of 15 survived.
The entrepreneurs come from a variety of backgrounds, lab director Jesse Rodgers says, and don't have to be U of T students or alumni. "What they've got in common is that none has a board of directors."
But they don't lack for mentors. The lab's Group of Seven Fellows – an advisory board of seven successful entrepreneurs who coach the ventures – meets with them every eight weeks to set business and technical goals that they must attain.
While the G7 Fellows set the benchmarks and can cut the underperformers, they can also reward promising startups by investing in them. Five of the seven Fellows have already put their money where their mentorship is. In the lab's first year, the eight survivors raised $65-million in equity value. To date, the total is up to $100-million.
Startup culture has caught on at many Canadian business schools. A growing number of campus-based incubators are providing youthful entrepreneurs with the resources and mentoring they need to launch their businesses. Increasingly, those resources include consultations with the schools' MBA students.
At the University of British Columbia's Sauder School of Business in Vancouver, an incubator devoted exclusively to social enterprises – the Innovation Hub – is in its second year. The iHub supports startups that address social and environmental problems while building a viable business.
Every January, five or six social ventures, each already generating revenue, are chosen from a short list of 20 applicants to enter the iHub for 12 months. They receive rent-free communal workspace and mentoring from 15 local business people (from both private businesses and social enterprises).
Each venture is also assigned one or two student interns who act as consultants during the summer, offering their skills in business strategy, marketing, entrepreneurial finance and research.
"The students are not just on general assignment," says James Tansey, executive director of the program. "They're doing it because they're interested in the social enterprise sector."
Ultimately, the iHub readies the social ventures to pitch for – and accept – investment, and move on to the next stage of growth, he says. The ventures are coached on how to approach investors, prepare a proposal for private funding and close the deal.
Change Heroes, an online friend-funding platform that enables anyone to raise $10,000 in a few hours to build a school in a developing country, is the first of the iHub ventures to raise "significant" venture capital, says Dr. Tansey.
Memorial University has been operating an incubator for technology businesses, the Genesis Centre, at its campus in St. John's since 1997.
"We take in about four companies a year out of about 25 applicants," says Michelle Simms, manager of incubation services at Memorial. "We only look for companies that have scalable products with global potential." They can incubate for up to three years.
The centre has accepted 58 ventures to date, including 10 still in incubation. It has graduated many of the leading startups in the region, including fraud-detection software developer Verafin Inc., which has attracted $60-million in U.S. private equity.
The centre's mentors are expatriate Newfoundlanders who run successful tech companies elsewhere but remain committed to the province. "We're different from a lot of other incubators in that way," says Ms. Simms.
The expats return to Newfoundland at least annually, visiting the centre and the clients on those occasions. The centre also funds trips by clients to their mentors once or twice over three years. Skype and phone conversations keep both parties in contact.
Also, every Genesis client is paired with a four- to six-member advisory board comprising local business, legal and accounting experts. Some of Memorial's MBA students also provide consulting, with two or three assigned to each venture.
"We're considering an accelerator program in addition to the incubator," Ms. Simms says. She says the clients likely would be incubatees that require only an accelerated program of 15 weeks to get prepared to pitch investors.