Incubating small business is becoming a big business at Alberta's universities.

Both the University of Alberta and the University of Calgary say they are working hard to give small business an upper hand - and expect to see dramatic returns in the years to come.

The U of A's small-business engine, called TEC (Technology, Entrepreneur and Company Development) Edmonton and its predecessor technology transfer unit, the industry liaison office (ILO), have played a major role in supporting and creating small businesses in Alberta.

In Calgary, University Technologies International Inc. (UTI) is where officials work with both university researchers and off-campus inventors to bring technology and inventions to the marketplace.

Jack Dagley, Business Edge
Scanimetrics CEO Steven Slupsky displays two wafers of silicon chips in his firm's testing lab.

U of A figures show that its technology transfer office - in the business of moving U of A inventions and discoveries to the marketplace - generated more than $27 million in revenue from licence fees, option fees and royalties, and created 84 new companies in a 10-year period dating back to 1994. Today, 71 of those 84 companies are still active and employ more than 1,000 people.

The U of C is still gathering information on the economic impact of the university's research.

But UTI numbers show that since its creation in 1989, it has developed or assisted in the creation of 38 spinoff companies.

Combined, the two university business engines illustrate that post-secondary school campuses are about much more than just students and research.

Although some of the companies incubated in Edmonton have merged, been discontinued or acquired by other companies, this source of company creation remains one of the most successful in Alberta, TEC Edmonton officials say.

"The success rate of continuing companies after five years far outlasts the rate for non-university startup companies," says Jason Darrah, TEC Edmonton's communications and public affairs manager.

These companies, adds Darrah, share with the world innovations ranging from pharmaceuticals that fight the common cold, such as CV Technologies' Cold-fX, to websites that provide novel methods to teach world history, such as Chinook Multimedia's web tools.

"As we have gained more experience in working with companies we will see a steady growth, and our research budget (at the University of Alberta) is growing every year," adds Pamela Freeman, TEC Edmonton's acting CEO, who also notes that as research activity increases, it translates into commercial output and in turn, the creation of more small businesses.

For Paul Cataford, UTI's president and CEO, the focus is on service - investing resources to protect the inventions and then taking them through the commercialization route - along with beefing up the number of companies that are created or spun off.

"Right now, 100 per cent of our revenues come from licensing technology to existing companies," says Cataford. "I'd like to get that down to 75 per cent, and 25 per cent from company creation, over the course of the next three to five years and then completely reverse those numbers in five to 10 years."

But while UTI has not brought a new company to market in its fiscal 2004-2005 period, Cataford points out the emphasis on company creation wasn't as strong as it is now.

"They were doing some company creation but had seen limited success," says Cataford, who was hired in April 2004. "My mandate is to focus on company spinoffs and company creation activities."

One of the companies UTI has had a hand in developing is CytoStore Inc., a Calgary entity involved in developing and commercializing life-science research tools, specifically biological and biochemical products used to study genes and proteins.

"In this particular case, UTI founded the company. We are a wholly owned subsidiary," says CytoStore president Casey Eitner.

"The driver was that UTI had been licensing technologies in the life-science research space to larger American companies and only benefiting from them in the form of royalties and not by capturing the higher values that comes with manufacturing and commercializing a product."

Although CytoStore only employs six people - four full-time and two part-time - Eitner says the company is dealing with some of the world's largest drug and biotech companies, and top medical research labs.

Business creation from these incubators, though, is not limited to companies connected to the parent operation. In Edmonton, for example, businesses such as Scanimetrics Inc. and DriveABLE Assessment Centres Inc. are full-fledged, self-sufficient entities.

Scanimetrics, which targets a $4.4-billion segment of the semiconductor test equipment market, is a U of A spinoff. Despite novel wireless testing technology that dramatically improves silicon chip manufacturing efficiency and reduces costs by as much as 1,000 times compared to current methods, Scanimetrics says it wouldn't be where it is today without the help it got from TEC Edmonton.

"I think we'd be in the wilderness," says Steve Slupsky, CEO of Scanimetrics, which employs 12 people. "I can't image where we'd be if we didn't have this assistance. I'm so proud to say were a spinoff of the U of A and part of the TEC Edmonton family.

It's very instrumental in our success."

That success included help from winning the VenturePrize business plan competition in 2003 and use of Deal Generator, a program that focuses on facilitating deals between investors and promising early- and growth-stage companies. The two programs, originally geared just to Edmonton companies, have now expanded to encompass business ventures on a provincewide basis.

"The Deal Generator program helped us to raise investor awareness and investment. They've introduced us to a number of potential investors, partners and business service providers, helping us to get connected and network in the community as well," says Slupsky.

TEC Edmonton and the Deal Generator program have also made a difference for DriveABLE, a driving assessment service to identify drivers who might have become unsafe due to medical condition or medications.

"(Company founder) Allen Dobbs and his team recognized that they needed additional financing to further develop this business and they were not successful in obtaining it," says CEO Henry Yip. "What was successful was that they were introduced to TEC Edmonton and Deal Generator. From the Deal Generator connection they were exposed to a venture capital firm."

DriveABLE now employs half a dozen people and is licensing its intellectual property.

"Having TEC Edmonton as a venue to expose ideas and get feedback - it's invaluable," says Yip.

Meanwhile, despite the strong reviews for the two incubators, there still are barriers to overcome.

"It's very difficult to get early-stage companies funded right now," says Cataford, though he adds he expects that will change.

Both Cataford and Freeman remain confident that the seeds they're planting are only going to blossom, not just in terms of creating new companies and more jobs, but through the development of new talent, new management teams and successful entrepreneurs who will want to come back and spread their wealth.

Meanwhile, the 2005-06 VenturePrize Program is calling for aspiring entrepreneurs and early-stage companies to compete for $175,000 worth of prizes in its fourth annual program. The program has increased prizes this year, up from $140,000 in 2004-05, and it added a second award category to accommodate what it calls business concepts of differing scope.

"We have had great support this year from a number of new sponsors to increase the prize packages, and we are extremely pleased to be able to take the program provincewide," said Jay Krysler, TEC Edmonton's VenturePrize program manager, in a recent statement.

Web Watch: www.ventureprize.com

(Laura Severs can be reached at laura@businessedge.ca)