How Lab2Market supports aspiring entrepreneurs in Canadian academia

Academic researchers all over Canada can gain valuable entrepreneurial experience in the recently-expanded Lab2Market program without committing to the career pivot up front

Lab2Market is a rapidly-evolving program that guides current students and recent graduates in Canada pursuing STEM research (Masters, Ph.D., and Postdoc) in commercializing their research and transitioning from, well, lab to market. It is one of the few Canadian innovation support programs that straddles the transition between academia and early-stage commercialization, and it was instrumental in my own journey in building out Northern Nanopore Instruments.

Lab2Market is unique among Canadian accelerators for a few reasons. It comes with funding through Mitacs and NSERC that allows aspiring entrepreneurs to buy out some of their research time to focus on exploring entrepreneurship before committing; it focuses heavily on validating the idea as a precursor to execution; and it starts as early as the Masters level in grad school, before one makes a commitment to entrepreneurship. While it is still delivered on a regional basis, Lab2Market programs are available all over Canada, and the program is in negotiations for national funding to move away from the regional delivery model in the near future.

Lab2Market has expanded significantly since I took part. I recently had the opportunity to sit down with Spencer Giffin, recently appointed Executive Director, to discuss how the program has evolved and what to expect going forward.

Lab2Market is now divided into four serial but modular stages that span the entire early-stage entrepreneurial journey, starting with a lightweight educational component while participants are still in grad school and carrying them all the way to incorporation and product development. While the stages are designed to be undertaken in order, Lab2Market recognizes the need for flexibility and allows entrepreneurs to do stages in isolation if their situation warrants doing so.

Discover

The first stage in the Lab2Market pipeline is Discover, a low-commitment set of courses that happen during academic research. The program is free, fully remote, and involves minimal homework aside from a few lightweight assignments, with a time commitment of 1-3 hours per week.

The intention of the Discover program is to address the largest problem with first-time entrepreneurs: they don’t know what they don’t know. The first round of experience with an incubator was for me a humbling experience of not only realizing how little I understood about business development, but further that in many cases I did not even know what keywords I should google in order to start to educate myself. Discover addresses this key knowledge gap and lays the foundation for the rest of the Lab2Market programming.

The application form is simple and self-explanatory, and will take no more than twenty minutes to complete.

In my opinion, Discover or an equivalent course should be a basic requirement of STEM graduate school, irrespective of discipline. Grad school by nature requires such a narrow focus that it is easy to lose sight of any possible outcome aside from continued academic work. Expanding horizons through exposure to an alternative career path has tremendous value, and I encourage every grad student and postdoc to participate in Discover if they get a chance.

Even if you have no intention of pursuing entrepreneurship and have no idea what you would build if you did, I still encourage you to take part in Discover. You don’t know what you don’t know.

Validate

Validate is the updated version of the Lab2Market program in which I participated. Usually intended to follow Discover, participants are expected to have a general idea of the technology that they want to commercialize, and focuses entirely on validating the existence of market demand. At the time of writing, Validate is delivered on a regional and national basis, however the cohorts offered are in flux due to funding limitations, but will likely be delivered regionally on a recurring basis across the country in the near future.

Getting into Validate requires applying both to Lab2Market and to one of the Mitacs Business Strategy Internship (BSI) program, or to NSERC I2I Market Assessment Grant, depending on the timing of the cohort in question. It also requires application as a team consisting of the Entrepreneurial Lead (the student or postdoc) and a Technical Lead (the PI of the hosting lab).

The first application form is simple, with a team interview to follow. Once both are passed, an application is submitted for the relevant funding vehicle, which is a more involved form which will require a few days of work, though the review process is accelerated and has a high likelihood of success once endorsed by Lab2Market. The Mitacs BSI comes with a $15,000 stipend, of which at least $10,000 is intended to buy out your time in the lab, while the NSERC version comes with $20,000.

Over four months, The Entrepreneurial Lead then completes an intensive, full-time (part time for the Technical Lead) set of courses aimed at providing the basic knowledge needed to run a business, all while conducting 100 interviews with potential customers and possible stakeholders, with the goal of establishing whether there is interest from the market in their technology and nailing down the pain points that any solution will need to address.

This is a stretch for most scientists, and trial by fire for others. Speaking to potential customers and explaining a novel technology to people outside of the field requires a set of communication skills that are simply not taught in grad school, and the first few interviews will be painful, unproductive, and awkward. The process of learning from these and iterating on your presentation of the idea is absolutely invaluable. When I went through this process, by the end of it I not recognize yourself in the recording of the first interview.

Communicating scientific ideas to people outside the field, to a business-oriented audience, or to customers, involves speaking an entirely different language to that which is used to in an academic context. The Validate program, at its core, is designed to teach this language. Everything in entrepreneurship is based on a foundation of effective communication, and for most of us, the only way to do that well is to start by doing it poorly and learn from our mistakes.

A trap that is easy to fall into at this stage is to conduct interviews based on the convenience of scheduling them rather than the value of the interviewee. The process, in my opinion, is far more valuable than the result, and participants should spend effort in getting outside of their network as part of the exercise. Deep tech commercialization plans will change over time, often quickly, and learning the processes and mental models by which those plans are made are far more important as an output than any specific plan. It is worth doing the extra work to get interviews with people who can bring an outside perspective to the process.

Note carefully that in the case of an NSERC-funded Validate cohort, the resulting intellectual property must be managed by the host university. Mitacs does not have such a requirement, but instead defaults to a hands-off approach to intellectual property that defers to the arrangement between the company and the university. In this arrangement, the host company is actually Lab2Market (or more precisely, one of their sponsors), which in practice means that IP will usually default to whatever is dictated by university IP policy.

Because the ideas developed in the course of this phase will likely form the basis of future product development, it is important to engage with the university tech transfer office at this stage and ensure that a licensing framework is in place. While the company is often not yet incorporated at this stage, starting this conversation early will streamline a licensing process that can otherwise hinder later progress.

Launch

Launch is designed to follow and build on the outcome of Validate. If teams have made it to this point they have an idea which has been validated to have commercial interest and are ready to move on to addressing the pain points they identified through their interviews. Many teams enter launch with the intention of incorporating before the end of the program.

This part of the program is structured to provide some exposure to board dynamics. Modeled after the MIT Delta V Accelerator, Launch matches participant teams to a mock board of directors who set goals for trainees on a monthly basis, similar to the model used by Creative Destruction Lab. Each month is a sprint, with the board holding teams accountable for meeting preset targets. The curriculums is broken into three monthly blocks. The first month involves identifying a beachhead market, the place where the team can find initial traction without necessarily being the market that will be addressed long term. Month two revolves around product design, while month three focuses on unit economics, planning out the costs of doing business, and the details of the go-to-market strategy in the beachhead market, all on paper. Within this curriculum, boards work with the team to set sprint goals that advance these objectives, tailored to the needs of the team.

Like the Validate section, funding is provided through a Mitacs BSI grant of $15,000, with additional funding of up to $3000 available on completion of related milestones.

The intention is that by the second month teams will have a solid foundation for the business, an understanding of where to start, and are used to grueling sprints and the dynamics of being held accountable to short-term goals by a board of directors. In addition to starting trainees off on the right foot for business, this is an excellent setup for subsequent participation in Creative Destruction Lab and direct exposure to a large number of prospective investors, a process to be covered in a future post. According to Spencer, CDL mentors report that teams that have completed the Launch program tend to excel in the CDL environment.

Build

The last stage of Lab2Market is focused on actually building the product(s) identified in Launch. To fund this, Lab2Market partners with the NSERC Idea to Innovation (I2I) Phase I grant to provide both $155,000 in funding for product development activities, and which can be used to pay the Entrepreneurial Lead through the university.

It is important to note that teams must not have incorporated a company before receiving this funding and must apply as an academic lab, meaning that teams coming from the Launch program should not incorporate until after acceptance to Build if they intend to do both. Incorporation can happen during the period of the grant. While teams must still apply for the I2I grant directly, Lab2Market streamlines the process as they do with the Mitacs BSI in other stages. The required input for the NSERC I2I Phase I grant is the market assessment that is the output of Validate. If the Validate cohort in question was funded by Mitacs instead, the output of that BSI can be adapted to serve as the required market assessment for the application.

When a startup spins out of a university, there is usually excellent alignment between ongoing R&D in the lab and the startup, but IP policies at most Canadian universities make it very difficult for startups to access lab space while doing for-profit product development without creating IP-ownership related complexities. On the other hand, NSERC grants are always directly to academic institutions rather than commercial entities, meaning that startups historically have not been eligible. In cases where startups have partnered with academic institutions to use joint grant funding, employees of the startup are typically not eligible to be paid by the lab, making these programs generally useless for startups unless they already having funding from another independent source. Together, these hurdles mean that startups often have to stand on their own as soon as they are incorporated, often cobbling together lab space from founder garages and whatever was locally accessible, wasting valuable time. It is only very recently that the Canadian innovation supports on both the academic and commercial side recognize the unnecessary hurdles put in place by existing funding programs.

By using academic funding specifically designed for product development, Lab2Market and NSERC I2I neatly solve this problem, giving the team access to the lab space, salary, and product development funds they need to get to a point that they can incorporate with a minimal viable product already completed and can hit the ground running with revenues from the start. The Entrepreneurial Lead remains in the lab in their role as a student and is paid through the I2I grant to undertake product development without running afoul of conflict of interest problems that would arise with other sources of academic funding.

As with Validate, the NSERC I2I program requires that intellectual property arising from funded activities be managed by the hosting university. Engage with the tech transfer office early to ensure that this does not hold up activities following incorporation.

Looking Forward

When searching for information relating to the program, take care. NSERC has also launched a call for proposals called, for reasons unfathomable, Lab To Market. This call is aimed at supporting post-secondary institutions in setting up entrepreneurship training programs like Lab2Market, which now competes for SEO with one of the programs that they could be supporting. Naming woes aside, I am encouraged to see funding for this kind of early stage support, and I look forward to watching the Lab2Market program evolve further with NSERC support.

The only point of potential conflict I see is that in the context of an NSERC I2I grant, resulting intellectual property is managed by the university, while Mitacs is hands-off with respect to IP and defers to whatever agreement exists between the university and the funding entity.

According to Spencer, the IP framework is still being developed and changes are to be expected going forward.

It is absolutely critical that startups have established an IP licensing or assignment framework with the university prior to creation of any IP. While it is generally not possible to incorporate prior to at least starting the Build phase due to NSERC eligibility requirements, in my opinion, an MOU detailing at least the key elements of this licensing framework that will be put in place upon incorporation should be a required output of the Launch phase. Until the framework that ensures this IP is accessible to the startup is in place, the startup will have a hard time attracting investment, and any complexities around IP ownership arising from poor management of IP in the early stages can and will slow the startup down and may prevent participation in other funding programs downstream.

The best part of the way Lab2Market is delivered is that academic researchers can gain experience in the world of entrepreneurship without leaving academia first. This extra level of safety net enables exploration of alternative career paths that would be challenging or impossible without much heavier commitment in other contexts. In an environment where academic appointments are increasingly competitive and difficult to find, the value of programs providing other paths for those trained in STEM disciplines to build rewarding careers cannot be overstated.

In their role as shepherds of valuable IP across the first valley of death that has historically claimed so many promising Canadian startups and IP portfolios, Lab2Market is in a strong position to influence how university IP licensing evolves over the next few years. I strongly encourage program administrators to carefully track licensing terms for the sake of being able to correlate these with downstream success of the startups they incubate. Canadian tech transfer and university licensing is badly in need of standardization, and data to support effective tech transfer models is difficult to come by. As Lab2Market positions itself to be the leading means by which this transition happens nationally, the insight available to this program will be critical to fixing decades-old challenges with Canadian innovation policy.