A new Internet incubator will open its doors in Calgary this week, looking to help local entrepreneurs accelerate their business plans, and tap into key U.S. markets.
Kinetiq (www.kinetiq.net) is the brainchild of Don Sandford, a local computer entrepreneur, and executives from Net Shepherd, a Calgary-based holding company that has spawned several successful Internet ventures south of the border.
Sandford says he wants to use Kinetiq as a means to pass on the experience and knowledge he and other Net Shepherd founders have gained from their ventures on the Web, and to hopefully create a lucrative vehicle for investors.
“We’ve often been asked the question: ‘If you can launch successful Internet companies in the U.S., why can’t you do it here?,’ ” says Sandford. “The answer, of course, is we can.”
Kinetiq has taken over the second floor of an office building on 17th Avenue S.W., near 14th Street, to serve as a breeding ground for its ventures. It already has one business on board, an online golf reservation startup called iBookings.com.
In the coming months it hopes to throw its support behind another four ventures.
Net Shepherd is not a familiar name on the Canadian Internet scene, but the companies in its portfolio are. It was launched about four years ago with the initial goal of developing a rating system that would help people make better use of their surfing time. A small army of researchers was hired to scan the Internet and rate sites based on their appropriateness for children, and their overall value.
While the rating service was popular, it didn’t make money, so Net Shepherd had to rethink its plans. It signed a deal with Paul Gross’s idealab!, to purchase the assets of a venture called Answers.com. Leveraging its existing knowledge base, Net Shepherd was able to turn Answers.com into a service that can answer questions asked in plain language.
GE Plastics uses the service under its own handle – Ask Edison. Customers can type in such questions as: “What is polyethylene used for?” or “Where can I buy product X in my area?” and automatically receive an answer.
Net Shepherd also operates a company called Ktopia (www.ktopia.com), which allows companies to tap into a distributed workforce, and ClickChoice (www.clickchoice.com), which provides Internet ratings and demographic information.
While Sandford and the other investors in Kinetiq do have a track record on which to lean, breaking into the Internet incubator business will be no easy task. The market has recently been flooded with so-called incubators, business accelerators, labs, garages, and even “Zaibatsus” – all looking to cash in on the Internet craze.
Some of the publicly traded incubators, like CMGI (www.cmgi.com), have seen their share prices collapse in recent months, and at least one high-profile San Francisco incubator, IntendChange, decided to scrap the concept altogether.
Kinetiq will also be far from alone on the local scene. At least three other Calgary-based Internet incubators are in the works.
Sandford says he has decided to take a tack which he hopes will help it avoid pitfalls some other incubators have fallen into. Kinetiq will only take on companies with a business that is already up and running, and bringing in revenues.
In exchange for its services, Kinetiq looks to gain a 5- to 10-per-cent interest in its adopted ventures, and earn income from billed professional services. It’s an exchange that Rick Bowie, vice president of iBookings.com, feels is worthwhile.
“Without question they’ve accelerated our business plans. They’ve introduced us to clients in the U.S. that would have been very difficult to reach on our own,” says Bowie.
“For what it’s costing us in fees, it’s money well spent.”
