Local Group Writes Letter

Recently, Northumberland CFDC received a letter from a local group (click here to read the original).

Here is our response.

The True Value of Northumberland CFDC

March 8, 2019
 

Dear Ms. Smith,

Thank you so much for your interest in programming as designed and/or executed by Northumberland Business Development Assistance Corp (o/a Northumberland CFDC).

Frankly, I was surprised to see an enquiry from the CTA since I understood your organization’s mandate to be issues specific to effective use of local government/municipal tax resources. There are zero core operational funds that currently flow to our organization from any municipality in our various catchment areas and thus the initial surprise. If and when there is-we will actively respond to public reporting requirements as may be designed and contracted solely by municipal officials.

However, your questions surface a wonderful opportunity to showcase the Northumberland CFDC, our partnerships, programs and our entrepreneurial clients’ many achievements. You wanted to understand the true value of Northumberland CFDC: we thank you in advance for the positive opportunity extended.

Our organization tends to be almost exclusively a federal “shop” though from time to time we do access various provincial programs in our primary quest to provide financing and strategy to entrepreneurs and community innovation/4th pillar organizations while working to diversify and strengthen our economies. That is our corporate mandate as an innovation focused non-profit organization. In that light, it is my pleasure to provide you with information (in some cases perhaps correcting) that more accurately outlines and reflects the impact of our work. Overall, we are not aware of any other like organization working with the breadth of resources and capital under management.

Let’s begin with broad explanation of our current accountabilities. We are an independent business development organization providing financing and strategy for entrepreneurs. We believe innovation and entrepreneurship are pathways for future prosperity in our communities. We are governed by a volunteer Board of Directors comprised of residents from across Northumberland County. They are entrepreneurs and experts in their fields and leaders who are passionate about their community with deep belief in our forward potential. Our governance policies include “best practises” of regular and targeted board turnover ensuring continuity balanced with refreshment of new ideas and energy. These strengths and reputations we are careful to respect and uphold as integral to our brand equity.

Our Board is also respectful of seeking occasional collaborative input from Eastern Ontario (gained through our regional Collaborative Innovation Panel) as well as an external Power Panel specifically designed to provide input into N100 decisions.

For programs that are deploying Federal funds, we are 100% accountable to the funder and report regularly to the Government of Canada within their prescribed processes. Depending on the program, this could be quarterly or in some cases annually, but in all cases we are pleased to have earned the lowest risk-rating possible due to our well established attention to quality inclusive of reporting, handling of public funds and delivery of measurable impacts. Impacts range but most often include job creation, job maintenance, and funds leveraged. In addition, our activity reporting is considered as well exceeding industry standards with extensive information readily available and current on various social media platforms, news releases and traditional media outlets.

Although our corporate offices are located in the Town of Cobourg, our viewpoints and programs are more broadly based in participating as a key partner in a regional ecosystem with primary and intermittent emphasis from Durham (and west) through Eastern Ontario to the Quebec border.

We invite you to take the time to view our website (click here) or our Twitter feed (click here). There, you will undoubtedly see an overwhelming array of information about our impacts, program evolution, and countless partnerships (inclusive of Spark Centre, UOIT, Fleming College, Durham College, the University of Toronto-Impact Centre, Ontario Centres of Excellence, the Green Centre Canada, the Business Development Bank of Canada, the Eastern Ontario CFDC Network Inc. and the Southern Ontario Fund for Investing in Innovation (SOFII), the National Research Council Industrial Technology Assistance Program (NRC-IRAP), the Northumberland Manufacturers Association, Northumberland Makers, and more). To my knowledge, we are the only Community Futures Development Corporation in the nation to be invited into membership in Canada’s Venture Capital and Private Equity Association (CVCA) and we are an Industry Partner of both the National Angel Capital Organization (NACO) and Angel Investors Ontario (AIO).

Across our many public materials you will also see endorsements and accolades from multiple entrepreneurs, partners, and indeed various elected officials all the way up to Prime Minister Trudeau. For your easy reference you may also wish to follow these links as further examples (though there are many more):

  1. Greetings from the Right Hon. Justin Trudeau, Prime Minister of Canada;
  2. Comments on Northumberland CFDC Initiatives in Parliament by MP for Northumberland-Peterborough South, Kim Rudd
  3. A Message from the Hon. Minister of Innovation, Science and Economic Development, Navdeep Bains, on the Occasion of the Opening of Venture13

Our suite of programming in some ways may seem complex but succinctly, we strive to synchronize the various initiatives to create a broader and stronger economic horizon. Generally, it is our corporate stance that entrepreneurs are the job-creators and thus our role is focused on advancing and accelerating their timelines through investment and assistance in honing their strategies. We don’t chase government programs and instead pursue only those particular programs that might work synergistically with our corporate goals of diversifying and strengthening our rural economies. In some cases, we have declined invitations to execute programming on behalf of government funders and in other cases we respond with positive passion. We expect to be making announcements in the very near future on new programs we will deliver on behalf of the Federal government and invite you to stay abreast of those via our website and social media feeds.

At this time, it is our pleasure to execute on behalf of the Government of Canada through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario):

  • Community Futures Program (CFP) - a national program intended to strengthen and diversify rural economies. We execute this program throughout the County of Northumberland with our primary agreement being deployment of our corporate investment funds (~$5.2 million) in support of business start-up, stabilization or expansion via loans/equity or hybrid instruments. Over the past 5 years we have invested a total of $5.6 million resulting in an estimated GDP lift of $25.2 million (per independent program estimates provided by the Conference Board of Canada); 140 jobs created and further 412 maintained. These are repayable funds that in turn are continuously returned and reinvested again to the benefit of the community. Over the past several years our corporate funding portfolio has more than doubled. We intend to continue this growth trajectory thereby making much needed capital accessible to support local business growth.
  • Eastern Ontario Development Program (EODP) - executed locally via each of the 15 CFDCs of Eastern Ontario-the program is federally funded and principally deployed by us within Northumberland to drive innovation investment, job creation and economic diversification. The program will sunset later this month. Our 5 year track record includes 233 jobs created, 646 maintained via 61 projects. We have invested $2.5 million over that period while leveraging a further $4.6 million investment by local employers/organizations.
  • Collaborative Economic Development Program (CEDP) - we are the sole organization chosen by the Federal government to deliver this tranche of regional programming through Eastern Ontario to the Quebec border. Since securing the program in August, 2016, we have focused the initiative on investing in regional innovation capital with 624 jobs since created, 1235 maintained, $22.0 million leveraged (against $6.3 million invested), 11 patents produced and estimated business revenue growth exceeding $460 million (5 year horizon).
  • Investing in Business Innovation (IBI)- marketed locally as N1M-again-we are the sole CFDC currently delivering this program across Southern Ontario with particular emphasis across Eastern Ontario/Northumberland. The program is tailored to providing matching performance-based seed funding for next generation entrepreneurs. While final government reporting won’t be completed until April-we have already Federally reported impacts at 73 jobs created, 59 maintained, $3.7 million invested by entrepreneurs in research and development, 10 new patents, $1.3 million in pre-sales crowdfunding, $3.9 million raised in follow-on investment/financing and $4.3 million in total sales. Due to our undisputed success in delivering this program, we were fortunate to have received additional incremental performance-based funding from FedDev Ontario just prior to Christmas, 2018 and have since deployed and reported (click here for the Press Release as it appeared in the Financial Post). We recently held an “Innovating in Customer Acquisition” day at Venture13 with N1M Round 2 startups (click here to watch a short video summary of the event).
  • N100-created by Northumberland CFDC-open invitation biennial startup competition www.n100.ca. We have dedicated a slice of our corporate investment fund behind attracting next generation entrepreneurs-ideally those working on disruptive and innovative technologies. This strategy simply recognizes that the digital world we collectively operate in is fast moving. We believe it crucial to the long term economic health of Northumberland communities to do our best to attract and embrace these entrepreneurs. This investment strategy is our highest risk however-it also aligns well with a primary mandate of a community futures organization-i.e. to take the risks that others won’t. N100 is more than funding-it is a multi-stage competition that has multiple layers of entrepreneurial education and development included concurrently. We are fortunate that many professionals from across Ontario have dedicated their personal time and expertise to help our organization isolate the key opportunities amongst the over 30 entrepreneurs that apply each year. Integral to the Panel’s and Board’s final selection is the consideration of how the entrepreneur might positively impact Northumberland.
Specific to your questions on Argentum Electronics (this year’s winner)-we are careful to be respectful on issues of privacy/proprietary information of private sector organizations and won’t be commenting on the specifics of their competitive plans or the tranche of the funds. However, Argentum has recently been interviewed on local 89.7 radio where Founder and CEO Bolis Ibrahim was passionately open regarding his future plans in Northumberland; praise for the N100 program and Northumberland CFDC. Of course the entrepreneur is free to share his information as he may wish without constraint to our internal privacy policies. You may wish to listen in (click here).

Although N100 represents less than 10% of our 5 year corporate investment program, I can understand why the N100 loan has disproportionately attracted your attention. It is high profile and definitely captures major national and international media exposure for Northumberland CFDC (e.g. TechCrunch, Betakit, VentureBeat, Financial Post, etc.). Although never our original intent, it has occasionally been referenced as “Canada’s startup competition” (e.g. in LA’s TakePart magazine) and we think it works exceptionally well in positioning our community as welcoming to next generation technology entrepreneurs.

In fact, the N100 program as designed by Northumberland CFDC is beginning to scale across Ontario at a pace specific to individual CFDCs’ comfort levels. It is certainly the work of the “brave” and we are pleased to assist a few other regions in their own efforts to adopt, adapt and introduce their own editions of N100 (e.g. Renfrew County – RC100, Muskoka 4.0, Peterborough Ignite100) We are presenting to the Economic Development Corporation of North Simcoe later this month on the same pathway. For many professionals working to position both rural and urban Canada at the forefront of global innovation-the Northumberland CFDC program is widely recognized as an exceptional offering.

N100 job figures are reported as part of our CFP portfolio performance metrics.

Finally, while we don’t profess to know your organization well-we did note one of your Directors- in 2015 called for a local economic strategy to support “knowledge-based startups” in his master plan submission to the Town of Cobourg. That is the path we are already on and I do believe there is no other local strategy that is working to attract and accelerate knowledge-based startups in Northumberland.

In summary, in the past 5 years across our various programs, we have helped entrepreneurs and industry to create 1070 jobs while maintaining a further 2352. Further impacts include estimated incremental sales of over $460 million, incremental financing/leveraging exceeding $30 million, 103 new export markets, 21 patents, research and development of $3.7 million and over 471 new partnerships. These are highlights of our extensive reporting to the Government of Canada which we understand substantiate our reputation for excellence.

Concurrently, to be candid, it is difficult to fully capture our broadest impacts because the impacts from many projects we invest in often take multiple years to be realized which extend long beyond our reporting periods. In addition, much of our work is highly discreet with reasonable expectations that we will be respectful of non-disclosure and proprietary preferences of private sector organizations operating in highly competitive markets. As a result, the community will often see or experience various new businesses or business growth initiatives without being aware of the Northumberland CFDC assistance that may have accelerated the opportunity.

However, many we can share at appropriate points. For example, a relatively small non-repayable investment of $50,000 from Northumberland CFDC to CPK Interiors (2015) triggered research that led to commercialization of those discoveries that in turn led to plant investment at their Port Hope site (announced 2018) of $8 million with job creation of 89 (click here for Northumberland News coverage). That downstream impact was not captured in our annual quantitative reporting processes though obviously there is an indisputable direct outcome of our original investment. Nor was a $100,000 investment in a Team Eagle (Campbellford) innovation project which in turn led to their partnership with Transport Canada for further commercialization of their product innovation (in the airfield security sector). That product is valued at several hundred thousand dollars per unit and optimistically, Team Eagle has a significant market opportunity unfolding as they continue to develop their product with the support of our local MP and the Government of Canada (click here for more). We continue to offer strategic advisory services with that in mind.

Overall, there are countless projects that have been chosen for acceleration because they were seen as potentially leading to a more prosperous and innovative Canada. For the public’s interest, all non-repayable funding contributions are recorded and published on our website. Specifics are often issued via press releases or announcements that account for funds without disclosing specific proprietary information.

Finally, Ms. Smith, I must respectfully disagree with what could be considered negative and ill-informed characterizations of CFDC initiatives as outlined in your letter. Specifically:

  • The Gaming and Entrepreneurship Lab (GEL) continues to operate to this day but you may be unaware that the brand changed to “UXR Lab” quite some time ago. The lab equipment is located both at University of Ontario Institute of Technology (UOIT) and the Venture13 MakerLab with UOIT experts continuing to deliver programming here (most recently running the second game hackathon in Port Hope in two years and working with companies at our Innovating in Customer Acquisition day at Venture13 last Friday). We are in our second Memorandum of Understanding with UOIT-Faculty of Business and Information technology since the UXR Lab moved out of the IDEAHUB when the Municipality of Port Hope closed the facility. I do cede, there were many unanticipated challenges to the original project concept. Many of these challenges were outside of our control though we accept responsibility and were pleased to have pivoted the project to still provide benefit in partnership with Northumberland’s chartered university, UOIT (click here to view UXR Lab reference).
  • The IDEAHUB was never a Northumberland CFDC initiative and we have more than once attempted to correct that specific misinformation that seems to pervasively and willfully disregard the facts. The Municipality of Port Hope led on this project with the majority of initial funding directly from the Government of Canada. We encourage you to re-direct your questions to the Municipality. However, our own viewpoint is one of gratitude and full, unbridled respect to the Port Hope community. Their leadership in attempting to diversify their economy was leading edge and we recall there being measurable economic spin-off both to Port Hope and surrounding communities. While their priorities may have changed, we did all that we could to support their effort with occasional targeted funding coupled with making sure that entrepreneurs knew of the facility as a “soft landing” option in the Northumberland region.

 

The fact is, municipalities throughout Northumberland often have specific economic development initiatives that we are consistently pleased to support when their goals align with our strategic programming. There are many examples of that including our funding support to the County’s Ontario Agri-Food Venture Centre (OAFVC), various lower-tier municipal initiatives to improve downtown business areas and recent partnership with the Business Entrepreneurship Centre Northumberland (BECN) through the local Agri-Food Fund pilot program.

Regarding Venture13 job impacts-I am not comfortable speaking on the Town of Cobourg’s behalf but do direct your attention to their public presentation made February 4th to Council (click here to view the document). Using established Provincial processes for estimating economic impact, the municipal team outlined $2.7 million in wages generated, 150+ events/activities, 66 jobs created, 3800 guests through the facility, etc. Of course, these impacts are not isolated to the municipality but rather a reflection of the partnerships which were born and continue to grow from Venture13. I’m sure you would agree that the results to date are very impressive given the facility opened less than a year ago.

What is not yet fully and numerically captured is the greater goal of establishing Eastern Ontario’s newest innovation centre here in Northumberland with Northumberland at the forefront of innovation. Again, the focus is broader than just Cobourg though all concerned are fully appreciative of the municipal willingness to host such remarkable activity.

I predict from a taxpayers’ perspective that you must be thrilled to see a building that was annually costing the local taxpayer ~$70,000 to sit idle is now operating on a full cost recovery model. Over a ten year period-the cost avoidance is measurable at ~$700,000. In addition, I understand investments made outside of the municipal tax levy are estimated at ~$2.1 million leading to a total financial benefit to a local taxpayer owned asset approaching $3 million. That’s pretty impressive though I do encourage you to reach out to the Town of Cobourg for confirmation of these numbers. From my perspective, I believe the Town has already achieved their “win” with an improved community owned asset now operating with full recovery in a theoretically sustainable manner. Momentum and jobs that are now emanating from Venture13 could perhaps be viewed as providing further added value for those who choose to positively analyze the benefits.

In addition, the facility now houses a thriving MakerLab where many of Northumberland’s creative citizenry (through Northumberland Makers) contribute their ideas and energy in developing products and programming to the communities at large. We are particularly impressed with their initial programming which is targeting youth and women in tech initiatives. Northumberland Makers is a current client of the CFDC and we are pleased to be providing strategic supports that will help them to govern, grow and sustain both their organization and resulting impacts. Our planned approach to the Makers is similar to our decade plus approach to assisting the Northumberland Manufacturers Association (NMA) to take flight, grow in its governance to become a fully sustainable industry organization providing voice and opportunity to its economically crucial Northumberland wide manufacturing membership. The NMA is also active in cross referrals while featuring other facility partners as viable options for manufacturing members. The Venture13 facility also now hosts the Business Development Bank of Canada (BDC) weekly and enjoys regular client interaction with various government agencies.

The impressiveness of Venture13 is also subjectively contributing to the overall momentum and positioning of the Cobourg Police Services business unit (Corporate Services) in securing incremental clients which in turn has and will conceivably lead to multiple community benefits inclusive of further flexibility to invest in policing innovation while concurrently creating added value jobs in our area.

There is a solid Venture13 “Board of Partners” who meet monthly to make sure we work collaboratively and thereby efficiently in securing opportunities for Northumberland and regional citizenry and businesses, inclusive of those rested in Cobourg. You can find multiple references to various Venture13 activities including mapathons, tech talks, robotics courses, maker camps, tech clubs, keynotes, conferences, ministerial round tables and announcements, coding workshops, pitch competitions, networking events and more on many different links and news coverage. It seems as though embracing the innovation age is happening right here in Northumberland.

Speaking solely for Northumberland CFDC’s Board of Directors, you can be sure we will continue to believe in our communities and in our collective future as we work to ignite what MP Kim Rudd consistently refers to as the “Rural Renaissance.” In fact, we have authored and shared perspectives via our Harnessing the Potential of Rural Innovation white paper with both the Province of Ontario (Ministry of Economic Development, Job Creation and Trade) and the Government of Canada (FedDev Ontario). The concepts developed and led by our organization were further endorsed through 2018 by the Eastern Ontario CFDC region and were instrumental in securing last week’s Federal announcement of $15 million in funding toward further support delivered through Eastern Ontario CFDCs (click here for an overview of the announcement).

Finally, I thank you again for your questions which in turn inspired me to pause and crystallize this top-line summary of our many activities and impacts. A summary that will be helpful and further motivating as we move forward on several new initiatives.

Of course we invite the communities at large (inclusive of the CTA) to join us in continuing to be supportive to the notion of embracing and welcoming new economies and new entrepreneurs on a pathway to stronger communities and by extension, a stronger Canada.
 

Wishing you the best,

Wendy Curtis, Executive Director
Northumberland Community Futures Development Corporation.