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ReportReport B B Full DataFull Data Presentation Presentation

prepared for MONCTON TECHNOLOGY PLANNING GROUP Preparedby the for the MONCTON TECHNOLOGY PLANNING GROUP By the IC²IC² Institute,Institute atTHE UNIVERSITY OF TEXAS AT AUSTIN JANUARY 2007 THE UNIVERSITY OF TEXAS AT AUSTIN

April 2007

Established in 2004, the Moncton Technology Planning Group is comprised of community leaders representing technology-based business, institutional research, venture capital, and local government. The MTPG’s purpose is to advance dialogue and action that will lead to the growth of technology-based enterprise in Moncton. Members of the group offer a wealth of innovation and technology experience, and share the common goal of building on the community’s strengths and potential to accelerate the growth of Moncton’s knowledge-based economy.

Steve Palmer, C.O.O., Whitehill Technologies Michelle Carinci, C.E.O., Atlantic Lottery Corporation Jon Manship, Chairman, Technology Venture Corporation Bob Rybak, Vice President of Technology, Spielo Robin Drummond, Senior Director, Government Sponsored Group, Spielo Rodney Ouellette, Executive Director, Beauséjour Medical Research Institute Stephen McClatchie, VP Academic and Research, Mount Allison University Marc Surette, Canada Research Chair, Cellular Lipid Metabolism, Université de Moncton Réjean Hall, Director, Innovation Support Office, Université de Moncton Graham Sheppard, Principal, NBCC Moncton Doug Robertson, Chair, Economic Affairs Committee of Council

The IC² Institute (The Innovation, Creativity & Capital Institute www.icc.utexas.edu) is an organized research unit of The University of Texas at Austin with the vision that science and technology are resources for economic development and enterprise growth; and the mission to enhance research and education on the enterprise system in order to promote widespread wealth creation and shared prosperity. Established in 1977, the IC² Institute founded the Austin Technology Incubator (ATI) in 1984; and in 1996 established the Master of Science Degree in Science and Technology Commercialization (MSSTC). Recently, ATI expanded to include the Austin Wireless Incubator, the Clean Energy Incubator, Digital Media incubation, as well as an active Global Commercialization Program. The institute has over 235 international fellows in business, academia and government – peers of excellence who actively support the vision and mission of the Institute worldwide. The IC² Institute directed by Professor John Sibley Butler, who is also the Director of the Herb Kelleher Center for Entrepreneurship at the McCombs School of Business, The University of Texas at Austin.

David Gibson, Co-Principal Investigator, Ph.D. Bruce Kellison, Co-Principal Investigator, Ph.D. Elsie Echeverri-Carroll, Research Scientist, Ph.D. John Green, Research Associate, MSSTC Darius Mahdjoubi, Research Associate, Ph.D. Robert Meyer, Research Associate, JD, MBA, MSSTC, LLM Rita Wright, Professional Librarian, MSLS Margaret Cotrofeld, Technical Writer/Editor Ryan Michael Coster, Graduate Research Assistant, Mount Allison University Megan Meyer, Undergraduate Research Assistant, The University of Texas at Austin Gina Phillips, Undergraduate Research Assistant, The University of Texas at Austin

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ACCELERATING Technology-Based Economic Growth & Entrepreneurship in Greater Moncton

REPORT B: FULL DATA PRESENTATION

Prepared for the MONCTON TECHNOLOGY PLANNING GROUP By the IC² Institute at THE UNIVERSITY OF TEXAS AT AUSTIN

April 2007

With the cooperation of the government, universities, & businesses of Greater Moncton

The IC² team gratefully acknowledges the support and encouragement of the Moncton Technology Planning Group and its chair, Douglas Robertson. Group members not only opened their businesses, offices, and research programs to team members during the study but also facilitated interviews and data collection across Moncton and throughout New Brunswick. For their invaluable counsel in helping the research team to understand New Brunswick’s educational system, we thank Réjean Hall at the Université de Moncton; Virendra Bhavsar, David Foord, and Gregory Kealey at UNB; Michel Thériault at NBCC/CCNB; Richard Corey at NBCC; Graham Sheppard at NBCC-Moncton; and Claude Allard at CCNB-Dieppe. Finally, we would also like to recognize Mathieu Brideau of Business New Brunswick, and Ben Champoux with the City of Moncton for research assistance and expert advice.

This report is dedicated to the memory of Len Weeks: a true champion of innovation, as well as a mentor and friend to entrepreneurs in the Province of New Brunswick.

© Copyright January 2007, IC² Institute, The University of Texas at Austin. All rights reserved.

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ACCELERATING Technology-Based Economic Growth & Entrepreneurship in Greater Moncton

REPORT B: FULL DATA PRESENTATION

CONTENTS

EXECUTIVE SUMMARY AND RECOMMENDATIONS...... 9

RESEARCH METHODS ...... 11 MONCTON’S TECHNOLOGY PATH ...... 11 STRATEGIES FOR SUCCESS AND KEY RECOMMENDATIONS...... 12 CASE STUDIES OVERVIEW ...... 13 KEY OBJECTIVE 1: ACCELERATE TARGETED INDUSTRY CLUSTERS ...... 15 BUSINESS DEVELOPMENT ...... 16

CASE STUDY: MEDSENSES...... 16 ENTREPRENEURSHIP AND NEW VENTURES: AN OVERVIEW ...... 18 Three Styles of Venture Development...... 19 CASE STUDY: BMG CONSULTANTS, INC...... 22 AN INNOVATION PATH FOR MONCTON...... 23 R&D Paradigm vs. Innovation Paradigm...... 23 R&D Paradigm: Local IP Challenges...... 24 Coordinating Both Development Paradigms...... 25 Moncton’s ICT strength ...... 25 ICT and R&D...... 26 CASE STUDY: SPHERIC TECHNOLOGIES...... 26 STRATEGIES FOR A MONCTON TECHNOLOGY COMMERCIALIZATION CENTER (MTCC)...... 28 Phase I Suggestions for the Moncton Technology Commercialization Center (MTCC) ...... 28 Phase II Suggestions for the Moncton Technology Commercialization Center (MTCC) ...... 30 PROPOSAL: CREATIVE LEARNING INSTITUTE IN DIGITAL MEDIA ...... 33 Why Moncton ...... 33 Suggested Creative Learning Institute Affiliates ...... 33 CASE STUDY: MINDSWEEP ...... 34 KEY OBJECTIVE 2: FOCUS ON ENTREPRENEURSHIP ...... 37 FINANCING ...... 39

CASE STUDY: WHITEHILL TECHNOLOGIES...... 39 CASE STUDY: MICRO-OPTICS ...... 41 FINANCIAL CAPITAL AND STYLES OF VENTURE DEVELOPMENT: POLICY IMPLICATIONS ...... 42 Venture Capital Institutional Investment...... 43 International Venture Capital Patterns...... 45 Leading VC institutional investors in the Moncton region ...... 46 Individual Investors and Angels ...... 47 Government Agencies ...... 48

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Bank Loans...... 51 Self-Funded Ventures ...... 52 RECOMMENDATIONS...... 52 Self-Funded Ventures ...... 53 Loans ...... 53 Government Agencies...... 53 Individual (Angel) Investment Network...... 53 Institutional Investment...... 54 CENTRAL TEXAS ANGEL NETWORK: A POSITIVE MODEL ...... 54 CASE STUDY: VIMSOFT INC...... 55 CASE STUDY: INTELISYS AVIATION SYSTEMS, INC...... 56 KEY OBJECTIVE 3: FOSTER ACADEMIC & RESEARCH EXCELLENCE ...... 59 TALENT, EDUCATION & TRAINING ...... 62

CASE STUDY: ARDENT DEVELOPMENT SOLUTIONS...... 62 EDUCATION...... 63 Technical Education: K-12 ...... 65 Bilingual Education ...... 66 Success Rates of Placing Students at a University ...... 67 Quality of Math Education...... 67 Drop-Out Rates...... 68 An Issue of Concern— A Declining Student Population ...... 68 K-12 Education for Tomorrow’s Workforce ...... 70 K-12 Education: Assets and Challenges...... 71 UNDERGRADUATE: IT EDUCATION...... 71 Private Colleges: IT-Related Programs...... 72 Community Colleges – IT-Related Courses...... 73 Universities: Science & Engineering Education ...... 74 Universities in Moncton ...... 75 Other Universities in New Brunswick Province Educating Most of the Monctonians...... 75 Closing the Gap in the Local Supply of University-Educated Workers...... 77 CASE STUDY: VE NETWORKS ...... 81 RESEARCH & DEVELOPMENT BASE ...... 83

CASE STUDY: WIND ENERGY RESEARCH & DEVELOPMENT ...... 83 CASE STUDY: NANOPTIX ...... 84 RESEARCH & DEVELOPMENT FUNDING...... 86 R&D Investments: Universities...... 87 Distribution of Research Funds at Universities in the Province...... 91 ICT-RELATED RESEARCH CENTERS...... 93 University of New Brunswick at Fredericton...... 93 Mount Allison University (Sackville, NB) ...... 94 CENTERS RELATED TO ENTREPRENEURSHIP ...... 94 Université de Moncton...... 94 University of New Brunswick at Fredericton...... 94 University of New Brunswick at Saint John ...... 94 R&D INVESTMENTS IN THE NB UNIVERSITIES: ASSETS & CHALLENGES...... 94 ACTION PLAN TO ACCELERATE MONCTON’S KNOWLEDGE-BASED GROWTH ...... 95 INTELLECTUAL PROPERTY & TECHNOLOGY TRANSFER...... 95 Preferred IP Policies and Technology Transfer Practices...... 95 IP Ownership: The Oxford and Cambridge Model ...... 96 Moncton: Existing IP Practices...... 98 Action Items...... 99

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KEY OBJECTIVE 4: PARTNERSHIP AND ALLIANCES ...... 101 ECONOMIC BENCHMARKING: MODEL FOR SUCCESS ...... 101

MONCTON—A SMALL CITY WITH HIGH TECHNOLOGY GOALS ...... 102 Choosing a Benchmark City for Moncton...... 102 Oulu —Small In Size, Big In Technology...... 105 The Beginnings ...... 106 Oulu Today ...... 106 Behind Oulu’s Success...... 107 NEAR-TERM ACTION ITEMS ...... 107 CASE STUDY: THIN FILMS AND PHOTONICS RESEARCH GROUP (GCMP)...... 108 ENLARGING NETWORKS ...... 109 KEY OBJECTIVE 5: PROMOTE A COMMON VISION FOR DEVELOPMENT ...... 111 CLOSER REGIONAL NETWORKS AND LOCAL EXPERTISE ...... 112

BUILDING KNOWLEDGE-BASED INFRASTRUCTURE IN MONCTON...... 112 Bioinformatics: The Bridge between ICT and Research & Development (R&D) Centers...... 112 Beauséjour Regional Health Authority ...... 112 South-East Regional Health Authority, Moncton Hospital...... 113 Action Plan ...... 114 CASE STUDY: ATLANTIC CANCER RESEARCH INSTITUTE (ACRI) CASE STUDY...... 114 CASE STUDY: SPIELO/GTECH ...... 116 A LAND DEVELOPMENT INITIATIVE...... 119 Clustering Digital Content Assets and R&D Commercialization Assistance ...... 119 Background...... 119 Deal Structure...... 120 Finance...... 121 Marketing ...... 121 Benefits, Motivation and Rewards...... 122 CASE STUDY: MONCTON FLIGHT COLLEGE ...... 122 CONCLUSION...... 125

FINAL FOCUS: THE OPPORTUNITY AT HAND...... 125 APPENDICES ...... 127

APPENDIX A. 2006 SURVEY ANALYSIS, MONCTON REGION GRADUATE STUDENTS ...... 128 Survey Sample ...... 128 Survey Methods ...... 130 KEY SURVEY FINDINGS...... 130 APPENDIX B. SURVEY INSTRUMENT ...... 141 English...... 141 Français...... 148 APPENDIX C. OPEN RESPONSES TO SURVEY...... 155 APPENDIX D. MONCTON TRI-CITY AREA IT COMPANY TIMELINE ...... 161 Methodology & the Dataset...... 161 Timeline Trends ...... 161 APPENDIX E. BENCHMARKING CITY COMPARISONS...... 174 APPENDIX F. THE RESEARCH TEAM ...... 176 APPENDIX H. BIBLIOGRPAHY...... 180

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EXECUTIVE SUMMARY and RECOMMENDATIONS1

Accelerating Technology-Based Economic Growth and Entrepreneurship in Greater Moncton provides select strategies for Moncton, New Brunswick, to take control of its economic destiny. The report emphasizes the importance of having common visions and action plans to mobilize key local partnerships. A main theme is the importance of collaboration and cooperation among Greater Moncton business, academic, and government sectors. The effectiveness of these partnering activities will largely determine the region’s ability to create high-value jobs; educate, attract, and retain talent; and to accelerate economic growth while sustaining a high quality-of-life for all citizens.

The overall vision is for Greater Moncton to be nationally and internationally recognized as a region that is known for education and research excellence, creativity and entrepreneurial success, and globally competitive business development in targeted technology sectors.

The report is organized in two parts. Report A (Executive Summary and Recommendations) contains key findings and action items. Report B (Full Data Presentation) contains the body of the report and supporting research data collected by the IC² team during the study.

Greater Moncton has been a regional leader in the use of strategic planning to guide economic development, as evidenced by at least three community-wide strategic planning efforts undertaken in 1989, 1994, and 1998. In 2004, the Moncton business community perceived that its direction and unity of purpose (that had been so successful in the 1990s) were being challenged. It found itself at a crossroads, partly due to the decreasing frequency of new business investments and the increasing frequency of call center jobs moving overseas. Consequently, Moncton stakeholders set as their mission to increase the quality of jobs in the economy and to increase the level of educational attainment in the workforce.

This report emphasizes the key role of significant but limited assets, and both real and perceived challenges, for accelerating technology-based growth and entrepreneurship in Greater Moncton. Challenges include: 2 ƒ Successfully recruiting established firms ƒ Launching and growing business start-ups ƒ Growing centers of R&D excellence ƒ Post-secondary education opportunities ƒ Expansion of career employment opportunities in knowledge-based industries ƒ The emigration of Moncton’s young, educated talent

1 The section “Executive Summary & Recommendations” is also published under separate cover as “Report A.” Some of these materials are included with more detail in the remaining sections of this report. 2 Building on Our Success: A Strategic Plan for Greater Moncton, Enterprise Greater Moncton, April, 2004; New Brunswick Capacity Study: Gaming, Simulation and Animation Industry Report, Red Hot Learning, Inc., October, 2004; City of Moncton Economic Development Strategy, City of Moncton, November, 2005; Research & Discovery, Vol. 1, No. 2 (2005).

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ƒ Limited national and international visibility ƒ The lack of a common vision, brand, and strategic plan

In recognition of regional challenges, The Moncton Technology Planning Group (MTPG)3 and other community leaders came together to commission the IC² Institute at The University of Texas at Austin to do an action-oriented study for accelerating technology-based entrepreneurship and economic development in Greater Moncton. The underpinning belief is that: ƒ Technology-based growth is key to the creation of wealth and career oriented jobs. ƒ Rapidly changing national and global realities require change in regional economic development strategies and policies. ƒ Moncton needs to be pro-active in determining its own destiny, rather than reacting after the fact.

Working closely with the Moncton Technology Planning Group (MTPG), the IC² Institute at The University of Texas at Austin conducted an assessment of Moncton’s business, academic, and government assets, challenges, and opportunities. A main objective was to identify specific near- and longer-term action initiatives for accelerated technology-based entrepreneurship and economic growth in Greater Moncton to: ƒ Facilitate successful recruitment of companies and talent (e.g., professional, entrepreneurial) in targeted industry sectors. ƒ Assist the growth of existing local technology-based organizations. ƒ Assist in the incubation and accelerated-growth of regionally based and globally competitive companies. ƒ Leverage regional public and private assets more effectively, as well as national and international partnerships, see Figure 1.

Figure 1. Four Strategies for Regional Economic Development

Company/Talent Company/Talent New Firm/Talent Relocation Retention & Development Expansion

Regional, National, Global Partnerships for Leveraged and Smart Economic Development

Source: IC² Institute, The University of Texas at Austin

3 The Moncton Technology Planning Group (MTPG) is comprised of community leaders representing business, institutional research, venture capital, municipal government and community economic development.

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RESEARCH METHODS

The IC² Institute research team collected and analyzed data from January to September 2006, including: ƒ Five team and individual visits to Moncton ƒ Interviews with over 100 local and provincial leaders in academia, business, and government (See Appendix G for the complete list of interviewees.) ƒ Reviews of 45 published economic development reports on Moncton, NB, and Atlantic Canada (See Appendix H for bibliography.) ƒ A survey of 2006 college and university graduates from Moncton’s post-secondary educational institutions to gauge their future employment plans and impressions of Moncton’s economy (see Appendices A, B, C for the complete survey and analysis.)

The scope of work included: ƒ Developing a benchmark of existing Information and Computer Technology (ICT) companies within Greater Moncton ƒ Documentation of Moncton’s research and development assets including governmental programs and educational resources, and existing private companies ƒ Developing case profiles of local technology-based businesses and entrepreneurial successes ƒ Identifying specific assets and challenges for technology-based innovation and company growth, including assessing available and potential sources of capital

MONCTON’S TECHNOLOGY PATH

Moncton has two clear asset classes for growing a knowledge-based economy. The first is represented by Moncton’s Information and Communication Technology (ICT) sector with over 400 companies (see Timeline Companies in Appendix D).4 Within ICT, Moncton’s strengths exist in the area of interactive software (including game design, IT education, and software design), digital media, and informatics (manipulating, storing, and classifying recorded information, especially in the health sciences). The second technology-based asset class is represented by Moncton’s existing R&D centers, including the Atlantic Cancer Research Institute, the science research being conducted at the Université de Moncton, and the bioscience commercialization initiatives at Mount Allison University. Technology transfer and commercialization from these R&D centers, to a large degree, is in its infancy. Large-scale commercial development in R&D, with significant local job growth, while encouraged, is a longer-term proposition.

Simultaneous investment in both ICT and targeted R&D activity is recommended. Investment of resources in ICT can be distributed across more companies and more

4 We use the definition of ICT companies supplied by Statistics Canada: “Industries primarily engaged in producing goods or services, or supplying technologies, used to process, transmit or receive information.” It is based on the North American Industry Classification System (NAICS). Statistics Canada website, “Special Aggregation: Information and Communication Technology (ICT),” accessed November 16, 2006.

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entrepreneurs, creating greater potential for job creation and economic growth. On the one hand, with the array of ICT assets that currently exist in Moncton, it is recommended to focus finances (and other resources for near-term wealth and job creation) toward assets that offers the greatest and quickest return on investment: innovation and entrepreneurship in digital content including services and product development. This report’s recommendations specifically embrace five of the eight focused sectors from Moncton’s 2005 Strategy Report: ƒ Gaming technologies ƒ Animation sector ƒ Information and communications technologies ƒ Software development ƒ E-learning

STRATEGIES FOR SUCCESS AND KEY RECOMMENDATIONS

To better focus Moncton’s priorities and objectives with regard to accelerated technology- based growth and entrepreneurship, “strategies for success” were defined in terms of five key objectives, which are supported by content as follows.

OBJECTIVE 1. Accelerate technology-based business development in established and emerging industry clusters with the greatest growth potential. The industry cluster with the greatest growth potential in Moncton is ICT (Information and Communications Technology). Key recommendations include the creation of Moncton Technology Commercialization Center that will serve the needs of ICT entrepreneurs and provide commercialization services to Moncton’s R&D centers; and a plan to build a Creative Learning Institute in Digital Media in which to test game design and equipment for Spielo, Atlantic Lottery Corporation, and other local companies. It also recommends an innovation path for Moncton based on existing ICT strengths and R&D centers of excellence. It expands on the importance of nurturing fast- growing companies by presenting a novel typology of companies and their use of different sources of financial capital.

OBJECTIVE 2. Develop Greater Moncton as an emerging center of technology-based entrepreneurship. An environmental scan and assessment is presented of the sources of financial capital available to growing technology companies in the region, with emphasis on increasing the amount of funding available for start-up companies. A model for organizing angel investors in Moncton in also offered.

OBJECTIVE 3. Foster academic and research excellence that is specifically linked to regional economic development. Educational assets are summarized and analyzed in order to recommend strategies to improve the post-secondary educational attainment gap between the Anglophone and Francophone communities in Moncton. Existing R&D investments are also examined, with particular attention paid to university- based sponsored research. Existing and preferred intellectual property and tech transfer regimes in Moncton and the region are also summarized.

OBJECTIVE 4. Foster and leverage regional, national, and global value-added partnerships and alliances. Specific steps are outlined, that the city could take to create an incubator and

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innovation center through a land development initiative. The presence of significant activity in bioinformatics in the city, especially at the two hospitals, suggests that bio- and health- informatics could be a bridge between ICT and R&D assets in the city.

OBJECTIVE 5. Promote a common vision and coordinated action initiatives targeted to brand Greater Moncton as an important emerging center of technology-based entrepreneurship and business development. Oulu, Finland is presented as a model of success for IT development, and overall conclusions are presented to assist local champions to coordinate a regional effort for action.

CASE STUDIES OVERVIEW

In order to provide a rich and more textured perspective on the business environment for technology companies in Moncton, seventeen case studies on individual companies or organizations have been developed by IC² project staff. Data on individual companies or organizations were collected from a variety of public information sources, as well as interviews with principals and business partners. Interspersed throughout the report, the purpose of the case studies is to celebrate success stories in Moncton’s technology sector, to highlight assets and challenges for tech firms in Moncton, and to summarize “lessons learned” from which similar companies might benefit in the future. These companies illustrate the breadth and depth of innovation in Moncton’s economy, as well as the vibrant economic impact that technology firms can make in the Moncton region. Firms were not selected randomly; instead the IC² team members made a deliberate attempt to include ventures that were: ƒ important for lessons learned ƒ represented a cross section of different technology sectors ƒ represented a variety of company sizes, years in business, etc.

Company case studies appear as follows: Large Firms Micro Optics, page 41 Nanoptix, page 83 Spielo/GTECH, page 116 Whitehill Technologies, page 39

Small Companies/Start-ups Ardent Development Solutions, page 62 BMG Consultants, Inc., page 22 InteliSys Aviation Systems, Inc, page 56 MedSenses, page 16 MindSWEEP, page 34 Spheric Technologies, page 26 VE Networks, page 80 Vimsoft, page 55

Case study-type write-ups on other institutions/organizations: Atlantic Cancer Research Institute, page 115 Moncton Flight College, page 122 Thin Films and Photonics Research Group (GCMP), page 108

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Wind Energy Research & Development, page 82

In prologue, the following appendices are offered for further data examination: A. Survey Of Graduate Students Results, Analysis; B. Survey Instrument; C. Open Responses To Survey; D. Timeline Companies; E. Benchmarking City Comparisons; F. The Research Team; G. Interviews; H. Bibliography.

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KEY OBJECTIVE 1: Accelerate Targeted Industry Clusters Accelerate technology-based business development in established and emerging industry clusters with the greatest growth potential.

Vision: Greater Moncton experiences accelerated technology-based company growth for enhanced wealth and job creation. Challenges: ƒ Limited density/size of R&D centers and industry sectors ƒ Inventor-owned intellectual property regime ƒ Limited sources of financing for start-ups ƒ Limited talent for senior management and corporate board Strategies: Establish an inventory of established academic assets. Establish an inventory of regional industry. Link R&D centers to local business and start-ups more effectively through such activities as a Moncton Technology Commercialization Center (MTCC), a Creative Learning Institute in Digital Media, and a Bioscience Consortia. Better identify and coordinate sources of financial support for R&D through commercialization and business start-ups. Specific Actions: Provide a strategy for establishing a Moncton Technology Commercialization Center (MTCC) – Incubator. Focus on dual, simultaneous economic development strategies for: o Near-Term Innovation-Based Growth (e.g., ICT, Gaming) o Longer-Term R&D-Based Growth (e.g., Biosciences, Informatics, Thin Films). Initial tenants in the incubator could include: ƒ Dr. Yves Gagnon, K.C. Irving Chair in Sustainable Development at the Université de Moncton, has a technology commercialization proposal to develop a new company to build a small wind turbine for residential and small business applications; also Dr. Gagnon’s proposed Eco-Efficiency Center would promote reduced industrial energy use through better energy management, efficient waste processes, and outreach efforts (see complete case study). ƒ Dr. Rodney Ouellette, Scientific Director and CEO, Atlantic Cancer Research Institute, has research that is viable for commercialization (see complete case study). ƒ Both IT departments at the two Moncton hospitals have expressed interest in developing closer contacts with local IT companies and

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commercializing research from their hospitals by opening an office in a new incubator. Enhance existing assets and knowledge, which are closer to the market place; success with near-term objectives will provide momentum and resources to support more long-term research and development. Strengthen outreach to regional business know-how. Involve faculty and students from the Université de Moncton, Mount Allison University, New Brunswick Community Colleges in Moncton and Dieppe and others. Develop links with the Austin Technology Incubator (www.ati.utexas.edu). Develop national and international partnerships and alliances focused on targeted industry sectors through, in part, strategic alliance with IC² Institute (www.icc.utexas.edu). Finance: Provide subsidized office space at the proposed MTCC for VC and angel investors. o Invite VC and angels from outside region. Promote “Bootstrapping” as a viable form of venture funding. o Form an advocacy organization to coordinate resources and provide mentorship for gazelle-type ventures. Develop and organize a local business angel network. Identify and coordinate VC, angel, and governmental financial support for business development (downstream activities) as well as R&D development (upstream activities). Education/Training: Improve workforce education and training program mechanisms within specific technology sectors in the Greater Moncton Region (see Key Objective 3).

BUSINESS DEVELOPMENT

CASE STUDY: MedSenses Interview with Trisha Coady, CEO

MedSenses (medsenses.com) offers custom-built continuing education modules for healthcare professionals in need of specialty and mandatory training. This e-learning start-up provides hospitals and other developers with the ability to seamlessly integrate a variety of portable courseware, complete with 3-D interactive tools, into other proprietary learner management systems. The company’s two founders, Trisha Coady and Lynn Casey, are nurses from Moncton Hospital who started writing content for instructor-led courses and seminars in 2001. “We wanted to get critical thinking back into the course materials we delivered, which was well-received by our audiences,” said Coady. In January 2006, the pair secured a three-year entrepreneurial leave from the hospital in order to devote themselves full-time to the start-up.

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Background In 2004, Coady and Casey formulated their business plan by talking with industry associations in a variety of countries to ascertain the need for continuing education in the nursing field. “We discovered that hospitals are desperate to save money on continuing education in order to meet budgetary constraints,” said Coady. They also want to exercise due diligence to improve the quality of patient care, decrease patient length of stay, and minimize the occurrence of medication errors. A related market, healthcare corporations, also has the specific need to offer accessible, high- quality continuing education to their employees.

As information technology began to spread throughout the nursing field, MedSenses realized that an online format would be the most efficient manner to accomplish these goals. Their first courses included 3-D animations and interactions that were created in collaboration with local animators. “Medical animators were too expensive for us, so we contracted with a Moncton company, Kervan Media, to provide us with graphic design, learning management systems software connections, and technical support,” Coady said.

MedSenses is trying to tap an enormous market: there are 56 million nurses in the world, and it is vital for hospitals to constantly recruit, retain, and provide continuing education for this skilled workforce in order to maintain high levels of patient care. The firm’s current clients include corporations and individual end-users across Canada and the U.S., providing a modest revenue stream to the fledgling firm. MedSenses courses are accredited by the American Nurses Credentialing Center (the only nursing credentialing body in North America), which provides a critical advantage in the marketplace.

Assets and Challenges Connectivity: MedSenses became frustrated with the lack of adequate wireless internet services in both of the office locations that the company has occupied in downtown Moncton. Neither Aliant nor Rogers offers local technical support; instead technical trouble-shooting and problem-solving are forwarded to a third-party call center. Although broadband internet coverage is available, it also only provides marginal technical support. In addition, Coady says that Aliant is unable to break apart three phone lines for their needs; consequently the company will probably go with VOIP when it is time to upgrade to a system that can handle greater call volume. “It’s frustrating that we are an on-line company that cannot get on-line access on Main Street in Moncton,” she says.

Financing: Coady and Casey went everywhere in their search for start-up capital -- banks, credit unions, BNB, NBIF, NBIC, ACOA, BDC, and Enterprise Greater Moncton -- with no success. “Everyone was reluctant to support two nurses from Moncton,” Coady says. As a result, she and her co-founder turned to a private investor for MedSenses’ first funding round, which kept MedSenses afloat during its R&D phase from September 2005 to May 2006. They then found a business mentor in Saint John to help position the company with investors, and to assist with networking and building a board of directors. Following the R&D phase, when it grew necessary to seek a second round of funding, the same funding agencies and sources that turned them down for the first round, saying they were too inexperienced, turned them down again just months later saying they were now too advanced. Coady observes that venture capitalists expect a large amount of equity for a small amount of investment,

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while potential institutional investors do not accurately evaluate MedSenses’ intellectual property.

Global reach: Like other ICT start-ups in Moncton, MedSenses understands the importance of attacking international markets at early stages in its growth. Currently the company has been contacted by U.S. and Canadian software firms in the healthcare industry to negotiate value-added channel relationships. Coady and Casey have also been contacted by a U.K. marketing firm to discuss a possible E.U. market infiltration as well. The company’s immediate focus is to reach 1.3 percent of the 3.3 million nurses in North America with its courses by 2008.

Lessons Learned Networking and Mentoring: MedSenses believes that the key to helping start-up firms succeed is to improve the networking and mentoring environment. “We have networked with Learn NB and through the Cyber Socials, but many business mentors and angel investors in the region understand ‘bricks and mortar’ companies more quickly than ICT companies,” said Coady. “But once we found the right people, by pushing our networking activities to the limit, Moncton has been a great place to be located.”

Funding: Any start-up, but especially a technology start-up, has trouble raising capital – a problem that is magnified in an environment dominated by traditional industries and a lack of well-networked angel investors. MedSenses has been particularly frustrated by programs that offer funding opportunities but then quixotically remove the offer. Coady cites the “Women in Business Initiative” by TriCo Credit Union, which has promoted a $150 million fund for women-owned businesses. Loans, however, are only available if a start-up has $1 million in the bank as collateral.

MedSenses has learned that VC investors are more receptive to investing in the ICT industry because they understand the incredible potential for rapid growth and wealth creation of such companies. Coady’s experience shows that investors in traditional industries -- as well as some government agencies -- still consider ICT businesses to be high risk, despite easy access to global markets and low overhead costs.

ENTREPRENEURSHIP AND NEW VENTURES: AN OVERVIEW

Perhaps the most influential researcher to underscore the importance of new entrepreneurial firms for job creation is MIT researcher David Birch5 who was the first recipient of the prestigious International Award for Entrepreneurship and Small Business Research by the Swedish Foundation for Small Business Research.6 According to Birch, a type of business venture which he designated “Gazelle ventures,” accounted for more than 70 percent of the employment growth in the U.S. between 1992 and 1996, while representing only about 3 percent of the firm population.7 Birch demonstrated that Gazelle

5 Global Entrepreneurship Monitor, 2005 Report on High-Expectation Entrepreneurship http://www.mazars.de/download/studien/GEM%20full%20report.pdf#search=%22DAVID%20BIRCH%20%22who %20is%20creating%20jobs%22%22 6 http://www.fsf.se/eng/index.htm 7 Birch, D. (1987). Job Generation in America. The Free Press, New York. Birch, D. (1995). Who is Creating Jobs? Cognetics, Cambridge, MA.

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ventures are distinct from other types of business ventures in style, manner, pattern and result. Birch’s work has important implications for how Moncton might address the question of how best to promote and finance knowledge-based firms.

For new venture development, the need for capital investment increases in a direct relationship to the time required to bring a new technology to market. The two investments of time and money increase in tandem, according to the complexity of the technology under development. It is generally true that great technology advancements require great investments of both. It is assumed that financial debt is necessary in order to provide marketable advancements in technology. However, it is a false assumption that new venture success is directly related to access to large amounts of venture capital. A novel theory of innovation postulates that the ideal path for new ventures is not always through heavy capital investment.

Three Styles of Venture Development There are two main thresholds in the early stages of venture development: Start-up—when the founders spend substantial amounts of their time (part time to full time); and Breakeven—when total sales become equal to total costs, and the new venture has the capability to gain positive cash flow. Accordingly, the early stages of venture development are classified into three distinct stages: Ideation, Survival, and Growth. The Ideation stage precedes the start-up threshold, when generating new ideas is the main concern of the new venture. The Survival stage occurs between start-up and the breakeven point, when cash flow is negative and the new venture is trying to keep itself afloat. The Growth stage happens after the new venture is able to pass the breakeven point and has a positive cash flow.

All new ventures may be divided into three types as they each pass through these stages of venture development. New ventures seem to conduct business in similar fashion during the Ideation stage: the core technology is defined while the conceptual groundwork is laid for marketing, human resources, and company organization. After the Ideation stage, new ventures enter the Survival stage and follow one of three paths: the slow lifestyle path (“Turtle” ventures); the fast organic path (“Gazelle” ventures); or the express path (“Rocket” ventures), Figure 2. 8

“Rocket ventures” are “revenue calibrated” in the sense that they are capable of fast growth if fueled adequately with extensive investments of capital. During the Survival stage of business development, Rocket ventures set out upon the risky course of assuming a substantial debt burden in order to reach the breakeven point in sales (thereafter growing with irresistible market momentum). This development pattern is generically considered to be the one true commercialization path. New ventures of this type include pharmaceutical start-ups and other high-tech ventures that are venture-capital-driven. During the Survival stage, Rocket ventures plunge into massive debt in order to build organization, perfect a core technology, and recruit the talent needed to perfect a venture that will explode through the Growth stage, where massive profits are anticipated. Astronomical revenues and staggering profits are expected to manifest and provide both a) repayment of the incurred debt and b) high rewards for the founders and their shareholders.

8 The section Three Styles of Venture Development is based on the studies of Darius Mahdjoubi.

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Figure 2. Patterns of Cash-flow and Sales in Three Styles of Venture Development

$ Startup Break-Even Point

(Cash Flow) Slow Lifestyle Path – (Sales) $ Turtle Ventures Time Survival Growth Ideation

$

(Sales) $ (Cash Flow) Fast Organic Path – Time Gazelle Ventures Ideation Survival Growth

$

(Cash Flow) (Sales) $ Express Path – Time Ideation Survival Growth Rocket Ventures

© Darius Mahdjoubi, 2006

However, many Rocket ventures do not exit the Survival stage; many languish for years in the stark absence of profitability while they continue to attract investment in consecutive rounds of venture capital. Data and practical experience both demonstrate that only a fraction of these ventures ultimately succeeds. Many venture capitalists aspire to a one-in-six success rate. The core technologies that spawn successful Rocket ventures usually arise from a research infrastructure of talent, equipment, and facilities.

“Turtle” ventures, in comparison to Rocket ventures, are financially conservative. Turtle ventures are founded by entrepreneurs motivated to reach the breakeven point of profitability (reflected in cash flow) with a minimum of debt. Their business goals are modest, growth is slow, and sweat equity is common. Founders of Turtle ventures think and act small in the beginning. In a sense, they try to carry what they need with them as they move along the business cycle.

While few Rocket ventures flare into profitability, and Turtle ventures cling to the safety of low cash flow, Birch’s data showed that some new ventures build value while minimizing fixed costs; keep expenses at a minimum, and achieve profitability with modest sales but a strong balance sheet; and then are able to position themselves to warrant major venture capital investment. These “Gazelle ventures” survive conservatively until they reach profitability with a razor-sharp competitive edge. If properly resourced with financial support at the right moment in their business cycle, these companies can attain rapid growth and significant revenues but without the debt burden and the high mortality rate of Rocket ventures. Moncton has such success stories, including Spielo and Whitehill Technologies. These two ventures show exactly this history; enterprise value was cautiously established before venture capital was invested. Their founders were familiar with latent market demand in ICT sector niches; their technologies were pulled by an identified market demand rather than pushed by creative scientific impulse.

“Gazelle ventures” hold a position between Turtle and Rocket ventures. Gazelle and Turtle ventures are both self-funded companies in the first two stages of company development: Ideation and Survival. Yet Gazelle ventures are distinct from Turtles in the aspirations of

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their entrepreneurs, and the type of technologies they pursue. The differentiation of Gazelle ventures from Rocket ventures can be made during the Survival stages of development. Gazelle ventures are not based on technologies that require lengthy, expensive scientific processes. At the same time, the founders aspire to achieve returns beyond sustenance levels; the companies are founded on a longer term plan for growth that can be well articulated; the management style strives for efficiency and does not scale for explosive growth until the product is profitable; frequently the technology is based on reverse engineering; management seeks to satisfy a specific, identified market demand, in lieu of establishing organizational buildup to support the perfection of a technology that requires expensive, lengthy development. Birch first pointed out twenty years ago, that only after reaching profitability, when imminent success is likely, do Gazelle enterprises assume the higher risks that Rocket ventures at start-up.

Understanding the distinct role of Gazelle ventures is what earned Birch reputation and acclaim. His novel theory of innovation, applicable to the circumstances in Moncton, proposes a method not merely for identifying but also nurturing Gazelle ventures. Rocket, Gazelle, and Turtle ventures each rely on specific sources of capital. Rocket ventures need extensive financial backing and operate like mature businesses very early in their life cycles. Yet the presence of capital does not guarantee longer term sustainability; and abundant initial capital will sometimes result in unrestrained spending. In contrast, Gazelle ventures seek modest amounts of financial capital from personal resources, minimal loans, and credit from suppliers and customers.

New high-tech ventures with laboratory-based R&D-derived core technologies require large infusions of capital for product development; these ventures, by necessity, will be Rocket ventures. Hard science R&D must usually be fed with large amounts of capital through the Survival stage because the chasm to be crossed between a prototype and a market launch is vast. Furthermore, the requirement for executive management and board governance is much higher for Rocket ventures than for Gazelle ventures. Costly investments during Survival stage leave little room for error in the commercialization path; early missteps that are later magnified during the growth stage cannot be afforded.

Cutting-edge R&D as the ideal innovation model (as it evolved in the 20th Century) requires heavy funding to sponsor a large research base and additional infusions of capital as each new competitive advantage is refined for marketability. ICT, however, is market-driven, not research-driven and can display short time-to-market periods when managed by market- savvy penurious founders. If one compares the time-to-market for a new drug versus a new software program, a new bio science product versus a new video game; or a new cancer treatment versus an internet service, one immediately recognizes the difference between Rocket venture development and the Gazelle/Turtle type of venture development.

Many founders of “Turtle” ventures never intend to achieve large growth, but prefer their companies to remain modest. As such, their contribution to the macro economy is minimal, except in the aggregate. Other ventures by their very nature must be undertaken as Rocket ventures with all the risk that is entailed to that model. As such, the cost to society for Rocket ventures – when measured across the large number of failures – limits their net contribution to the macro economy. Gazelle enterprises, on the other hand, leverage dedicated resources with the least risk, to produce the greatest return on a community’s investment.

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If a community’s sole metric is home-grown homeruns, resources should be dedicated exclusively to Rocket ventures. If, however the desired metric is knowledge-based economic development, the probability of success increases when placing investments in Gazelle enterprises. However, if not properly resourced by their environment, Gazelle ventures will be relegated to remain Turtle ventures, and their communities will be the poorer for it. The question is not how Moncton can grow a limited number of Rocket ventures, but how might the region nurture as many Gazelle ventures as possible.

CASE STUDY: BMG Consultants, Inc. Interview with Louis-Philippe Gauthier, Co-founder and President

Background BMG specializes in web site development, web applications, and eMarketing. As the largest Francophone IT company in Atlantic Canada, the firm has a strong link to the communications field through their ownership of CapAcadie.com, the largest French news and information portal in Canada outside of Québec.

Philippe Gauthier, a graduate of the Université de Moncton, co-founded the company in 1996. At first, Gauthier shunned government funding or assistance from angel investors and focused instead on growing the company from sales and savings. From 1996 to 1999, the tools that allowed the use of databases via the web proliferated; BMG's first big project, in 1998, was to develop the first fully web-based payroll processing system in Canada for the federation of French Credit Unions.

In 2005, Bristol (Atlantic Canada’s largest full service communication firm) became the majority shareholder of BMG. These new partners provided BMG with access to capital and new market opportunities. This transaction has had a substantial impact on BMG’s revenues and has allowed the company to more than double its employee base from four to ten employees in one year.

Assets and Challenges Gauthier feels the entrepreneurial climate in Moncton and Dieppe could improve by mentoring of young people with the initiative and desire to become entrepreneurs. Both French- and English-speaking businesses should offer more internships and more readily provide personal mentoring to students and young people. Gauthier is the president of the Conseil Économique du Nouveau Brunswick (the association representing the French business community for over 25 years); he also teaches MIS courses in the MBA program at the Université de Moncton. Gauthier explains that while some mentoring does take place, a more systematic process would be beneficial. He suggests that Enterprise Greater Moncton and the Chamber of Commerce, in collaboration with the CÉNB, and the Université de Moncton, could lead the effort to foster mentor programs.

Lessons Learned Gauthier asserts that the cultural differences that exist between the cities of Moncton and Dieppe should be leveraged as opportunities to contribute to economic development in both cities. Every effort should be taken by local leadership in government and business, he says, to encourage business growth in both cities, because "any plan to grow Moncton necessarily includes Dieppe." A publicly funded ICT incubator available to entrepreneurs in both cities could be a successful first

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step, because the ICT industry in Dieppe is not very large; companies based in Dieppe would benefit from synergies created around an ICT incubator that housed firms from both the Francophone and Anglophone communities.

AN INNOVATION PATH FOR MONCTON

Moncton has two clear asset areas in its knowledge-based economy: organically launched ICT companies, and the R&D activity represented by centers of excellence like the Atlantic Cancer Research Institute. Moncton’s knowledge-based innovation economy is currently developing along two paths. The first path is innovative, in which start-up companies, mostly in the ICT sector and outside the R&D centers, arise spontaneously from entrepreneurial initiatives. In the near term, the growth and expansion of these companies and the emergence of new ones in the ICT sector could be dramatically assisted by a supply of resources housed in a new incubator. Longer-term, an innovation center could evolve around the incubator, providing a wider range of resources and services for entrepreneurs and companies large and small, and some governmental agencies like Atlantic Canada Lottery. Taking an even longer view (20 years), the innovation center itself could transition into a research park. The second path for increasing knowledge-based entrepreneurship in Moncton involves commercialization of R&D coming out of the research centers in the region, much of which is in the bioscience disciplines. Developing companies and creating wealth along both these paths will involve strategies that are both distinct and overlapping; the R&D paradigm and the innovation paradigm.

R&D Paradigm vs. Innovation Paradigm9 In the 1950s and 1960s, the prevailing view was that the combined effect of basic research, applied research, and development was the only path to regional economic prosperity. A paradigm grew around the discovery of knowledge (developed within specific scientific disciplines in university, government, or corporate labs) that was shared with industry through technology transfer and introduced to the public.

Technology-intensive companies closely affiliated with universities and corporate private labs undeniably contribute to economic growth and job creation. However, since the 1970s a second alternative -- the Innovation paradigm – emerged that integrates customer development with organically derived technology. Companies that dwell in the sector where digital content resides (such as Apple, Microsoft, Compaq, Lotus, and Dell) were not founded on university research but achieved success because they seamlessly merged technologies with markets. The founders did not possess strong technical capabilities or academic credentials; many of them were college dropouts. Contrasting these two paradigms provides a new perspective for Moncton’s potential business development strategies from the micro level of individual companies to the macro level of regional community development. Bioscience technologies require the structure of the R&D paradigm; ICT development, on the other hand, tends to flourish in the Innovation paradigm. Each paradigm displays distinct parameters, including management styles, investment patterns, product life cycles, resource needs, etc.

Because the technologies that come out of lab-based research require a massive amount time-consuming product development, start-up companies in the R&D paradigm require a

9 The section R&D Paradigm vs. Innovation Paradigm is based on the studies of Darius Mahdjoubi.

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large, ongoing cash infusion of venture capital (the Rocket model of development). These companies need particularized resources, including boards of directors, mentor management, and advisors with first-hand experience in that business model. Successful commercialization of cutting-edge science normally requires rigorous technology assessments, market studies that involve complex patent searches, and industry analyses that carefully evaluate technologies that compete closely in a tight market space. It is difficult to nurture and protect a competitive advantage that is based on incremental advancements of basic science; consequently early-stage R&D companies tend to polarize employment between senior management and scientific personnel.

The founders of start-up companies in the Innovation paradigm, on the other hand, tend to be self-funded; and if they reach profitability, they do so more quickly than R&D-based companies because they are usually smaller-scale companies with low overhead and rapid product development. These companies also need particularized resources and incubator services. The core technology of these organically grown companies is innovation of existing knowledge, usually provided by a founder with an intuitive sense of market direction and technology application. The high cost associated with protecting intellectual property, is not usually an issue; and the division of labor in early stage organic innovative ICT companies is egalitarian: concentrated among skilled labor, project managers, and entrepreneurial founders.

The rate of new start-up activity and the time-to-market for new products and services is markedly different in these two paradigms. It is not by coincidence that the bioscience cluster along Route 128 in Boston is vertically integrated with a more closed structure, while Silicon Valley benefits from open networks of communication horizontally across firms. The R&D paradigm tends to result in vertically integrated firms, while innovation paradigm firms flourish under non-proprietary standards, in decentralized organizations with cooperative information sharing and in which some processes are outsourced. In order to fully leverage assets and resources, bioscience commercialization will, as a rule, proceed under a different paradigm than digital content and therefore should be planned for accordingly.

R&D Paradigm: Local IP Challenges Excellence can be found in a number of bioscience niches in the Moncton region. However, numerous factors mitigate the choice of R&D-based bioscience as the primary near-term target sector for building a knowledge-based economy. While exceptional successes are in store from ongoing bioscience R&D, the challenge to efficiently commercialize those successes in the near term is great, and is tied to complex IP, tech transfer, and financial capital issues. As a result, the R&D model is unlikely to contribute to significant job growth in Moncton in the short- to mid-term. For the foreseeable future, significant advances in this sector are most likely to be accomplished through licensing agreements. Out-licensing, which normally leads to migration of IP outside of the region, is not a strong method for promoting local job growth.

Start-ups in the bioscience sector require close attention to business formalities in the early stages, so that in later stages venture capital companies can make investment without facing the frustration of dealing with equity apportionment, anti-dilution, defective share holder agreements, and other contentious governance issues. It is of high concern that, in the Atlantic provinces, talent for the highest level of corporate governance and executive management mentorship is in short supply.10

10 The challenges facing bioscience start-ups in Atlantic Canada were outlined in an interview with Peter Forton, Growthworks.

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Also of high concern, the current IP regime grants university inventors unilateral decision- making power over new technologies. Even excellent legal counsel and commercialization expertise must face the challenge to avoid circumstances in which intellectual property is inadvertently negotiated away in head-to-head discussions between faculty/inventors and multi-national corporations’ licensees and research sponsors. If institutional experts could be unilaterally empowered to make commercialization decisions, the situation would be vastly different. Presently, most inventors may elect whether or not to embark on a commercialization path – a decision that can come late or not at all. Faculty/inventors, as IP owners, have a qualified obligation to participate in commercialization initiatives, even in the presence of low personal interest for the process. A conundrum exists: while there is often a “disconnect” between IP generators and economic development planners, other inventors plea for help with commercialization.

Coordinating Both Development Paradigms In Moncton, simultaneous investment of resources in ICT and formal R&D is appropriate. Greater potential for job creation and economic growth should be realized with resources invested in ICT, which will ultimately spread resources across more companies and more entrepreneurs. Moncton would be best served to focus its resources in this sector, as it emphasizes innovation in digital content services and product development.

Moncton’s ICT strength The recommendation to invest in Information and Communications Technologies specifically addresses the five key threats and challenges that the City of Moncton identified in its 2005 strategy report:

1. Demographics: The niches in the ICT sector that are recommended directly appeal to the more youthful age brackets and address the aging population dilemma. 2. Limited post-secondary education opportunities for Anglophones: Establishment of new articulation agreements and computer science and applied IT programs in Moncton to raise the number of post-secondary educational offerings for Anglophone students. 3. Lack of challenging employment opportunities in knowledge-based industries and the creative economy: Employment data suggest demand for ICT jobs is up, even while enrollment in IT programs at CCNB and NBCC is down. A promotional campaign to reverse this trend is needed region- and perhaps province-wide. ICT entrepreneurship should be directly supported by the proposed Moncton Technology Commercialization Center (MTCC). 4. Weak attractiveness factors that are crucial to making our city more appealing to younger people: It is recommended, for example, that an international gaming conference be staged in Moncton and that digital content niches be promoted in primary and secondary educational programs 5. Weak national and international visibility: Moncton’s ICT entrepreneurship could be accelerated with the support of a specialized incubator. While the Moncton Technology Commercialization Center (MTCC) can be branded provincially, international entrepreneurship can also be promoted through competitions promoting international student exchange similar to the USA/Canada/Mexico program in place at the Université de Moncton’s Faculty of Business. The 2005 Plan presented eight focused sectors for development; of these, we suggest targeting five: ƒ Gaming technologies ƒ Animation sector ƒ Information and communications technologies

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ƒ Software development ƒ E-learning

A primary ICT focus also reverberates at the national level. The Committee on the State of Science and Technology in Canada, sponsored by the Council of Canadian Academies, in its 2006 report, specifically promotes “new media, multimedia, animation and gaming, where Canada is internationally recognized as a leader, with a number of successful companies as well as a reputation for superb skills training” and recognizes its upward trending momentum second only to oil sands nationally. Aside from technologies and sciences related to natural resources, the national view is “the perception of strength is greatest for…information and communications technologies (ICT).”

ICT and R&D To increase knowledge-based entrepreneurship, the City of Moncton should purposefully move toward a dual economic development strategy that leverages the community’s ICT assets while it nurtures the community of R&D researchers. It is vital for Moncton to support ICT start-up companies that arise organically through entrepreneurial, market-driven innovation, as evidenced by the predominance of digital content companies in the community’s timeline of overall start-up activity (see Appendix D). It is also important to commercialize R&D in the region, for longer-term growth with high potential for return. Both these strategies would be promoted with the development of a regional business incubator. Further, an incubator would create new communication channels between these two entrepreneurial communities, which could result in more synergistic commercialization of new technologies as they emerge into the marketplace.

CASE STUDY: Spheric Technologies Interview with Adam MacDonald, Co-founder

In 2001, Spheric Technologies was founded like many local start-ups: in the basement of a suburban home. With the leadership of founders Dan Martell and Adam MacDonald, the company has been in full operation for two and a half years and is quickly building a reputation as a competitive provider of consulting and support services for companies using a BEA® Aqualogic portal.

Background Early in its operations, Spheric was off to a running start, earning $1 million in gross sales in its first fiscal year. The company currently employs a team of 10 and hopes to expand its operations by 12 employees in the next year. Most of Spheric’s clients (roughly 90 percent) are in the United States, though the company also serves a number of Canadian clients. The Spheric team travels across North America to assist these clients to plan and implement customized portals using the BEA® Aqualogic technology; they also perform limited amounts of research and product development in Moncton to complement these services.

One of Spheric’s central doctrines is to do more with less. Martell and MacDonald have established a lean operation to keep costs as low as possible. Any function outside of the company’s core competency is outsourced, so that time and money are not spent trying to develop unnecessary skill sets. This lean operating philosophy has been a driving force in overall growth, as it enables them to frequently underbid competition and secure projects. Spheric has also financed the entirety of its

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operations and growth from sales revenue without help from loans, government grants, or venture capital.

Assets and Challenges Basing Spheric’s operations in Moncton is critical to its competitive edge. Low salary and overhead costs enable the company to keep operating expenses low, and consequently, able to underbid the competition. Spheric has also benefited from open communication lines with other technology firms in the region, particularly Ardent Technologies. Company officers regularly participate in Moncton’s Cyber Socials to develop relationships with other local technology companies. While these companies compete -- both in the marketplace and for local talent -- they also cooperate to their mutual benefit. For example, other companies will sometimes refer potential employees to Spheric when the applicants’ skill sets are better suited to its operations. Likewise, Spheric and Ardent have established a support relationship so that Spheric employees located all over North America can receive technical support from Ardent staff if no one is available at Spheric.

But while Spheric does not require extensive office space (its employees frequently work at client sites), they have found it difficult to find affordable office space that is centrally located. Likewise, Moncton’s business internet connectivity is insufficient to their needs; and is all the more frustrating because resources are in place that could make local connectivity more effective.

Spheric also faces significant difficulties traveling in and out of Moncton; there are few direct flights and the airport is small. Employees often need to make numerous connections in order to reach their destination, which can add hours to travel time. Continental’s new direct flight has been helpful, but more resources in air travel are needed.

Spheric leadership feels that -- while technology education in Moncton is strong -- local colleges should be more responsive to the needs of local companies. While coursework prepares students generally, there is a need for specialized courses in technology areas: a benefit that would be felt at Spheric and other local technology companies as well. NBCC, CCNB, and other local colleges with technology programs should more frequently seek input from the ICT industry regarding curriculum selection and course offerings -- in order to provide graduates with the skill sets required by local industry.

Lessons Learned Spheric suggested several initiatives to assist new companies in Moncton. First, internet connectivity should be improved with more fiber optic lines; further, a wireless network in downtown Moncton would be beneficial. “I would love nothing better than to be able to go down to Timothy’s, grab a cup of coffee, and do some of my project management work,” says twenty-something founder, Adam MacDonald.

MacDonald also recommended a formalized system to help entrepreneurs in the community to share experiences and resources. MacDonald suggested a new system like Cyber Socials be established that is open to all entrepreneurs in the region rather than just technology firms. He is also an advocate for a formalized mentoring program in the community to help foster better business skills. While

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Spheric has sought needed consulting services in larger Canadian cities, local resources would be preferable.

STRATEGIES FOR A MONCTON TECHNOLOGY COMMERCIALIZATION CENTER (MTCC)11

The recommendation for a Moncton regional technology commercialization center (incubator) and larger innovation center (science park) is to start small, leverage available resources to the benefit of the tenant companies, and build a track record of success. IC² Institute’s Austin Technology Incubator (ATI) was launched in 1989 in 4,000 square feet of donated office space. The City, the County, and The Greater Austin Chamber of Commerce seed-funded the three-year experiment – about $30,000 each for three years – to create wealth, generate jobs, diversify Austin’s struggling economy, fill office space, and help catalyze and build an entrepreneurial infrastructure for the City. The main expenses were salary for the incubator director and her assistant, office supplies, and building taxes. Office furnishing and equipment were donated from university surplus and by local office/furniture supply stores in hopes of developing a new customer base. Professional legal, accounting, management, and marketing talent from the region also donated their time to assist the companies in order to help grow future paying clients. In addition to receiving rent from tenant companies, a private financial donor contributed additional needed funds. Of the first three tenant companies: One was recruited from California, one from a local research consortium, and another from The University of Texas at Austin. The strategy was to select the best candidates for near-term success to establish a positive track record.

Phase I Suggestions for the Moncton Technology Commercialization Center (MTCC) The delivery of value-added services becomes a vital differentiator between successful and unsuccessful incubators.12 The National Business Incubator Association (NBIA) published a report of the incubation industry and identified typical services (by more than 75 percent of the respondents) offered by technology incubators: • assistance with business basics • marketing assistance • accounting/financial management • investor and strategic partner linkages • networking activities • links to higher educational institution • conference rooms and other shared facilities • shared administrative services

Figure 3 provides an overview of the critical components of ATI and shows the public private regional support (university, business, government, non-profit) that was key to the incubators success. Each of these sectors was represented in ATI’s Advisory Board. A Technical and Business Advisory Board also helped review and select the best incubator tenant companies. ATI was affiliated with the newly formed Texas Angel Capital Network as there was limited Angel and VC investment available in the region in 1989. Most important was the selection of a highly capable incubator director. ATI’s first director was not a technologist, but she was extremely capable at evaluating or “sizing up” prospective tenant companies; in building

11 “Overview of U.S. Incubators and the Case of the Austin Technology Incubator,” by J. Wiggins and D. Gibson, International Journal of Entrepreneurship and Innovation Management, Vol. 3, Nos. 1 and 2 (2003). 12 Ibid, p. 58.

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regional academic, business, and government networks; in focusing on and assisting with tenant-company mentoring for success; and being entrepreneurial in leveraging physical resources, talent, and business know-how. The incubator’s director and know-how networks also worked to help find financial support and building alliances with established companies.

Outputs of ATI centered on shortening time-to-market by minimizing mistakes and maximizing value-added learning. ATI was a living learning experiential laboratory for students and faculty. As graduating companies grew, they hired local students and other employees, paid taxes, filled local office space, and generally contributed to the local community. These same organizing principles were emphasized when ATI, in 1991, moved into its second facility of 60,000 ft. and housed about 22 companies (mostly IT). The incubator staff was kept to about 4 persons, but the professional know-how network grew to include hundreds of professionals.

Figure 3. Important Basic Components of Technology/Business Incubators

Product/Process Incubator Affiliation T Commercialization e

n Profits

a Non-Profit Government Private University Viable n . Companies t Technology Economic Entrepreneurs Development Incubator C Technology o (non-profit/profit) m Job Creation p Industrial Support Systems a Competitiveness Capital Administration n Global i Know-How Facilities Networks Networks e s Experimental Laboratory

Based on the ATI model, Initial crucial MTCC criteria for success include: ƒ Deal flow – promote sufficient numbers of technology and business applicants so the incubator has the ability to select the most promising business ideas. ƒ Community support and involvement – local business and government officials support the incubator and provide free or discounted professional advice to tenant companies ƒ University support and involvement –faculty and students teach and work at the incubator, helping the companies with technology and business assessments, marketing plans, financial plans, etc., while the companies provide experiential learning opportunities.

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Figure 4. Ten success factors for the Moncton Technology Commercialization Center

Concise program On-site learning Access to milestones with and leveraging financing and clear policies and of resources capitalization procedures

Tie to a In-kind university professional support

Incubator

Selection Community process for support tenants

Entrepreneurial Perception Entrepreneurial networks: regional, of success education national, international

Phase II Suggestions for the Moncton Technology Commercialization Center (MTCC) As a Phase II model for MTCC, we again look to the Austin Technology Incubator. When ATI’s initial success warranted larger facilities, the incubator moved to its present location, where it occupies about 40,000 sq. ft. in a university-owned building. Financial support has been provided by tenant company office rent, research projects, occasional contributions from the city, and private sector partnerships. Over the years, as a result of changing local and global conditions, ATI has transitioned from a location for subsidized rent, business plan support, and business know-how support, to enhanced value-added support and market making activities (see Figure 5). Initially ATI welcomed a broad range of technology-based companies, but it has increasingly focused of late on industry sectors that are most linked to regional emerging business sectors and related UT-Austin academic excellence, including IT, wireless, Clean Energy, and Digital Media.

An additional current focus of ATI is to facilitate global incubation; international companies are incubated at ATI with an emphasis on “market making” support. For example, ATI is currently mentoring 12 select companies from Mexico. The TechBA program is funded by the Mexican government with the goal to accelerate technology business growth though increased access to U.S. markets and business alliances. ATI has also launched cooperative programs with Poland and Portugal and has had tenant companies from Brazil, Japan, and Canada.

ATI served as a catalyst for Austin’s economic recovery in the 1990s by developing an entrepreneurial support infrastructure, expanding the region’s tax revenues, and increasing demand for commercial office space. Over the years ATI has measured itself according to four basic criteria: business creation, wealth generation, innovation, and value to the

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Figure 5. ATI’s Transition in Value-Added Activities for Tenant Companies Value to today’s entrepreneur

“Market making”

Sector-specific acceleration (clean energy, Start-up wireless) infrastructure support

Time 1989 •Office space As at left, plus: As at left, plus: 2006

•Professional •High-touch •Access to services consulting “chokepoint” Example services facilitation technologies, key offered to •“Virtual Board” customers •Capital networks entrepreneurs •Target capital •Business matchmaking consulting (e.g., Sevin Rosen)

Source: Isaac Barchas, ATI Director 2006

university (student internships and entrepreneurship research). As of 2006, ATI has graduated more than 150 companies, raised $720 million (USD) in capital, had four companies launch initial public offerings, had 20 of its companies acquired, launched 30 independent profitable companies, and created 3,000 direct and 7,000 indirect jobs. ATI has won numerous awards, including NBIA’s award as Incubator of the Year and the prestigious Justin Morrill Award from the Technology Transfer Society. Four of its companies have won NBIA incubator “Company of the Year” awards. Indeed, ATI has served as a model incubator for a number of incubation programs in the U.S. and worldwide. Important lessons have been learned about successful business incubation:

ƒ Sustainability must be addressed. In the USA, more that 75 percent of all incubators are non-profit being supported by local governments, academic institutions and/or local businesses.13 After its initial success in launching fast-growth companies, in about 1995 ATI started asking for 1-3 percent equity in companies admitted into ATI and more recently requests financial compensation for value-added services provided by industry sector efforts.

ƒ Develop a workable selection process. Selecting the right companies is a key consideration that sets apart one incubator from another. The selection process needs to be rational, well communicated, and appropriate to the mission and context of the incubator while being flexible enough to allow for exceptions in unusual situations. Specific product and business criteria should govern the companies allowed in and those kept out. Each of the various stages (application, recruitment, due diligence, selection,

13 Ibid, p. 57.

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induction, and orientation) requires attention. Adequate databases should be kept; records of agreements should be archived.

ATI employs both an internal and external review process requiring both written and oral material from those who apply. The written material (business plan and/or executive summary) shows the quality of thought put into the business and the depth of domain knowledge of the team. The verbal presentation provides an opportunity to meet and observe the team. The external process brings the company before a panel of outstanding investors, entrepreneurs and service professionals from the community; thus assuring a fair hearing of its business proposal. The external panels also provide a way for ATI to connect to the community and provide potential alliances between the presenting company and the audience members.

ƒ Develop service system that delivers on behalf of client companies. All incubators are service organizations. Whatever services it offers – from facilities to partner networks to funding to education and training – an incubator must measure itself according to two standards. It should design value-added services that client companies need and deliver those services in a consistent, timely, and value-added fashion.

ƒ Provide entrepreneurial leadership. A critical attribute of successful incubation programs in the U.S. is an entrepreneurial staff. From director to receptionist, each should assume a “can-do” attitude, an ability to solve problems, a clear focus on results, and a willingness to work hard. An incubator’s first director usually sets the tone for the future development and long-lasting success or failure of an incubator program.

ƒ Establish clear metrics of success. Every incubator program should establish criteria of success against which it measures its performance. According to the NBIA, industry- wide priorities include creating jobs, creating new business, reducing business failures, accelerating business success, facilitating capital investment, and leveraging funds. Select incubators may have other domain-specific and local objectives such as encouraging minority or women entrepreneurs, revitalizing a distressed neighborhood, commercializing technologies, diversifying local economies, moving people from welfare to work, building or accelerating growth of a local industry, generating income and benefits for the sponsoring organizations, retaining businesses in the local community, and enhancing a community’s entrepreneurial climate.

ATI’s growth has taken a natural and logical course: growing in size as it takes on more companies; growing in services as “best practices” are honed and developed; enlarging its networks as a natural result of pairing high potential companies with venture capitalists and other professionals in the community; expanding to strategic new industry sectors as the region’s economy diversifies. Most importantly, the Austin Technology Incubator is an interactive component in Austin’s economy as a whole – and it is supported by broad-based interests and financial investments. With similar community focus and support, the MTCC could serve as a similar catalyst to accelerate technology development in Moncton.

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PROPOSAL: CREATIVE LEARNING INSTITUTE IN DIGITAL MEDIA

We propose the creation of a collaborative gaming and ICT-related innovation center in Moncton. Tentatively called the “Creative Learning Institute in Digital Media,” the center would operate as an idea laboratory for new technologies, where students could interact with companies to test new devices, games, consoles, and other technologies. Initial funding could come from appropriate government programs, Atlantic Lottery Corporation, and Spielo/GTECH. Such a gaming facility could dedicate a portion of its revenues to support research activities at the center. Technologies and talent could be drawn from the funding partners and affiliates (see below) as well as secondary and post-secondary educational institutions across Atlantic Canada. Similar alliances could be formed with national and international affiliates including The University of Texas at Austin; Austin’s game, film, and arts businesses and communities; and select IC² global partners (e.g., Portugal, Poland, Korea).

An underlying premise is that enhanced creativity will result from collaboration between creative talent that is broad-based, eclectic, and from diverse backgrounds and geographic locations. Atlantic Canada is a preferred product and market development location for gaming technologies; new alliances can enlarge current markets and create new ones while increasing the region’s international reputation in this industry sector.

Why Moncton ƒ Atlantic Lottery is headquartered in Moncton. ƒ GTECH has major operations in Moncton as well as Austin, Texas and Poland. Moncton benefits from strong, knowledgeable executive and knowledge links to GTECH. ƒ Being based in Atlantic Provinces, Canada, Atlantic Lottery is free from many product development and marketing constraints that exist in such places as Texas and generally in the U.S. ƒ Moncton is a central location to draw on student talent from colleges and universities in Atlantic Canada. ƒ Moncton desires to accelerate technology based growth and has champions dedicated to this vision.

Suggested Creative Learning Institute Affiliates Austin, Texas Related Assets: ƒ Austin is the third largest gaming development location in the U.S. with successful gaming pioneers and current leaders such as Richard Garriott, NC Soft. ƒ Dell Computers, founded and based in Austin, is moving rapidly into gaming through alliances with champions like Garriott and others. ƒ Digital film producer Richard Linkletter, a graduate of UT Film School, films many of his creative and innovative productions in Austin. ƒ The City of Austin is working to build its Digital Media economic development related activities. ƒ The University of Texas at Austin is building a Digital Media Center of Excellence, drawing on computer sciences, engineering, and the creative arts. ƒ IC² Institute’s Austin Technology Incubator (ATI) is considering the creation of a Digital Media Facility to leverage with the successful ATI Wireless Incubator. ƒ Austin’s entertainment sector (e.g., film, music) is world-recognized and growing. ƒ IC² Institute has an on-going Visiting Scholars Program with Korea Telecom, which is moving into the mobile gaming space and is sending its executives to study at UT’s Film

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School for developing content know-how (Korea is a leader in gaming and wireless technologies).

Portugal-Related Assets: ƒ Portugal has developed trusted relationships with key academic, business, and government officials in technology commercialization over the past ten years. ƒ The Portuguese government is developing a 5-year R&D and commercialization agreement with IC² Institute and UT-Austin focused on Digital Media. ƒ Several Portuguese companies have novel technologies and content based on the EU market, e.g., www.YDREAMS.com.

Poland-Related Assets: ƒ IC² Institute has established networks based on 3 years of program development with leading Polish universities. ƒ Poland has relatively inexpensive world-class technology and software developers. ƒ The University of Texas at Austin’s College of Communication is linked to the world famous Lodz Film School in Poland. ƒ Dell Computers is opening a plant in Lodz, Poland.

Clearly, other country partners for talent, technology, finance, and markets could and should be added, but it is suggested to launch the Moncton Creative Learning Institute with the above known, value-added entities.

CASE STUDY: MindSWEEP Interview with Eric Papillon, President and Founder

MindSWEEP was founded in Dieppe as a web development company in 2002. The company offers web design, hosting, marketing and promotion, as well as other IT services to clients all over the world. MindSWEEP started with 12 clients and a team of 3 technology experts, including founder Eric Papillon.

In the first two years of operations, its revenues doubled, and after four years, its client list has increased to 450, serving clients in the United States, Mexico, Africa, and nearly every province in Canada. About 10-15 percent of its 450 clients are located in or around the Moncton/Dieppe area. With a meager $1,200 annual marketing budget, Papillon feels the increase in clients is a result of customer service and satisfied client referrals.

Papillon has been asked to speak repeatedly as a model entrepreneur to students at CCNB-Dieppe, and in 2005 his company was awarded the City of Dieppe’s “Emerging Business Award.”

Background Eric Papillon started his web-development business amid the technology crash of 2001-2002 with very little business background. He moved to Dieppe from Prince Edward Island where he had worked as a general manager for a struggling IT company. Papillon decided to start his business in Dieppe because the majority of his competitors were in Moncton, and he hoped to absorb a large portion of the local Dieppe market if he was located there. “I’ve always been the kind of guy to take a

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risk,” he says. Starting MindSWEEP from scratch with little investment support was a significant risk.

Currently renovating their offices in Dieppe, MindSweep also plans to open an office on Prince Edward Island. “Enlarging our current offices makes more financial sense than moving into a new location, with rents as high as they are,” says Papillon. It has been challenging for Papillon to find reasonably priced office space in Dieppe. Though it would be slightly less expensive to move to Moncton, he feels the competitive advantages of staying in Dieppe are worth the extra expenses.

Assets and Challenges Papillon found it difficult to obtain early-stage funding. He sought support from governmental agencies such as the Atlantic Canada Opportunities Agency (ACOA), and the National Research Council Industrial Research Assistance Program (NRC- IRAP), but was disqualified under their funding restrictions. (To be eligible for funding, he needed to have more capital on hand and to document revenue from international contracts.) MindSWEEP also had difficulty obtaining commercial loans; banks were reluctant to fund a new technology company when so many had recently failed in the area.

MindSWEEP has not had difficulty finding quality staff locally, though Papillon does feel that many of the graduates of local universities are not given sufficient opportunity to practice what they are learning. To be part of the solution to that problem, he consistently hires students for internship positions to help them gain necessary experience.

Lessons Learned MindSWEEP requires fiber optic internet connections to run its business. Unfortunately, the small number of suppliers makes subscribing to a service expensive. Papillon feels that a fiber optic loop around the city of Moncton would be beneficial to MindSWEEP and other companies that require the connection; further, he feels that an established loop would attract more providers of fiber optic service increase competition, and lower the cost of internet connectivity.

The Moncton/Dieppe area would also benefit if local universities or community colleges would develop IT education that integrated entrepreneurship and basic business skills (although a new concern arises to establish access to start-up capital for new entrepreneurs graduating from such a program).

Papillon supports the development of a new technology center that would provide free or discounted services such as teleconferencing to emerging companies. It would likewise be beneficial if the region established an incubator center for young companies to provide affordable office space and common services such as reception staff, and necessary electronics such as telephones, computers, copiers, and fax machines. Papillon has been contacted by private sources seeking to establish such facilities in both Dieppe and Prince Edward Island, but a government- funded resource would be more useful to local companies like MindSWEEP.

He is a proponent that internship programs be provided through regional universities, as well as incentives for local companies to participate in these programs in order to provide students better preparation to join the local workforce upon graduation.

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Finally, Papillon asserts that the region needs to develop additional financing opportunities for start-ups in addition to conventional ACOA or IRAP funding. It is difficult for companies to obtain support from these agencies before they have demonstrated revenues, but impossible to develop products to generate revenues without investment capital.

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KEY OBJECTIVE 2: Focus on Entrepreneurship Develop Greater Moncton as an emerging center of technology-based entrepreneurship.

Vision: Greater Moncton becomes a national and international center for educating, recruiting, and retaining entrepreneurial talent. Challenges: ƒ Greater Moncton is currently losing some of its best entrepreneurial talent to higher- paying jobs and more exciting career opportunities in Toronto, Quebec, Montreal, Ottawa, Halifax, and elsewhere (See Student Survey, Appendices A, B, C). ƒ Existing entrepreneurial support mechanisms are fragmented. Strategies: Celebrate Moncton’s entrepreneurial successes that have overcome regional challenges (see Case Studies for Spielo/GTECH, Whitehill Technologies, Ardent Development Solutions, BMG, Mindsweep, VE Networks, and Vimsoft). Recognize the importance of – and actively support – grassroots development of entrepreneurial initiatives to educate, retain, and recruit talent. Specific Actions: Organize a Greater Moncton Entrepreneurial Council: o Facilitate monthly meetings with small dues for refreshments, promotion, speaker fees, etc. o Provide a forum for regional, national, and international speakers. Use Internet and web infrastructure for virtual community-building among Moncton entrepreneurs. Foster entrepreneurship of younger individuals in the region: o Create a regional business plan competition for university and college students and an associated competition for regional high schools. o Offer entrepreneurial training for key personnel in start-ups and in established firms. o Take advantage of the talent of local residents who are retired or semi-retired, who would be outstanding mentors for younger entrepreneurs. Provide small grants which may lead to larger funds from outside sponsors: o Create a venture research fund for faculty and students supporting new research leading to commercialization that is unlikely to be supported by traditional sponsors without further development. o Limit most grants to around $20,000 Canadian (or less). o Focus funds to encourage research and innovation in targeted technology areas. o Make a concerted effort to bring back entrepreneurial talent that traditionally has left the community for post-secondary education and for better paying jobs and career development elsewhere.

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Simultaneous investment in both ICT and targeted R&D activity is recommended. Investment of resources in ICT should be distributed across more companies and more entrepreneurs, creating greater potential for spectacular success in job creation and economic growth. With the array of ICT assets that currently exist in Moncton, it is recommended to focus finances (and other resources for near-term wealth and job creation) toward the single asset that offers the greatest and quickest return on investment: innovation and entrepreneurship in digital content including services and product development. Five of the eight focused sectors from Moncton’s 2005 Strategy Report are recommended: ƒ Gaming technologies ƒ Animation sector ƒ Information and communications technologies ƒ Software development ƒ E-learning

Current recommendations (see below) specifically answer five key threats and challenges to the ICT growth that the City of Moncton identified in its 2005 strategy report:

1. Demographics The niches in the ICT sector that are recommended directly appeal to more youthful age brackets to address Moncton and New Brunswick’s aging demographics. 2. Limited post-secondary education opportunities for Anglophones Establishment of new articulation agreements and computer science and applied IT programs in Moncton to raise the number of post-secondary educational offerings for Anglophone students (See Key Objective 3).14 3. Lack of challenging employment opportunities in knowledge-based industries and the creative economy Employment data suggest demand for ICT jobs is up, even while enrollment in IT programs at NBCC and CCNB is at capacity. 4. Weak attractiveness factors that are crucial to making the city more appealing to younger people It is recommended, for example, that an annual gaming conference be staged in Moncton and that digital content niches be promoted in primary and secondary educational programs. 5. Weak national and international visibility Moncton’s ICT entrepreneurship could be accelerated with the support of a specialized incubator. While the Moncton Technology Commercialization Center (MTCC) can be branded provincially, international entrepre- neurship can also be promoted through competitions promoting international student exchange similar to the USA/Canada/Mexico program in place at the Université de Moncton’s Faculty of Business.

14 The City of Moncton’s “Downtown Moncton Development Vision” supports the idea of locating a university presence in the downtown area. See p. 5, http://www.moncton.ca/search/english/cityhall/downtown/strategy- draft.pdf

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FINANCING

CASE STUDY: Whitehill Technologies Interview with Steve Palmer, Chief Operating Officer

Whitehill Technologies was founded in Moncton in 1997 to develop software for billing-related document conversion for law firms and their clients. Whitehill has since developed similar products for customers in the insurance and financial services industries. They currently have over 800 clients in the U.S., Europe, and Canada, with annual revenues over $25 million. The company operates from a 20,000 square-foot facility in Moncton and has a large presence in Markham, Ontario and other smaller offices, including Roanoke, Virginia.

Background As a start-up company in Moncton, Whitehill benefited at first from provincial and federal programs that wanted to see it succeed in the region; service excellence among its original employees, many of whom are still with the company; and supportive infrastructure in the growing city of Moncton. Whitehill's founders recognized a niche in the processing of legal documents and in short order developed a product, a marketing strategy, and a sales force. Many law firms, the founders realized, have very high levels of customer service and often customized documents to meet client needs. Document customization is often a time-consuming manual process that is prone to errors. Whitehill developed software to automate this process. These products "lead and leverage," according to Palmer; that is, they are globally competitive with international software vendors, but they leverage a client's existing software, complementing legacy systems. Whitehill products are not dominant applications but are extremely adaptable to client needs.

The company succeeded quickly for a number of reasons. First of all, its marketing and sales strategy was to penetrate U.S. markets with its first products. Usually the pattern for software start-ups in Moncton is to first market products or services locally, then to a Canadian market, and then to the U.S. and England. According to Palmer, however, “As a software company, if you’re going to make it, you’ve got to make it in the States,” so going directly after U.S. clients enabled Whitehill to prove early on that it was globally competitive with its products and services. A second strategy that helped Whitehill grow successfully is that its early operations were financed not with venture capital but from ongoing revenues. The firm is a good case of a company that started with a modest amount of initial capital which was able to grow quickly and finance itself organically from sales, rather than from an extensive amount of external capital. Whitehill was forced to pursue a number of revenue- generating services that, while not necessarily in its niche, could add value for its clients.

Assets and Challenges Palmer believes that Whitehill’s employee team and management group is unusually dedicated to the company and its mission, and he believes a big part of that is Moncton itself. Many Moncton residents live in the area for personal rather than professional reasons and thus have a strong attachment to Moncton and Atlantic Canada. Since business opportunities are not as widespread in Moncton as they might be in a larger city, Whitehill employees are more willing to work through

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personal and professional difficulties to stay with the company. Consequently, Whitehill’s staff has developed a strong sense of continuity and community which is evident in an extraordinarily cohesive upper-management team, as well as in product support, sales, professional services, and software development groups, which all work and communicate effectively together. Their cohesiveness, according to Palmer, creates innovation and superior performance throughout the organization.

Among the biggest challenges of growing a company Whitehill’s size, Palmer said, is that Moncton lacks a talent pool large enough to locate local employees with certain specialized skills. Whitehill has been able to fill 85-90 percent of its professional staffing needs locally in Moncton, but for certain skilled positions, Whitehill has had to hire employees in other cities who work for the company remotely. Recently, Whitehill was unable to locally staff an experienced sales manager for its insurance operations – a position that required a professional with over 10 years of sales experience as well as numerous ties to the insurance industry. In a larger city, it may have been easier to find an employee to meet such a specialized need, but Whitehill was unable to find the right fit in Moncton, so it hired a consultant based in the U.S. for the position.

Additionally, finding experienced senior managers is a challenge for Moncton's technology companies. Whitehill’s senior management team is composed primarily of professionals who worked in large organizations prior to the company's founding. But the limited number of large technology companies locally means that there are few experienced technology managers available, which may mean that Whitehill will need to compete in national and international labor markets to recruit senior-level managers to guide the company to its next level of growth.

Lessons Learned Palmer believes that one of the most important attributes to recognize about start-up firms is that the success rate is always fairly low. “The numbers game says you need a bunch of start-ups to get success stories,” he says. Consequently, he feels it is important to celebrate entrepreneurial successes and encourage those who fail to try again. Palmer says, “We in New Brunswick need to be less envious of entrepreneurial success and support entrepreneurial endeavors in any way possible.” Tales of start-up success and failure should be given broad press coverage in local and regional media so that young people with business ideas can have a more realistic idea of what entrepreneurship is all about.

Finally, Palmer believes that one of Moncton’s greatest needs is to mentor young entrepreneurs through a strong, multifaceted mentoring program should be developed for the city. The Rising Stars program currently run by the Greater Moncton Knowledge Industry Network and Enterprise Greater Moncton is a good start. Start-up company executives and others with strong business or technical expertise should advise young company founders throughout the process of starting and growing a new business, both through individual mentoring and by serving on advisory boards. Also, Palmer believes that many of Moncton’s IT firms have business models that can be replicated easily in different niche markets. “There are many 50- to 100-person businesses that could flourish and do niche plays,” he says. Business leaders in the community should identify successful, repeatable business models and share this information to cultivate new economic activity.

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CASE STUDY: Micro-Optics Interview with Mike Power, former VP Sales, October 23, 2006

Micro-Optics was a Moncton technology company that started in 1994 and ceased operations in 2003. Its principals included researchers from the Université de Moncton. It raised a large amount of venture capital and grant support from provincial and federal agencies. It sold its manufactured product into international markets. Its experience, successes, and demise, therefore, hold valuable lessons for other regional start-up companies, investors, and policy makers.

Background Mark Savoie founded Micro-Optics in 1994 around a new technology to carve eyeglass lenses with a novel method that introduced new efficiencies and eliminated traditional manufacturing steps. The prototype involved a “cut and coat” process that was extremely promising. With financial help from a few angel investors, friends, and family, Savoie built the prototype and created a management and sales team with an initial $1 million. By late 1996, Savoie had completed the prototype and Micro-Optics was successful in attracting $5-10 million in a second round of financing from ACOA, the NRC, and venture capitalists.

Mike Power joined the company in 1997 to begin selling the first fully functional machines worldwide. Just as the firm was moving the machines to market, however, the first UltraLab process problems appeared. Micro-Optics’ instrument cut glass so finely that the cutting process left sub-micron marks on the glass surface that defracted light and caused lenses to be defective. Scientists at the NRC could not help because the manufacturing scale was so new: Micro-Optics’ instrument was shaving lenses in nanometers, not microns. To remediate the problem by buffing the lenses would re-introduce steps in the lens carving process that the machine was designed to eliminate.

Management decided to move forward with placing the $500,000 machines with the first customers, despite reintroducing buffing to the cut-and-coat process. Between 1997 and 2000, as the company developed a second iteration of the machine with fully integrated robotics, 20 machines were sold to companies like Essilor Laboratories of America, Oakley, Eye Care Center, Kaiser Permanente, Wal-Mart, and other eyewear manufacturers worldwide for $1 million per unit.

Micro-Optics employed 150-160 people in Moncton in 2000, many of whom were talented engineers trained at universities in Atlantic Canada. The company’s financials, however, were not secure. Cash flow and invested capital were not enough to cover operations. There were no economies of scale, and the manufacturing facility worked around the clock to deal with maintenance and process issues. Two more rounds of venture capital and ACOA grants were required to pay vendors during production delays, not invest in new markets. Most of the marketing effort and huge amounts of money, Power says, were spent managing customer expectations and handling complaints about the machine. Finally, in 2003 the company ceased operations and declared bankruptcy. Somewhat ironically, approximately 25 Micro-Optics machines are still in use around the world and are

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considered to be the best on the market. In all, Micro-Optics absorbed more than $34 million in venture capital investment and received $6 million in loans and grants from ACOA. It is estimated that in total, Micro-Optics raised more $50 million in financing during its 9-year lifespan.15

Lessons Learned Micro-Optics succeeded on many fronts and fell short on others. For the purposes of the case study, however, it is important not to focus on why the company went out of business but to take away lessons from its experience that might inform other technology entrepreneurs in Moncton.

Manufacturing: Micro-Optics developed a technology that clearly improved a manufacturing process in a large market (eyewear). The problem was rooted in bringing a complex machine to market before it was ready. “Dozens of different things could throw off machine results,” Mike Power said, “which made it difficult to repair. Essentially the machine was the culmination of more than a hundred discrete processes. Each adjustment required recalibrating many other parts. Once the machines had been sold and installed, repairs became expensive, time-consuming, and financially draining.” Management considered selling the core technology to a more experienced German manufacturer in 2002 but passed on the opportunity.

Financing: Once the decision was made to sell machines with known but fixable problems, cash flow from sales went not into product development but to pay for repairs and to parts vendors. New venture capital and ACOA funding, while substantial, was consistently delayed, and as a result much of the money raised paid for bills instead of new business investments. Obtaining venture capital, and the due diligence undertaken by venture capital firms, became a hindrance in itself. “The supply chain was financing our business,” says Power. Tight controls by Canadian VC firms precluded a financial buffer to cover unexpected manufacturing problems, even in the first two rounds. The perception was that ACOA and the venture capitalists working with the company were too risk averse and needed to take a much longer- term view of the business.

Management: Technology entrepreneurs excel at identifying markets for new products but typically lack the management experience to know “what they don’t know.” In Micro-Optics’ case, the initial leadership team seemed reluctant to seek outside management help to cope with manufacturing problems and cash flow issues that threatened the company. And although finding bright engineers trained in Atlantic Canada’s universities was relatively easy, it was more challenging to locate managers of engineers in the region. “Running the manufacturing operation around the clock,” says Power, “was simply not sustainable.” Moncton needs to find ways to attract experienced mid- to senior-level management to the area for its technology firms, perhaps though provincial tax incentive programs and relocation grants.

FINANCIAL CAPITAL AND STYLES OF VENTURE DEVELOPMENT: POLICY IMPLICATIONS

For economic development on a regional scale, it is critical to make financial capital available for entrepreneurial business growth. In order to maximize regional resources, it is

15 Mr. Denis Lanteigne, Atlantic Innovation Fund, interview of July 30, 2006.

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important to provide a coordination of investment programs across the spectrum of the company business life cycle. In addition to examining a company’s internal management strength, it is crucial to recognize its place in the business life cycle to determine both its qualifications and the need for capital investment. Sources of capital that are not mutually exclusive can be coordinated as a matter of policy in a way that enables appropriate financial support for high tech companies as they transition through consecutive stages of their business development.

Government policy and civic agenda show commitment to regional development by providing an explicit and accessible financial infrastructure for entrepreneurial investment. Burgeoning companies will contribute to economic growth when provided: ƒ commercial credit from suppliers and customers ƒ government-sponsored grants and direct loans ƒ corporate investors to partner with new companies in exchange for equity ƒ institutional loans by banks and other financial institutions ƒ angel investors (both individuals and groups) ƒ traditional venture capital equity investment by institutional investors

Varied financial capital resources provided across time will provide companies with the greatest support, and consequently the greatest leverage of the region’s available financial resources for economic growth. Sources for capital should not act independently, but in harmony. For example, in the case of the Moncton region, investments made by the Business Development Bank of Canada – a crown corporation of the Federal government that provides both business loans and venture capital – would increase its investment performance through better communication and coordination with other banking and venture capital sources in the area.

A closer view of Moncton’s financial capital resources is presented for: ƒ institutional venture capital investment ƒ angel and individual investment ƒ government investment mechanisms including ACOA and IRAP ƒ bank loans and self-funding

Venture Capital Institutional Investment Venture capital (VC) is the equity or equity-linked investment in young, privately-held companies, where the investor is a financial intermediary who typically is active as a director, advisor and/or manager of the investment firm.16

Table 1 summarizes total institutional investments of venture capital made in the tri-city Moncton region (Moncton, Dieppe, and Riverview) between 1999 and 2005. This seven- year period shows a total of 13 VC investments placed in new ventures. The average rate of VC investment has been two per year, except for 2004 in which there were three investments. The total amount of VC investment in the Moncton region per capita is not large, relative to other cities in Atlantic Canada. The majority of VC investment in New Brunswick occurs in Fredericton, most likely because of its history of successful entrepreneurial VC investment17. The sources of venture capital in Moncton shows a skewed

16 Kortum, Samuel and Josh Lerner. (2000). Assessing the Contribution of Venture Capital to Innovation. RAND Journal of Education. Vol. 31, No. 4, Winter 2000. pp. 674-692. 17 Data for this section kindly provided by Mr. Michael Arbow, New Brunswick Security Commission.

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pattern, with only two firms making 7 of the 13 VC investments; further, these two firms merged in 2005.

Table 1: Venture Capital Investment in Moncton18

CDN$ (1000s) Firm Industry – Sector Lead Investor Firm stage 8,355 Micro Optic Design med dev: Precision lens mfg ACF Equity Early 7,500 Spielo Gaming: automated lottery Finova – KPMG Expansion 400 Custom Assemblies Mfg La Societe Investissment Expansion 5,259 Micro Optic Design med dev: precision lens mfg CDP Expansion 8,327 Micro Optic Design med dev: precision lens mfg ACF Equity Expansion 5,000 Whitehill Technologies Software Longitude Fund Start-up 10,433 Micro Optic Design med dev: precision lens mfg ACF Equity Expansion 1,592 Micro Optic Design med dev: precision lens mfg ACF Equity Expansion Advanced Lodging consumer – motel Growthworks Early 771 Motion-Fab ophthalmic lenses ACF Equity Start-up 700 Nanoptix mfg – thermal printers Growthworks Early 4,100 Whitehill Technologies Software Growthworks Early 72 Chatham Biotech Biopharma NBIF Start-up

The pattern of VC investment has also been skewed toward one company, Micro Optics, which took 5 out of the total 13 VC investments for a total of $34 million (all figures are in Canadian dollars unless indicated), or 72 percent out of $53 million invested during the period. In addition to VC investment, Micro Optic Design also received financial support from other third-party sources including ACOA (CDN $6million). It is estimated that in total, Micro Optic Design raised more $50 million before it ceased operations in 2003 (see the case study, p. 40).19

The fact that approximately 72 percent of the total $53 million VC investment in the Moncton region was invested in a single company over a seven-year period is of critical importance; Micro Optic Design was ultimately a failed investment. Whether or not it was a seemingly wise investment of funds at the time is not the issue; however, of critical importance to policy makers is whether the region as a whole was aware of the narrowly targeted investment decisions that were made to the exclusion of other potential new company candidates. In the past ten years, various Moncton government entities have provided a number of regional policy and economic assessments; and while all of those reported high or superior strength in a number of sectors in the ICT industry, none of those assessments identified the medical device sector as one of the most promising. When two-thirds of available capital over a seven-year period has been dedicated to a niche outside the region’s economic strengths, the question remains whether the region as a whole is well served. On the other hand, successful VC investment stories are not absent in Moncton. Very successful business cases include Spielo, Whitehill, Nanoptix, and Motion-Fab.

Spielo, a designer, manufacturer and distributor of gaming technology solutions, was founded in 1990. In 1999 Spielo received its first round of VC investment ($7.5 million) from Finova-KMPG. Spielo currently is a wholly owned subsidiary of GTECH Corporation and has over 300 employees in Moncton. (See complete Case Study, page 118.)

18 Compiled from the Thompson Macdonald database that has tracked VC investments in North America since 1995. Data not independently verified. This data is available to the subscribers of the database. 19 Mr. Denis Lanteigne, from the Atlantic Innovation Fund (an ACOA program), interview of July 31, 2006.

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Whitehill Technologies, a software company, was founded in 1997. The main source of start- up capital was the founder’s personal resources. The firm had some major U.S. sales successes early in its lifecycle, and was able to finance operations primarily through revenues. By year 1999, the company had about 40 employees. Its first round of VC investment was made in 2001 by Latitude Partners, with another round in 2004 by Growthworks. By 2001 (time of the first round of VC investment), Whitehill Technologies’ workforce had grown to approximately 50 full-time employees20. “As an entrepreneur, bootstrapping is a great teacher, because you immediately need to generate revenue,” said current chief operating office Steve Palmer.21 (See complete Case Study, page 39.)

Nanoptix, provider of thermal direct printers, was founded in 1996 and received its first round of VC investment in 2004. (See complete Case Study, page 85.)

Motion-Fab Ltd. was established in January 2004 to provide vertically integrated IT solutions encompassing custom design engineering services, prototyping, manufacturing/assembly processes, and after-delivery support for electromechanical and automation solutions. Motion-Fab received its first round of VC investment in 2004, from Growthworks.

International Venture Capital Patterns The pattern of VC investment in Moncton is not identical to VC investment patterns in the U.S., but understanding the U.S. experience could prove to be useful for future VC investments in Moncton, since the U.S. venture capital industry has been a world leader, and its performance often preludes similar patterns in other parts of the world. Data in Figure 6 reveals a bell-shaped curve for total U.S. VC investment of about USD$20 billion in 1998, peaking to about USD$105 billion in 2000 and then receding back again to about USD$20

Figure 6. USA VC Investment Patterns 1995-200522

U.S. Venture Capital Investments, 1995-2005

60% 120

50% 100

40% 80

30% 60

20% 40

10% 20 Total VC Investment, $B

0% 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 % 1st Stagel % 2nd Stage % 3rd Stage

% 4th Stage Total VC Invst. $B

20 Data for this section kindly provided by Ms. Lynne Reid, Whitehill Technologies Media Relations Specialist. 21 Interview of Steve Palmer, Whitehill Technologies. 22 From PricewaterhouseCoopers Money Tree Database.

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billion in 2002 during the infamous dot com boom-and-bust phenomenon. Total VC investment has remained flat since 2002.

The data’s critical pattern reveals that between 1995 and 2005 overall VC investment shifted from first stage to fourth stage investments. The shifting patterns of venture capital investments since 1995 have drastic implications for the business development of new ventures that require a high level of initial financial capital. The data implies that the U.S. venture capital industry has a tendency to invest in mature (fourth stage) businesses. Competition for VC is more intense, and early-stage capital investment is especially more difficult to acquire.

The resulting trend is clear: regional economies will suffer if they rely on VC investments in high-tech start-up companies that require large initial financial infusions, in lieu of self- funded companies that do not require large preliminary budgets for technology development and business organization.

Leading VC institutional investors in the Moncton region The five most prominent VC institutional investors in the Moncton region are Atlantic Venture Fund (ACF), the New Brunswick Innovation Foundation, the Business Development Bank of Canada, the New Brunswick Investment Management Corporation, and Roynat Capital, although none of these firms have local Moncton offices.

Atlantic Venture Fund (ACF): ACF is an Atlantic Canadian “labor-sponsored investment fund,” following a uniquely Canadian method for raising venture capital resources. 23 ACF funds invest across the Atlantic Provinces to support the growth of emerging businesses. Investors in Atlantic Canada benefit from up to 70 percent tax savings on their investments. Residents of Nova Scotia, New Brunswick, Newfoundland, and Labrador may purchase investment with both a federal and provincial tax credit, while residents of Prince Edward Island (PEI) receive only federal tax credit. Between 1996 and 2006, about $400 million has been invested in Atlantic Canada, mostly in technology-based businesses including IT, advanced manufacturing, and software spin-out companies24. Between 1996 and 2006, ACF invested approximately $60-70 million, and the company has taken co-investment positions with other Canadian sources for a total of about $130 million. ACF’s current investment is about $30 million. ACF recently appointed a resident investment manager in a Fredericton office but has no presence in Moncton.

The New Brunswick Innovation Foundation (NBIF): NBIF is a non-profit government-owned organization that stimulates innovation as a means of improving productivity and growing the knowledge-based economy in New Brunswick. With a $35 million pool of capital to invest from the Province, NBIF makes investments in research and development and early-stage companies in New Brunswick. NBIF’s three main funds are a venture capital fund (VCF), an enterprise innovation fund (EIF), and a seed equity fund (SEF). NBIF’s portfolio at present

23 In some respects ACF is comparable to American mutual funds. In the U.S., investors who contribute to venture capital funds (usually in the role of limited partners) are typically large institutions with massive amounts of available capital, such as state and private pension funds, university endowments, insurance companies, and pooled investment vehicles. 24 Interview of Mr. Peter Forton, Senior Vice President, Growthworks.

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includes nine companies with five in Fredericton, three in St. John, and two in Moncton (Chatham Biotech and Vimsoft).

The Business Development Bank of Canada (BDC): BDC is a financial institution wholly owned by the federal government of Canada. BDC delivers venture capital, loans, and consulting services to Canadian small businesses, with a particular focus on the technology and export sectors of the economy. BDC Venture Capital is the venture capital arm of BDC, which invests in all stages of a company's development cycle, from seed through expansion, with a focus on technology-based businesses that have high growth potential and that are positioned to become dominant players in their markets. BDC Venture Capital has an office in Halifax with responsibility for Moncton, but so far it has made no investments in Moncton. BDC representatives believe that there are adequate financial resources in Atlantic Canada but a lack of technical talent and science-based new technologies 25.

The New Brunswick Investment Management Corporation: NBIMC is the trustee and investment manager for the pension assets of approximately 45,000 members of the Public Service, Teachers’, and Judges’ pension plans with assets totaling $7 billion in 2005. NBIMC has been inactive in Moncton.

Roynat Capital (RC): RC is a member of the Scotiabank Group, a Canadian merchant bank. RC concentrates on longer term capital investment for mid-sized and high-growth firms with sales between $5 million and $200 million. This segment is rare in the Moncton region, and RC has been inactive in Moncton.

Why hasn’t Moncton attracted a larger amount of venture capital investment? In interviews, venture capital representatives describe a shortage of experienced technology managers familiar with nurturing VC-funded ventures. On the other hand, in the eyes of more risk- averse public institutional investors such as the Business Development Bank of Canada, sufficient capital is considered to exist in Atlantic Canada, but the region has a shortage of technology talent and entrepreneurial ideas in which to invest. These viewpoints perhaps have limited merit, but the larger problem appears to be an unwillingness of both private and public institutional investors to invest in early-stage ventures.

Individual Investors and Angels Individual Investors (Angel Investors) are defined as “individual accredited” investors who typically invest personal capital in fledgling businesses in exchange for ownership equity. As a matter of law26, according to Canadian regulations, an individual accredited investor is: (1) An individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year; (2) An individual who, either alone or with a spouse, has net assets of at least $5 million; (3) A person, other than an individual or investment fund, that has net assets of at least $5 million as shown on his most recently prepared financial statements.”27

25 Telephone interview of Mr. Tony Van Bommel, Director of Advanced Technologies BDC, on August 17, 2006. 26 The legal distinction has tax ramification and separates habitual investors that may take part in their family and friends ventures and in this study are classified under the personal resources of entrepreneurs. 27 There are comparable laws in the U.S. The federal securities laws define the term accredited investor in Rule 501 of Regulation D as: 1) natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase; 2) a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those

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Unlike venture capitalists, who manage the pooled money of third parties in a professionally managed fund, angel investors rely on their own assets for investment; self-motivated, they often prefer to keep out of the spotlight (having already achieved a high degree of success in their own right). Angel investors are often motivated by the psychic return of helping mentor young entrepreneurs; although the potential for profitability is paramount.

Individual investors may have preference for particular styles of venture development. Some operate like small venture capitalists; they seek new ventures that follow an aggressive growth style of development with clear and fast exit strategies. Others look for new ventures that follow patterns of organic growth with longer term objectives. In the most cost-effective situations, individual investors are organized into angel networks to share market analyses and pool investment capital. All parties benefit from such an arrangement.

Based on estimations28, there are about ten yearly angel investments in Moncton, each one about $30,000. There are reports that financially well-resourced individuals in Moncton invest independently, but these individual investments are not easily traceable. A strong need exists to identify and network these independently acting angel investors. In the Moncton region there is no recognized network of individual investors.

First Angel Network (FAN): FAN, located in Halifax and established in 2005, is a network to link individual investors in Atlantic Canada including Moncton. FAN consists of about 60 individual angel investors who all are residents of Atlantic Canada. The Network has to date funded three rounds of investment with two different companies. Applicant entrepreneurs are required to pay a fee (currently $3000) for each presentation. In Atlantic Canada, individual angel investors usually have a business background in manufacturing, and thus may feel uncomfortable with placing investments in IT29.

Government Agencies Government agencies stimulate regional economic development by both direct and indirect financial incentives through the Atlantic Canada Opportunity Agency (ACOA) and NRC-IRAP (the National Research Council-Industrial Research Assistance Program).

The Atlantic Canada Opportunities Agency ACOA is the lead federal government agency responsible for regional economic development in Atlantic Canada, including New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. ACOA's strategic priorities include: cultivating a climate of entrepreneurship; developing market and trade opportunities; promoting tourism and innovation; and encouraging human resource development and best management practices. ACOA's approach to regional development is defined by the need to develop policies tailored to Atlantic Canada's opportunities and challenges.30 Because of political realities, vigilant advocacy is necessary to influence federal decision-making to promote Atlantic positions and interests.

ACOA's core mission is focused on strategic priorities that include innovation, community development and infrastructure, trade and investment, business skills and entrepreneurship, years and a reasonable expectation of the same income level in the current year. (http://www.sec.gov/answers/accred.htm). 28 Interview, Mr. Ross Finlay, First Angel Network, on August 4, 2006. 29 Comment based on the interview of Mr. Peter Forton on August 8, 2006. 30 Dennis Wallace, President of the Atlantic Canada Opportunities Agency (ACOA), at a C.D. Howe Institute policy roundtable held in Halifax, Nova Scotia, on February 18, 2003. Source: http://www.acoa- apeca.gc.ca/e/about/regdev.shtml

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and access to capital for small- and medium-sized enterprises (SMEs). ACOA also delivers a range of federal initiatives directed at specific economic needs and adjustment challenges facing the Atlantic region, including infrastructure projects. ACOA not only provides financial resources, it is predisposed to specific views on the process of innovation and development. The purpose of this section is not to evaluate ACOA’s performance, but to examine potential impacts of ACOA investments in the Moncton region. Total ACOA expenditures in Atlantic Canada and ACOA expenditures in the Moncton region (for years 2002 and 2003) are summarized in Tables 2 and 3.

The two tables illustrate how the patterns of total ACOA expenditures in Atlantic Canada and in Moncton are distinct, which is likely due to Moncton’s relatively advanced economy compared to the average urban area in the rest of Atlantic Canada. Table 3 demonstrates that almost all (97 percent) of ACOA expenditures in Moncton in 2002 and 2003 ($32.2 million) went to two programs: the Atlantic Innovation Fund ($16.6 million) and the Business Development Program ($14.4 million). The average AIF award in Moncton was $3.3 million, and the average BDP award was $257,000.

Table 2: Total ACOA Expenditures (in Atlantic Canada) - 2002-200331

Description (100,000s CDN$) % of Total Direct Support to Business 97.6 27.0 Indirect Support to Business 59.4 16.4 Adjustment Programs 4.6 4.6 Infrastructure Canada 39.5 10.9 Federal Provincial Cooperation Agreements 32.0 8.9 Atlantic Innovation Fund - AIF 25.1 6.9 Strategic Community Investment Fund 22.4 6.2 Trade, Tourism, Invest, and Entrepreneurship & Business Skills 19.1 5.3 Community Economic Development 9.4 2.6 Other 40.5 11.2 Total 349.6 100

Table 3. ACOA Expenditures in Moncton - 2002-200332

Description (CDN$) % of No. of Average Total Cases Investment Atlantic Innovation Fund -AIF $ 16,606,090 52% 5 $ 3,321,218 Business Development Program - BDP $ 14,415,328 45% 56 $ 257,417 Entrepreneurship & Skills Development $ 813,451 3% 11 $ 73,950 Community Investment Fund $ 197,612 1% 4 $ 49,403 Trade, Tourism and Investment $ 197,612 1% 5 $ 39,522 Total $ 32,230,093

31 Source: ACOA documents and ACOQW web site: http://www.acoa-apeca.gc.ca/e/about/regdev.shtml 32 Source: ACOA documents and ACOQW web site: http://www.acoa-apeca.gc.ca/e/about/regdev.shtml

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The Atlantic Innovation Fund –AIF: Through the AIF, ACOA provides direct investments to increase research and development in the public and private sectors, although ACOA does not concentrate only on R&D. Tables 4 and 5 summarize AIF activity in Moncton.

Table 4. All AIF Non-Commercial Grants to Academic Institutions

Funding Proponent Name and Project Description CDN $000,000 Concept + Inc. $1.2 Create generic electronic circuit boards for new product development (2002) Institut de recherche médicale Beauséjour $6 Medical biotechnology innovation (2001) Université de Moncton $5 Advanced optics: materials, devices and applications (2002) Université de Moncton $2.7 Design/development of innovative thin film smart systems (2003) Université de Moncton $2.9 SynergiC3: E-learning productivity enhancement framework Total $17.8

Table 5. All AIF Commercial Grants to Private Organizations

Funding Proponent Name and Project Description (CDN$ 000,000s) Micro Optics Design Corporation (founded in 1993) Advanced ophthalmic lens design (2002) $6 Apex Industries Inc. (Founded in 1961) High velocity machining of monolithic structures $5.5 Spielo Manufacturing Incorporated (founded in 1990) Mercury project to build I-link product ( 2001) $1.9 Whitehill Technologies Inc. (founded in 1997) Applied development tool for industry specific web-based portals (2004) $2.8 Total $15.7

Business Development Program (BDP): BDP provides interest free loans for business start- ups and modernizations, new technology adoption, software & prototype development, management training, and marketing and export development. BDP targets business investments that do not meet the preferred client profiles of commercial lenders. Based on a list provided by ACOA, between 2001 and 2005 Moncton businesses that received financial support under the BDP program includes 129 cases, totaling $24.7 (46 percent of total). The average investment in each case was $190,000.

Strategic Community Investment Fund: Based on a list provided by ACOA, 129 Moncton awards were made under the BDP program between 2001 and 2005, totaling $24.7 (46 percent of total). The average investment in each case was $190,000.

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Entrepreneurship and Business Skills Development Partnership (EBSDP): The $59.6-million EBSDP is designed to increase the number of Atlantic Canadians choosing to start a business and to improve the ability of existing businesses to compete and grow successfully. It has three key elements: Innovation Skills Development Initiative; Women in Business Initiative; and Young Entrepreneur Development Initiative. From October 2002 to March 31, 2003, the Entrepreneurship and Business Skills Development Partnership approved over $9 million in assistance toward 125 projects. A breakdown for monies invested in Moncton is not immediately available; some of these awards were for publications projects to benefit Atlantic Canada as a whole, while others were placed with individual SME applicants.

The Atlantic Trade and Investment Partnership (ATIP): ATIP strengthens the export performance of the Atlantic region by developing and enhancing export markets, export activities; and foreign direct investment in the region. Based on a list provided by ACOA, between 2001 and 2005 in Moncton 17 awards were made under the ATIP program, totaling $1 million. The average investment in each case was $59,500.

Seed Capital Program (SCP): SCP provides business skills training and loans to start, expand, or improve a small business. A maximum of $20,000 is available per applicant in the form of a repayable, unsecured personal loan with flexible interest and repayment terms. A maximum of $2,000 is available per applicant for specialized training and business counseling. As a result, the scope of the program is relatively small.

ACOA disburses about $15 million per year in Moncton and is the most important source of financial capital in the Moncton region. ACOA has been active in supporting the “development” stage of R&D projects (through the Atlantic Innovation Fund) as well as providing support for existing businesses through its Business Development Program. ACOA’s Seed Capital Program, because of its limited scope, has not been as active in supporting new ventures.

Industrial Research Assistance Program (IRAP) is a program of the National Research Council, the Canadian government’s main organization for funding research and development. IRAP concentrates on providing a combination of technical and business- oriented advisory services along with financial support to its targeted enterprises. It consists of approximately 230 “Industrial Technology Advisors” across Canada, including 3 in Moncton and 8 in other locations in New Brunswick. IRAP provides non-repayable grants in seed and start-up stages and technical advice for business development to fledgling companies. It is estimated that IRAP injects about $20 million capital into Atlantic Canada.33 IRAP financial contributions are based on cost sharing and matching funds are required.

Bank Loans While Venture Capitalists seek equity in return for investment, banks offer the alternative of debt financing: a key mechanism in business start-up and growth. In Canada, commercial banks are the main source of business loans -- usually asset-based requiring collateral to secure the debt. Collateral may comprise a company's equipment, real estate, accounts receivable, and inventory, whereby the lender takes a first priority security interest in those assets financed.

Major Canadian commercial banks such as Royal Bank, Canadian Imperial Bank (CIBC), Bank of Nova Scotia, TD Bank, and Business Development Bank (BDC) provide asset-based

33 Source: Mr. William Langely, interviewed on August 20, 2006

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commercial loans through the Canada Small Business Financing (CSBF) Program that is the funding program applicable to new ventures, which provides financing up to $250,000 for the establishment, expansion and improvement of small businesses.

The CSBF program supports the purchase of buildings, equipment and renovation of existing businesses or the purchase of new business provided they operate in Canada. The program is delivered to the banking customer by financial institutions on behalf of Industry Canada. To obtain a loan, the applicant must present a business proposal directly to the financial institution. Lenders are required to apply the same care and procedures in making a CSBF loan as they would for conventional loans of similar amounts. The decisions of where to grant these loans rest entirely with the lender; Industry Canada does not participate in the decision-making process of granting loans under the Program. When a loan is approved, the lender forwards the complete application with a cheque for the 2 percent registration fee to Industry Canada34. The rate of interest is prime plus 3 percent.

Since the CSBF Program is asset-based, it is difficult for knowledge-based firms that rely on intellectual capital, and without sales records, to qualify for CSBFP loans. “The Comprehensive Review of the CSBFP Program” performed by Industry Canada35 indicates that: …a working capital “gap” exists in small business financing and that working capital needs are growing relative to the needs for fixed asset financing. The concentration of the CSBFP on fixed asset financing makes the program particularly unsuitable for financing knowledge-based businesses that typically lack fixed assets and have a greater need for working capital. It has been suggested that either the CSBFP be expanded to include working capital financing or a separate program be established to guarantee working capital loans based on guidelines other than the current CSBFP program. Whether or not CSBFP will proceed to implement the policy concerns that the Comprehensive Review indicates remain to be seen.

Self-Funded Ventures Self-funding, or “bootstrapping,” involves starting a new business with little or no external funding. Compared to equity-financed ventures, self-funded ventures tend to grow slower in the early stages of venture development. However, the ability of self -funded ventures to initiate and sustain growth with a moderate amount of initial capital makes it possible for self-funded firms to form during periods when external capital is scarce. Furthermore, self- funded firms absorb less available capital accessible in an economic region and tend to leverage those funds with less risk. Due to shortage of VC funding and bank loans, the majority of new knowledge-based ventures in Moncton need to rely on self-funding.

RECOMMENDATIONS

The indication is that the Atlantic region can absorb more investment funds if the financial resources have been formed and are available to institutional investors. Organizational investors receive their funds from public resources such as personal or institutional retirement plans. The existing patterns of capital formation define the future patterns of capital investment. Accordingly it is recommended that the different tiers of government active in Moncton facilitate the process of capital formation through tax incentive policies.

34 Data for this section kindly provided by Ayoub Najah: CSBFP 35 http://strategis.ic.gc.ca/epic/internet/incsbfp-pfpec.nsf/en/la00210e.html

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While the ACOA Seed Capital Program was established to serve small start-ups, in Moncton there are no existing programs that target the development of self-funded, fast-growth “Gazelle” ventures (i.e. those that begin as self-funded companies with a business plan that envisions fast growth after the business case is proven). Regional development strategies need to identify and support Gazelle ventures, due to their key role in growing a technology- based economy and new jobs.

In Moncton, there is insufficient financial capital is available to sustain the existing pipeline of R&D projects. The New Brunswick Innovation Fund and ACOA’s Atlantic Innovation Fund are exemplary cases of agencies that promote R&D-based new technology companies. However, as discussed earlier, both the shortage of venture capital and limited governance expertise for express-path ventures, seem to downplay t economic development based on R&D for the short- and mid-term.

Self-Funded Ventures Support for self-funded ITC ventures should be a priority. Moncton companies like Spielo, Whitehill Technologies, Ardent Development Solutions, BMG Consultants, Vimsoft, and others are all examples of successful self-funded Gazelle ventures. Institutionally, steps should be taken to facilitate the stream of initial capital and credit needed by self-funded ventures. Support should be specifically provided for the development of knowledge-based Gazelle-type ventures, perhaps including the formation of a “Moncton Gazelle ventures Network” or similar advocacy organization to coordinate funding possibilities and networking for fast-growth companies in Moncton.

Loans Guidelines for the Canada Small Business Financing (CSBF) Program should be adjusted to provide support for knowledge-intensive new businesses in information technology and knowledge-based industries. Elements of the U.S. Small Business Development program, which provides business advice and business consulting services, should also be considered.

The New Brunswick Liberal Party platform that secured the September 2006 election promised that the new government will provide start-up capital of up to $100,000 for new businesses and up to $60,000 for business expansion and diversification. If implemented, such loans may be used to support new technology-based organic growth ventures in Moncton.

Government Agencies A public initiative should be undertaken to provide matchmaking services between entrepreneurs and funding sources.

Individual (Angel) Investment Network Moncton angels should be encouraged to organize into a network, focused to support the technologies that are consistent with the regional development of Moncton. Angel networks in Silicon Valley, Boston, and Austin are often initiated by a few individual investors with the experience and willingness to mentor other angels in their investor role. Moncton is home to many wealthy individuals and families, some of whom could act as the core for an angel investor network. Cross-networking an angel investor network with the Gazelle entrepreneur’s advocacy organization should increase the region’s start-up business synergy; and could include workshops to help entrepreneurs with business plan presentations, etc.

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Institutional Investment Since capital must be “pooled” before it can be “invested,” a longer term plan is needed. Cooperation with both Federal and Provincial governments will be required to enhance existing venture capital pools generated by public tax-deductible retirement funds.

Institutional investment firms should be encouraged to establish permanent offices in Moncton since institutional investors have a tendency to invest in geographic areas in the proximity of their offices. Office space for VCs should be arranged free of charge at the proposed incubator. Organize existing VC managerial talent into mentor councils, and enlarge local VC networks to interact with experienced VC managers outside the Moncton area to assist with practical advice that will help facilitate regional deal flow.

A longer term project to form cooperation between the sources of investment capital in the Moncton region is strongly encouraged. To precipitate the further development and deployment of VC capital in Moncton, deliberate steps should be taken to create a venue for information sharing among sources of capital. With the understanding that VC firms compete for the best investment prospects, such coordination among firms would mine efficiencies of scale, avoid duplication of effort, consolidate expertise, and potentially lower administrative costs.

CENTRAL TEXAS ANGEL NETWORK: A POSITIVE MODEL

“The Central Texas Angel Network is a not-for-profit corporation dedicated to providing quality early-stage investment opportunities for accredited Central Texas angel investors, and to assisting, educating and connecting early stage growth companies in Central Texas with information and advisors for the purpose of raising money and assisting in their growth” (www.centexangels.org).

In order to bring better organization to Austin’s informal angel network community, a few local champions joined the Houston Angel Network (HAN) and attended their monthly meetings to get ideas for forming a similar angel network in Austin. Indeed, they found that one third of the companies presenting to HAN were located in Austin. These champions adapted Houston’s format to the realities of Austin and formed the not-for-profit Central Texas Angel Network (CTAN) for entrepreneurs and angels.

Today, they welcome all excellent entrepreneurial business ideas (including real estate, energy ventures, etc) and do not limit themselves to technology-based start-ups. They realized that considerable wealth has been created by Austin companies that did not rest on technology-based IP, such as Whole Foods, GSDM Advertising, and even Dell Inc. In addition, they did not appreciate the “in-club” or “we are the best and brightest” mentality often exhibited by technology entrepreneurs. Accordingly, they focused their angel recruitment efforts on seasoned and successful businesspeople, not just technology leaders. They invited 40 potential angels and 30 have accepted the invitation to date. Members are required to sign an SEC Accredited Investor form and pay an annual Fee of $1,500 (to discourage membership by service providers). These fees provide a salary for CTAN’s part- time Executive Director, and cover food and drink for meetings. Board members provide a place to meet. The group decided to meet four times a year rather than monthly, and instituted the following process of operation: ƒ The funding range of the Angel Network is $200,000 to $3 million.

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ƒ The group only considers companies that are Texas-based, with a preference for Austin-centric ventures. ƒ About 15 companies apply for funding each quarter. They are asked to write a one- page summary and include a fee of $250. A one-page PDF file for each company is emailed to the CTAN membership, who are invited to share this information with their colleagues and friends. As the Chair emphasized, “Information dissemination promotes a democratic as opposed to a secretive culture. It also helps get the word out about companies that aren’t selected to present.” ƒ Select CTAN angels volunteer to provide additional due diligence on a company(ies) of particular interest to them, as needed.

A Screening Meeting is held, in which CTAN members briefly discuss all the candidates and vote to establish the top four ventures. The leaders of these four companies are invited the CTAN quarterly meeting, where they may present for 15 minutes and respond to a 5 minute Q&A session. CTAN members have the opportunity to arrange further meetings with the entrepreneur and perhaps elect to invest in the venture; these negotiations are confidential.

CASE STUDY: Vimsoft Inc. Interview with Mitch Manuel, President, Founder, and Chief Executive Officer

Vimsoft Inc. was founded in Moncton by software programmer Mitch Manuel in December 2003. The company has developed a novel programming method to efficiently create equipment asset management programs for its customers. Their client focus is primarily in the broadcasting industry, and the company was recently able to secure a long term contract with the Canadian Broadcasting Corporation (CBC).

Background Manuel, a former Spielo employee, was able to obtain preliminary funding from his family and friends and take advantage of a provincial tax benefit for private capital investments. With these funds and early revenues, Manuel hired two employees (a software developer with whom he had worked at Spielo, and a product manager with 35 years of business experience). Together, they developed a suite of customizable programs named “VimBiz,” that enables companies to efficiently manage their business processes and assets. The programs also track asset locations and service requests in order to protect company value and to analyze precise carrying costs and costs of ownership.

Assets and Challenges The low cost of living in Moncton makes it easier to recruit and retain technically advanced employees since they require lower salaries than in other Canadian cities. Additionally, Moncton has hundreds of qualified programmers working in the city, so if Vimsoft’s demand for technical talent expands, Manuel believes he could easily fill these positions. However, government programs will only help finance the hiring of an employee that is either unemployed or underemployed. If a start-up company like Vimsoft wants to hire a qualified and experienced programmer, that programmer is most likely currently employed, and the cost of hiring an employee away from another company is too high for a start-up. "Finding a qualified programmer who is underemployed or unemployed is rare," says Manuel.

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Another advantage in Moncton is that the technology sector is a small community in which strong relationships can be developed. Vimsoft out sources its marketing and graphic design requirements to local companies; and due to the strong ties he developed working at Spielo, Manuel could quickly assemble a team on a contract basis to expand his capacity.

Vimsoft found it difficult to obtain start-up capital from NRC-IRAP. When Vimsoft's application was reviewed, Manuel was told that Vimsoft needed to have a larger revenue base before it could receive IRAP support. The funding that Vimsoft needed, however, was to develop the product that would generate its revenues. It had to look elsewhere for these funds. Help arrived in February 2007 when Vimsoft obtained venture capital financing from Technology Ventures Corporation and NBIF.

Lessons Learned One of the biggest difficulties Vimsoft has faced as a young start-up is obtaining the necessary capital to develop its product. With IRAP and bank loans unavailable during Vimsoft's product development phase, it has been difficult to locate capital to sustain operations. Its recent success in obtaining venture capital financing underscores the regional need for seed-stage funding to be more accessible to young start-up companies. Manuel obtained funding from family and friends by discussing the tax benefits they would receive from both the province and the federal government for investing capital funds in start-up commercial activity. Moncton could implement a similar municipal tax benefit to supplement the provincial and national programs.

Manuel commented that navigating the myriad government assistant programs for start-ups can be confusing and frustrating. One ideal program would be a centralized, one-stop office where companies can receive information about all the programs and perhaps some consulting advice on which programs to which to apply. The possibility of placing his company in an incubator would be appealing, in order to receive management advice and assistance for his technology concepts while pursuing a market opening.

CASE STUDY: InteliSys Aviation Systems, Inc. Interview with Jock English, Chief Operating Officer and Vice President Sales and Marketing

InteliSys Aviation Systems, Inc. was founded in 1987 in Montreal by Chief Executive Officer Ralph Eisenschmind. In 1999 it moved its headquarters to Shediac, NB, which is about 30KM (17 miles) from Moncton. The company develops integrated software packages for low-cost, mid-size, and regional airline carriers around the world. InteliSys’s business growth has accelerated steadily since its formation, though particularly since 2001. It has 18 full-time employees and annual revenues of approximately $2 million. The third quarter of 2005 was its first positive profit quarter, and it has continued to operate with positive net income since then.

Background InteliSys has created an integrated operating system for small airlines. The system centralizes all operating and database systems necessary for an airline based on its flight schedule. Surprisingly, the devastation to the airline industry after September 11, 2001, initiated a strong growth period for the company. Prior to 9/11, Air Canada had provided the majority of the operating system technology required for

56 Report B

the smaller regional airlines in the country. When the industry experienced financial distress in the downturn, however, InteliSys was able to provide these companies with their necessary technology infrastructure. A large percentage of the regional airlines in Canada have adopted InteliSys' technology, though market penetration was a slow and arduous process.

InteliSys has also focused its marketing in Saudi Arabia, China, and other areas of Asia where it has successfully negotiated important contracts with smaller national airlines. It has had a representative marketing its technology in China for 3 ½ years, and it recently completed a project to integrate many of the necessary features for Asian travel into its computer system. This investment has the potential to yield substantial returns in coming years.

Assets and Challenges InteliSys Chief Operating Officer and Vice President of Sales and Marketing Jock English cited Moncton’s high level of training and education as one of the area’s primary assets. He feels that the education provided at NBCC-Moncton is excellent and more than sufficient to prepare his employees for the technology job functions at InteliSys. He estimates that about 90 percent of InteliSys employees were educated at a college rather than a university. The education they have received, primarily at NBCC-Moncton, is highly applied, and students complete their programs with strong technical skills. Additionally, being able to employ students without educations from large universities (who carry substantial student loan debts) allows InteliSys’s cost structure to remain competitive.

One primary difficulty InteliSys has faced in its attempt to grow into a global competitor in Moncton is access to reliable internet service. Though New Brunswick was one of the first areas of Canada to install a wide network of fiber-optic lines in the early 1970’s, service has become unreliable. Aliant, one of two ISP’s in Moncton, owns nearly a monopoly of the fiber optic lines running through the city, so prices are high, and English has had poor service experience. He recently experienced a connection outage due to a firewall update error and was surprised to find little response from Aliant representatives. “They didn’t seem to understand that when we’re down for 30 seconds, we are in big trouble. There is a line forming at an airline counter somewhere halfway across the world and it’s because Aliant is down.”

Lessons Learned Technology Collaborations: InteliSys is part of a wide network of technology companies in the Moncton area. While there are numerous technological organizations that bring these companies together, they lack unity. A leading organization, with the influence to unite the numerous and diverse groups, would enable more effective networking of technology professionals and strengthen the industry in the area. The technology sector in Moncton has the potential to attract significant amounts of talent if its strengths can be adequately united and publicized through such organizations.

Infrastructure: English feels the current fiber optic infrastructure system is a major impediment to business in Moncton. The installation of a fiber optic ring around the city would be a minimal (approximately $1 million) investment that could quickly pay for itself both directly (through usage fees) and indirectly (through increased economic activity in the city). An alternative to the installation of an improved fiber

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optic system may be to create a WiFi umbrella for downtown Moncton that could provide reliable internet access to the business sector.

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KEY OBJECTIVE 3: Foster Academic & Research Excellence

Foster academic and research excellence that is specifically linked to regional economic development.

Regional excellence in research and education provides the long-term foundation to accelerate economic development. Illustrations abound, including Stanford University and Palo Alto, CA; MIT and Boston, MA; and the University of Texas at Austin, as well as less famous universities and regions. Recruiting world-class faculty in targeted technologies leads to greater funding from industry and government, recruitment of higher-quality students, and increases company spinout activity from educational institutions, as it enhances research and education excellence.

Vision: To fully leverage and develop existing and emerging academic assets (research, education, and training) that are key to accelerating the growth of established and emerging technology-based industries in targeted, niche sectors. Assets: ƒ Area R&D activities in the biosciences are a long-term asset and growing stronger every year. In 2005 and 2006, over $750,000 in CIHR research funds was awarded to Université de Moncton scholars; in addition, the Centre de Formation Médicale du N.B. initiated its four-year MD degree program in 2006 in Moncton, which increases research capacity in the city and may pave the way for a medical school associated with Université de Moncton. ƒ The Atlantic Cancer Research Center; research underway at both local hospitals; and R&D groups at the Université de Moncton such as the Thin Films and Photonics program have untapped commercialization potential. ƒ Moncton has a large representation of community and private colleges. ƒ Université de Moncton, the largest Francophone university in Atlantic Canada locally educates bilingual engineers and scientists to help provide the region’s talent needs. Université de Moncton reports that 89 percent of its full-time students are originally from New Brunswick, 70 percent of its graduates reside in New Brunswick, and 80 percent work in the province.36 ƒ Moncton has a number of nearby universities, such as UNB-Fredericton, that provide excellent masters and doctoral programs in science and engineering fields. Challenges: ƒ There is no major Anglophone university in Moncton, which contributes to a disparity between the percentage of local Anglophone and Francophone workers with post- secondary education. ƒ There is a need to foster shared vision and effort on targeted activities across businesses, academic institutions, and local and provincial government leaders.

36 Data taken from interview with Daniel Grant, Université de Moncton Placement Officer.

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ƒ The entire Atlantic Region faces population decline. Numbers show that by the end of the next decade, there will have been, spread over two decades, a 33 percent decline in the number of high school graduates in New Brunswick alone.37 In the long run, without increased immigration, this situation is likely to continue.38 ƒ Universities in the province—with a few exceptions (e.g. University of New Brunswick at Saint John)—are not attracting sufficient numbers of science and engineering students from outside the NB province or from other countries. Strategies: Support existing and emerging research and development centers as valuable resources that create the “seed corn” for future economic development. Establish academic-business “Partnerships for Research Excellence” that will benefit the larger community in terms of regional, national, and global perceptions that Greater Moncton is committed and action-oriented, and that regional leaders work cooperatively. o Raise funds to endow faculty chairs at regional universities, in targeted industry sector areas such as ICT, Gaming, Bioengineering, Computer Science, Entrepreneurship and Commercialization. o Recruit outstanding faculty that are likely to win competitive grants and recruit outstanding students, especially in these targeted areas. o Concentrate on building upon existing and emerging regional strengths, e.g., the Thin Films and Photonics Research Group (GCMP) at the Université de Moncton. Develop a regional approach in Greater Moncton for specific clusters that links academic and industry leaders, and fosters targeted growth through effective recruitment. o Greater Moncton has an emerging model in regional cooperation in biosciences including Mount Allison, UNB, Université de Moncton, and the two Moncton Hospitals and includes public-private sector support and leading-edge research, i.e. the Atlantic Cancer Research Institute. Focus both on short-term objectives, which concentrate on the use of existing knowledge and strength of existing assets; and longer-term objectives, which include the creation of new, cutting-edge research and development that is a desirable longer-term objective for the educational institutions. Specific Actions: Pursue opportunities for greater alignment of post-secondary capacity in ICT with regional industry needs, and encourage Université de Moncton, NBCC-CCNB, and other post-secondary educational institutions to increase collaboration through planned channels. Expand and clarify articulation agreements (community college-to-university, and across universities) to encourage post-secondary educational enrollment, especially among Anglophone students. Develop reliable math testing protocols at the school district level that fulfill two characteristics: (1) they allow comparisons of math scores for both the Anglophone

37 This trend is explained, in part, by an aging population—the median age of the population in Moncton is 38 years old—and by the decline in the rates of growth of the young cohorts (ages 5-14 and 15-19). 38 Data provided by Dr. Richard Wiggers, Senior Policy Analyst, Post-Secondary Affairs, New Brunswick Department of Education during interview on August 3, 2006.

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and the Francophone population and (2) they can be compared with scores of students in other cities in Canada and other industrialized countries.39 Increasing Moncton’s sample size in the PISA test could be an effective way to address the issue. Explore development of K-12 curriculum initiatives and youth training programs with the participation of the ICT business community. Encourage more active participation of entrepreneurs on the Board of Directors for the Maritime Provinces Higher Education Commission (MPHEC) in the determination of new programs to be initiated at universities in Atlantic Canada. Increase distance education opportunities, especially at the post-graduate level. The continuing education of engineers and scientists is a necessary condition for the growth of a knowledge-based industry in Moncton. Promote a campaign to matriculate more students into Moncton’s ICT and other technology-based education/training programs.

The importance of having a college-educated workforce in a local economy cannot be overemphasized. Worldwide, the most successful technology regions have regional universities that graduate talent into the local economy. For Greater Moncton, the Université de Moncton and CCNB-Dieppe are huge assets, and especially for Moncton’s Francophone community. For Anglophone students, NBCC-Moncton, Mount Allison University, and Atlantic Baptist University enjoy well-deserved reputations for excellence among both students and employers. But the province’s post-secondary educational institutions need to do more to raise the percentage of Greater Moncton workers with degrees in the sciences and engineering, especially in the Anglophone community.

Develop Student Internships and Job Placement Opportunities Pilot test a variety of innovative ideas and approaches for improving student placement with local employers. Better employer and student placement service relationships and interactions are needed to achieve higher retention levels of graduates and to facilitate co-op programs, between local employers and undergraduates, that will build important ties between “town and gown” before students graduate. Develop technology-based education and training programs at the high-school level to get students interested at an early age in ICT and engineering fields. Many of the interviewees from the NB Department of Education noted that student interest in trade skills was much higher than in ICT skills. Support college and university internships with companies in targeted industry sectors to build ties with Moncton businesses early in students’ educational programs. Develop an internship program for high school students with local employers. Host job fairs for targeted industry sectors and regional universities. Develop and fund research and education workforce projects.

39 Moncton needs to sell an image to the international high-tech community that its educational system is among the best in the world. In Austin, for instance, the Chamber of Commerce website advertises that Eanes and Round Rock School Districts (where Dell Computer is located) in the Austin metropolitan area are rated “gold medal,” the highest of Expansion Magazine’s cost-performance category.

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Provide a brokering service to match employers seeking information on technology available talent in targeted industry sectors. Recruit those who have moved away after graduation—the goal is to identify and attract those individuals who moved away from Moncton for whatever reason. Develop campaigns to attract to the region the best students in science and engineering from other provinces in Canada and from other countries. Increase international connections and exposure through student exchange in digital media entrepreneurship. For example, an international exchange program is being considered between Université de Moncton and France, IC² Institute and partners in Poland and Portugal.

TALENT, EDUCATION & TRAINING CASE STUDY: Ardent Development Solutions Interview, Derek Hatchard, Founder and President

Ardent Development Solutions, established in 2004, is a software development, consulting, and training firm in Moncton. Its most recent homegrown “software as a service” is Church Radius, a web-based church management software tool. Ardent specializes in Microsoft technologies including .NET, SQL Server, and related technologies. It has five full-time employees. Derek Hatchard, 29, is the founder and president.

Background A native of Nova Scotia, Hatchard completed his undergraduate degree at UNB Fredericton and worked in the UNB incubator while he was a student, and then again after graduation. He has completed graduate studies in computer science in Toronto. He is a “Microsoft Regional Director,” which means that he writes articles and courseware for Microsoft, and has wide connections in Moncton’s software community doing training and development in Microsoft products. At present, Hatchard finances his company organically from sales and is reticent to take outside funding.

Assets and Challenges In an interview, Hatchard says that he co-locates his servers outside of New Brunswick because he “doesn’t feel confident in the backbone infrastructure in the province” to trust his backups to local servers. Ardent has fiber optic lines in its current building and had internet service from a local provider, but Hatchard canceled it and switched to a cable modem to get faster download and upload times. He still cannot run his production servers via either of the two local ISPs (Aliant and Rogers) because they cannot guarantee him carrier-class up time. “They are down regularly five minutes per month,” he says.

Hatchard has had a difficult time finding qualified, experienced software developers to hire locally. When he does find them, they are programmers who are moving back to the area for family reasons. He cannot hire recently graduated programmers to use for consulting jobs because they have insufficient experience.

The “Workforce Expansion Program,” provided by the Department of Post-Secondary Education has been a useful training program for Hatchard; it has paid for half of one

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of his employee’s salaries for 40 weeks, allowing him to train the employee in his business. In addition, he expects that his next two hires will come out of the National Research Council’s Youth Internship Program, which provides a similar salary supplement up to a maximum of $12,000.

Lessons Learned Infrastructure---For young companies, office space is hard to find in Moncton. Start- up companies need terms (low rates, short leases) that are difficult to accommodate in the Moncton leasing environment. He has had great difficulty finding office space for Ardent.

He feels that a new fiber ring around the city would be an enormously successful infrastructure upgrade. Aliant and Rogers’s business packages are not flexible enough to meet his needs. WiMax downtown would improve his competitiveness, but connecting Ardent’s network (not just individual laptops) would be key, in order to establish the company’s firewall. WiFi downtown would make Moncton “more comfortable” but is not essential to increasing productivity or business. Home broadband access is fairly accessible but still expensive.

Talent---Moncton’s relatively low cost of living and high quality of life is a strong attraction to entrepreneurs like Hatchard. He wanted a comfortable place to raise his children and moved back to Moncton from Toronto to start his company. The low cost of living in Moncton helps to keep employee salaries low, which cuts two ways: it lowers his costs as a business owner but raises barriers to attracting qualified talent from outside the area. Software programmers make $50,000-60,000 a year in Moncton with 5 years’ experience, $10,000-15,000 less than in Halifax. He also sees more enthusiasm in the software space in Halifax, more talent there, and more users of Ardent’s services. Tax incentives to bring talent to the province would be an immediate help to him.

As a young entrepreneur, Hatchard still has many questions related to human resources. He uses his network of colleagues in Moncton when he has questions, but he would greatly benefit from training seminars on HR issues related to running a business. Hatchard listens to a pod cast called “Venture Voice” out of NYC for entrepreneurial advice.

EDUCATION

Construction industries, call centers, and hospitals are the main employers in Moncton, and these sectors demand workers with trade skills.40 Moncton’s secondary and post-secondary educational systems have responded by training students with strong trade skills, and accordingly, the provincial government has invested heavily in the community colleges’ trades-oriented programs. However, the city shows an increasing need for talent in Information and Communication Technologies (ICT) (including informatics and digital media) and electronic gaming industries, and the skill set required by these industries is different

40 Statistics Canada classified 79 occupations as trade skills, including cabinetmaker, electric motor system technician, electronic communication technician, electronics technician, plumber, motor vehicle body repairer, meat-cutter, etc. These trade skills are highly demanded in the following sectors: electric and electronic, motor vehicle and heavy equipment, metal fabricating, building and construction, and food and beverage services. See www.transferableskills.com.

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from the skill set that has previously been sufficient. These emerging industries require workers with specialized ICT skills (technicians and university graduates) as well as project managers, entrepreneurs, and financial and IP (Intellectual Property) experts.

As summarized in Figure 7, the options that students choose during their school years will place them on different career paths. More importantly, the local supply of skills supports two different local economic development paths. The path adopted by most students in Moncton is the one that leads them to acquire trades skills for traditional sectors such as building and construction, or metal fabricating – an economic development path that does not lead to innovations and growth. Knowledge-based economic development and wealth creation are associated with students being trained to become managers, entrepreneurs, skilled technicians, engineers, or scientists.

Figure 7. Moncton Education Value Chain as It Relates to Local Economic Development

K-12 Education Create Technology Awareness & Excitement

Community College University Develop Technical Provide Theoretical Basis, Skills Sets & Experience for Practical Exercise and R&D for Business Business

High Tech High Tech High Tech Trade Sector Corporate Sector Entrepreneurial Corporate Sector Sector ƒ Electric & Electronic ƒ Motor Vehicle & ƒ Critical Game Studies ƒ Technology ICT / Gaming / BioInformatics Heavy Equipment ƒ Games & Society Commercialization [e.g., Spielo, Whitehill ƒ Metal Fabricating ƒ Game Design ƒ Project Management Technologies, OAO Technologies] ƒ Game Programming ƒ Business Fields— ƒ Building & Marketing, Finance, Construction ƒ Visual Design Areas: ƒ Food & Beverage ƒ Audio Design Accounting ƒ Critical Game Studies & Services ƒ Interactive Game Design Storytelling ƒ Game Programming ƒ Game Production ƒ Visual Design ƒ Business of Gaming ƒ Audio Design ƒ Interactive Storytelling ƒ Game Production ƒ Business of Gaming ƒ Project management

WEALTH CREATION SECTORS

The following information has been drawn from published data and the insights of many experts in the New Brunswick educational system and Moncton’s private sector in order to: ƒ identify assets and challenges through the educational value-added chain (K-12, post-secondary, and graduate education)

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ƒ formulate short- and longer-term policy actions that will help Moncton to accelerate knowledge-based growth

Technical Education: K-12 “The K-12 sector is a dual system… one English, one French, and they don’t match. They don’t teach the same things; curriculums are not the same; and the curriculums are not developed together.” 41

Moncton children are educated in two different languages in two different school districts, shown in Figure 8. School District 01 is Francophone and School District 02 is Anglophone. The total enrollment in primary and secondary education in both school districts was 23,563 in 2005.42 Of these, 16,508 students were educated in English in the 38 schools of the Anglophone School District 02, while 7,055 students were educated in French in the 13 schools of the Francophone School District 01. Three metrics are examined for Moncton’s K- 12 educational system: bilingual education, drop-out rates, and math education.

Figure 8. Map, Francophone District 01, Anglophone District 02, NB

41 Interview at the New Brunswick Department of Education with Louise Boudreau, Executive Director, Post- Secondary Education and Training. 42 These data come from Summary Statistics School Year 2005-2006 published by the Policy & Planning Division, Department of Education, New Brunswick. http://www.gnb.ca/0000/pub-e.asp

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Bilingual Education In 2002, Moncton became Canada’s first official bilingual city – a designation that was gained, in part, due to Moncton’s strong bilingual educational system at the primary and secondary levels. According to the 2001 Census, 34 percent of the Moncton population learns French as their first language, and almost one quarter (21 percent) of the workforce43 use French at their place of work. A bilingual workforce can be an important asset to attract international companies to locate in Moncton, and interviewees frequently mentioned that Moncton’s success in attracting call centers was linked to its bilingual workforce. In this regard, we inquire whether high-school graduates from the Francophone District are proficient in English, and whether high-school graduates from the Anglophone district are proficient in French.

Figure 9 shows that 38.8 percent of the Anglophone students in District 02 are in an immersion French program (compulsory from grades 1 to 10), which prepares students to master all aspects of the French language: writing, reading, and oral communication. About 40 percent of the students in School District 02 are enrolled in French immersion classes;44 however, the number falls to 20 percent by grade 12.45 These Grade 12 students are eligible to take the French Language Oral Proficiency Assessment: a 15-30 minute individual oral interview which is rated according to the criteria of the New Brunswick Oral Proficiency Scale.46 Students are not tested in proficiency to read or write in French. Data show that, of the Grade-12 students tested, 60 percent scored at an Intermediate Level or higher in the oral French test in 2005.47

Figure 9. Language Proficiency, Primary and Secondary Students

French Immersion Francophone 7,055 10,095 6,413 (38.8%) Anglophone

Anglophone District 02 Francophone District 01

Source: Summary Statistics, School Year 2005-2006 (Policy & Planning Division, New Brunswick Department of Education, 2006) http://www.gnb.ca/0000/pub-e.asp

43 Total population 15 years and older who worked since 2000. 44 Data from Table 4 and Table 5a from Summary Statistics 2005-2006 from the New Brunswick Department of Education. 45 Data from table on page 49 from Report Card 2005 published by the New Brunswick Department of Education. 46 A description of the New Brunswick Second Language Oral Proficiency Scale is found at http://www.gnb.ca/0000/publications/eval/oralprofgr12.pdf 47At a minimum, these students were able to satisfy the requirements of conversing about a broad variety of everyday, school, and work situations. Students are not tested on the ability to read or write in French.

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Many of the music, Internet, and television programs that appeal to the younger generation are presented in English, and 93 percent of Francophone students in Grade 10 achieved intermediate level or higher on the ESL (English as a Second Language) Oral in Francophone District 01 in the 2004-2005 exams.48 Francophone interviewees noted that Francophone youngsters prefer to speak in English, and it is increasingly difficult to instill a high value for communication in the French language.

Success Rates of Placing Students at a University In 2005, 76 percent of students in the Anglophone District 02 went to university -- an increase from 65 percent in 2002.49 Many interviewees indicated that a self-selection process exists in which the best Anglophone students enroll in French immersion classes, which helps explain that while almost 100 percent of the students in French immersion classes go to university, only about 30 percent of monolingual students do.50 Proportionally, many more Anglophone than Francophone high-school graduates continue their education at the university level. A number of studies show a two-to-one preference for university over community college among Francophone students, which is closer to the average for Canada. Among Anglophone students, the proportion doubles to four-to-one.51

Quality of Math Education Math education is a fundamental metric when preparing students to sustain a vibrant local knowledge-based industry. Data in the 2005 Performance Review of the provincial assessments in mathematics for Grade 8 show that students from the Anglophone District 02 were 3.2 percentage points above the NB average.52 Students in the Francophone District 01, tested for math at grade 11, show an average score of 3 points above the average for New Brunswick province during the school year 2004-2005.53 Yet these results for the Francophone and Anglophone sectors cannot be directly compared because of differences in their respective curriculums and evaluation tools. A proposed government initiative to reinstate Provincial Achievement Examinations would provide both language groups with equivalent education assessment.

While there is no national test to provide comparative data for New Brunswick’s School Districts 01 and 02 in relation to other school districts in Canada, students from all provinces participate in the Programme for International Student Assessment (PISA) that tests students in math, language, and science skills near the end of their compulsory education.54 Forty- one countries participated in PISA 2003, including all 30 OECD countries. The large Canadian sample allows reliable estimates representative of each province disaggregated for French and English language school systems, but does not allow reliable comparisons at a

48 Provincial Examination Results—Francophone School Districts. Fredericton, NB: Francophone Assessment and Evaluation Branch, New Brunswick Department of Education, 2005. 49 Interview with Karen Branscombe, Superintendent, Anglophone District, on August 2, 2006. 50 Ibid. Unfortunately, ESL data on the ability to write or read in English are not available from the NB Department of Education; the data would have to be collected from each individual school. 51 These studies were mentioned by Dr. Richard Wiggers of the New Brunswick Department of Education. Moreover, Robert Laurie, from the Francophone section of the Department, pointed out that there is no consensus on this issue. Some studies find a very high proportion—60 percent—of the students go to university; however, other studies indicate that only about 30 percent do. We interviewed both Wiggers and Laurie on August 3, 2006. 52 Performance Review 2005 (Moncton, NB: School District 2, 2005). http://www.district2.nbed.nb.ca 53 Provincial Examination Results—Francophone School Districts (Fredericton, NB: Francophone Assessment and Evaluation Branch, New Brunswick Department of Education, 2005). 54 See P. Bussiere, F. Cartwright, and T. Knighton, Measuring Up: Canadian Results of the OECD PISA Study (Ontario: Ministry of Industry, Statistics Canada, 2004), http://www.statcan.ca/english/freepub/81-590-XIE/81- 590-XIE2004001.pdf

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smaller geographical area (e.g., Moncton). PISA 2003 reports no significant differences in combined mathematics performance between the two school systems in NB. The province, however, performed significantly lower than the Canadian average in the math test, which deflates the value of Moncton students earning higher-than-average math scores in New Brunswick.

Drop-Out Rates Drop-out rates (for all schools and grades 7 to 12) in 2003-2004 were 2.4 and 3.1 percent for the Francophone and the Anglophone school districts, respectively. The average for the New Brunswick province was 2.9 percent.55 Michel Theriault, Assistant Deputy Minister, indicates the low drop-out rates in both school districts are due to the provincial government’s efforts to reduce drop out rates in high schools.56

An Issue of Concern— A Declining Student Population The city of Moncton had a total population of 64,849 in 2004, with approximately 36 percent being Francophone.57 Similar to the Atlantic Region’s population trends, the city’s population growth rate is in decline. It grew at a rate of 4.1 percent in the 1980s, 4.0 percent in the 1990s, and only 2.9 percent between 1996 and 2001.58 Figure 10 shows the rate of population growth by age groups between the 1996-2001 and 2001-2004 periods, and indicates that these low growth rates are concentrated across the youngest population cohorts. The current trend will continue to provide a decreasing supply of students for School Districts 01 and 02 and a smaller demand for post-high school education (e.g., community colleges and universities). As the young population declines, so does the probability of being able to provide a new post-secondary institution in Moncton to serve the Anglophone population.

Figure 10. Rate of Population Growth in Moncton by Age Group

55 Summary Statistics, School Year 2005-2006 (Policy & Planning Division, New Brunswick Department of Education, 2006) http://www.gnb.ca/0000/pub-e.asp 56 Interview with Michel Theriault, Assistant Deputy Minister, NB Community College, New Brunswick Department of Education, August 3, 2006. 57 Demographic data comes from the City of Moncton, Planning Commission. 58 Ibid.

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25.0%

20.0%

15.0%

10.0% 18.6% 17.0%

13.6%

5.0% 8.9% 5.9% 4.3% 3.7% 3.6% 3.6% 3.5% -0.9% -0.7% -0.6% 0.0% 0-4 5-14 15-19 20-24 25-54 55-64 65-74 74 & over

-2.6% -5.0% -9.2% -12.9%

-10.0%

-15.0%

1996-2001 2001-2004

Source: City of Moncton, Planning Commission.

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K-12 Education for Tomorrow’s Workforce “A skilled regional workforce is critically important to supporting regional high-tech industry. But creating a techno-savvy workforce begins long before future workers are [at] the universities. … Sparking interest in high-tech careers is a process that begins as early as the sixth grade.”59

The High Tech High Schools program funded by the Gates Foundation in the U.S., provides a positive role model by which Moncton schools can increase student interest in high-tech careers at an early age. These schools offer intense preparation in the ninth and tenth grades to accelerate students’ skills and prepare them for university-level work. By the junior and senior years, the majority of the students’ coursework will be university courses, taught by university professors for university credit. Specialized labs take the place of traditional classrooms; technology and a pre-engineering theme are integrated throughout the curriculum; and internships at local companies provide real-world experience. These schools provide a challenging technology-based education and raise awareness of engineering, computer science, and technology for all students. Core subjects are closely interlinked with the use of information technology (laptops, PDAs, scanners, video conferencing) with the objective of preparing students for success outside of school and ensuring the nation’s future in the high-tech industry.60 Cooperative learning is strongly emphasized to address complaints from businesses that students graduate with skills but not the ability to use those skills collectively in a group to solve problems. Due to close collaboration with business interests, “early-university” high schools will be able to address the needs of businesses.

Preliminary data indicate that these experiments are successful. High Tech High in San Diego, California, implemented some of these programs. During the 2002-2003 school year, 99 percent of the tenth graders passed the California High School Exit Exam in reading and 88 percent passed the mathematics portion. In 2003, all 48 of the seniors graduated from high school and 100 percent of the first graduating class was accepted to university. In comparison, the district graduation rate averages 49 to 61 percent.

High school graduation requirements need to align with university entrance requirements. Interviews at the Francophone and Anglophone school district revealed that none of these innovative programs (such as high school students taking university level courses taught by university professors, or pre-engineering themes integrated throughout the curriculum) are currently implemented in Moncton’s districts. Moreover, although internships at local companies provide real-world experience through the Young Apprentice Programs, most of these internships are conducted in trades-related industries (in particular, the construction industry) with which the districts have had a longer term, close relationship. More recently some professional services such as doctors, dentists, and accountants are working closely with the districts to receive interns; however, interviews revealed that few of Moncton’s ICT or gaming companies work with school districts through formal internship programs.

Interviews show that, in general, there is low interaction between the school districts and the community: local community colleges, universities, and community-based organizations. Strategies that might improve the situation include establishing academic and community advisors to assist high schools to develop mission statements and curriculums, help train

59 Workforce: The Force behind Technology, pp. 25-27 in Florida.HIGH.TECH Directory (Florida High Tech Corridor, 2006). http://www.floridahightech.com/directoryPDF/workforce.pdf 60 T. A. Huebner and G. C. Corbett, Rethinking High School—Five Profiles of Innovative Models for Student Success (a study by WestEd for the Bill & Melinda Gates Foundation, 2006). http://www.wested.org/online_pubs/gates.profiles.pdf

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staff, and evaluate the success of the educational programming. Also, businesses and foundations should provide increased resources to catalyze reform. At present, these strategies are not prominent in school districts 01 and 02. The current educational system is highly centralized at the provincial government level, and some interviewees feel it would be beneficial to develop a more community-based curriculum. Thus the possibility exists to implement some of the innovative initiatives discussed here. Further, these innovations would support the New Liberal Government agenda to develop a Community Schools Policy (in which one objective is to allow greater flexibility in course development).61

K-12 Education: Assets and Challenges Assets: ƒ Low drop-out rates ƒ An educational system that supplies a bilingual workforce ƒ An increasing number of Anglophone students pursue a university degree ƒ Math score tests above the average for the New Brunswick province Challenges: ƒ A horizontally disintegrated provincial math testing system for Anglophone and Francophone students that does not allow comparisons across these two groups ƒ Lack of a standard test that would allow comparison of Moncton students’ math scores with those in the rest of Canada and in other industrialized countries ƒ A relatively low proportion of Francophone students (compared to Anglophone students) continuing to university ƒ A declining growth rate of the young population supplying a decreasing number of students to the local educational value-added chain: primary and secondary education, community colleges, and universities ƒ A school system that doesn’t spark interest in high-tech careers among students at an early age

UNDERGRADUATE: IT EDUCATION

Primary, secondary, and post-secondary education in Canada is governed provincially. Undergraduate education in Moncton is conducted by three classifications of educational institutions, based on program duration and the authorization to issue a baccalaureate degree. Programs offered by private colleges range from 5 months to 2 years, the community college programs last from 1 to 3 years, and most university programs last 4 years or longer; only universities have the authority to issue a baccalaureate degree.

High-tech hubs in Canada such as Vancouver and Toronto are characterized by a large proportion of university-degreed workers in their labor force market. Knowledge-based cities facilitate learning and are particularly attractive to highly-talented young people who have large potential returns from their education attainment. Knowledge “rubs off” on people in places such as Silicon Valley and Austin because individuals in high-tech cities interact and cooperate with other high-ability people, are well-placed to communicate complex ideas with them, and are highly motivated.62

61 Shawn Graham, The Chapter for Change—The Liberal Plan for a Better New Brunswick, September 2006, p. 12. 62 There is an extensive literature that documents the importance of knowledge spillovers in high-tech regions. For a revision of this literature, see D. B. Audretsch and M. P. Feldman, “Knowledge spillovers and the geography of innovations,” pp. 2713-2739 in V. Henderson and J. F. Thisse (eds.) Handbook of Regional and Urban Economics Vol. 4 (Oxford: Elsevier, 2004).

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In Vancouver and Toronto, the proportion of workers with a university degree is 39.7 and 36.4, respectively (Figure 11). The percentage of workers with a trade or college (private or public) certificate or diploma is less than half the proportion of those with a university degree. Two trends are observed. First, the proportion of workers with a university degree is much smaller in Moncton than in cities like Vancouver or Toronto. Second, the proportion of workers with a private or community college certificate or diploma is much larger than in high-tech cities like Vancouver and Toronto. The lower proportion of university graduates in Moncton may be explained by two trends. First, the proportion of knowledge-based industries in the local economy is relatively small (although ICT industries have grown dynamically). Second, the lack of a major Anglophone university in Moncton creates a relative scarcity of Anglophone workers with a university degree.

Fortunately, Moncton’s private and community colleges provide a large supply of technicians with strong IT-related skills. Following is a list of the IT-related educational programs available at Moncton’s private schools and community colleges.

Figure11. Workers with Trades Certificate, College Diploma or University Degree: Moncton, Vancouver, Toronto

45%

39.7% 40% 36.4%

35%

30%

25% 22.9% 21.9% 22.2% 19.9% 20% 16.4% 15.5% 15%

10.8% 9.5% 10% 6.8% 5.5% 5%

0% Moncton, NB Canada Vancouver, BC Toronto, ON (City) (City) (City)

Trades certificate or diploma College certificate or diploma University certificate, diploma or degree

Source: Statistics Canada, Community Profiles, 2001.

Private Colleges: IT-Related Programs Atlantic Business College–Moncton Campus (5-month and 10-month programs):63 ƒ Business and Computer Technology Program (5-month) ƒ Microsoft Office Specialist Program (5-month) ƒ Computer Repair and Network Administrator (10-month)

63 Atlantic Business College also has a campus in Fredericton, NB.

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CompuCollege–Moncton (10-month programs):64 ƒ Multimedia: Graphic Design & Development ƒ Accounting and Computer Applications ƒ Business & Computer Applications ƒ Business and Computer Applications and Sales Specialist ƒ Computer Business Applications ƒ Computer Business Applications Specialist ƒ Computer Service Technician ƒ Information Systems Administrator ƒ Information Systems Specialist

Oulton College (11-month programs): ƒ Advanced Programming ƒ Business Management (Entrepreneurship) ƒ Network Administration and Security

McKenzie College (1- and 2-year diploma programs):65 ƒ Graphic Design ƒ Digital Media ƒ Animation

Community Colleges – IT-Related Courses New Brunswick Community College (NBCC)–Moncton Campus.66 Regular college training programs generally involve from 40 to 80 weeks of study (1-year business- or industry-driven programs, or 2-year technology programs). Total number of students: 4,000. ƒ Aircraft Technology Option: Avionics ƒ Computer Network Technology (Option: Network Design and Administration) ƒ Computer Programming Technology (Option: Internet Application Programmer) ƒ Computer Systems Technician (Option: Desktop Support) ƒ Computer Systems Technician (Option: Network Support) ƒ Computerized Numerically Controlled Manufacturing Technician ƒ Electrical Engineering Technology (Option: Industrial Electronics) ƒ Electrical Engineering Technology (Option: Telecommunications) ƒ Electrical Engineering Technology (Option: Alternate Energy Systems) ƒ Electrical Engineering Technology (Option: Electronics Design and Embedded Systems) ƒ Pre-Technology

New Brunswick Community College (CCNB)--Dieppe Campus. Total number of students: 600. ƒ Applied Internet Programming ƒ Management of Small and Medium-Sized Companies ƒ Web and Multi-Media Production Techniques

64 Other CompuCollege campuses are located in Halifax (NS), St. John’s (NF), Fredericton (NB), Saint John (NB), and Charlottetown (PE). Average number of students per year in the Moncton Campus: 200. 65 This institution also has a campus in Halifax (NS). Average number of students per year at the Halifax campus: 100. 66 The New Brunswick Community Colleges are a bilingual (English and French), province-wide network of ten training and educational institutions that offer more than 100 full-time programs, as well as near-term training services, educational upgrading, and literacy training. Anglophone Campuses (NBCC): Moncton, Miramichi, St. Andrews, Fredericton, and Saint John. Francophone Campuses (CCNB): Dieppe, Bathurst, Campbellton, and Edmundston. NBCC’s College of Craft and Design is also located in Fredericton.

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Universities: Science & Engineering Education As can be seen in Figure 12, there are only two universities in Moncton: Université de Moncton and Atlantic Baptist University, which is private. Mount Allison University is located nearby, in Sackville. The University of New Brunswick (UNB) has only a nursing campus in Moncton, but it has large campuses in Fredericton and Saint John.

There are other private universities in New Brunswick that are not placed in the map such as Yorkville University and Landsbridge University in Fredericton and St. Stephen’s University in St. Stephen and Bethany Bible College in Sussex. However, these universities are small and do not offer ICT specializations.

Figure 12. Map, Universities in New Brunswick Province where Most Monctonians are Educated

1. Université de Moncton, Campus de Moncton 2. Université de Moncton, Campus d’Edmundston 3. Université de Moncton, Campus de Shippagan 4. Atlantic Baptist University 5. Mount Allison University 6. University of New Brunswick, Fredericton 7. University of New Brunswick, Saint John 8. St. Thomas University

Table 6 illustrates the geography of the universities in New Brunswick that train most of the university graduates who work in Moncton; most of these are primarily undergraduate institutions with relatively few graduate programs. The Maritime Provinces Higher Education Commission defines a comprehensive university as one that has a significant amount of research activity and a wide range of programs at the undergraduate and graduate levels, including professional degrees. The only comprehensive university listed here, is the University of New Brunswick (UNB), with campuses in Fredericton and Saint John. UNB- Fredericton is also the largest university in the province, with a student body of 9,781 students, twice the size of the Université de Moncton. Moreover, it has 359 full-time master’s students and 175 doctoral students in science and engineering fields. It is the only university in New Brunswick offering doctoral programs in science and engineering (S&E).

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Table 6. New Brunswick Universities Educating Most of the Monctonians

Total Full-Time S&E Students University City University Type Enroll- Under- Mas- PhD ment grad ters Atlantic Baptist University Moncton Undergraduate 687 48 0 0 Mount Allison University (MTA) Sackville Primarily Undergraduate 2,319 345 6 0 Université de Moncton (UdeM) Moncton Primarily Undergraduate 4,586 573 88 0 Université de Moncton (UdeM) Shippagan Undergraduate 746 17 0 0 Université de Moncton (UdeM) Edmundston Undergraduate 1,007 90 0 0 University of New Brunswick (UNB) Fredericton Comprehensive 9,781 1,956 359 175 University of New Brunswick (UNB) Saint John Comprehensive 3,234 255 38 12 St. Thomas University (STU) Fredericton Primarily Undergraduate 3,135 1 0 0 S&E – Science and Engineering Fields. Sources: Maritime Provinces Higher Education Commission, Data and Information — Static Tables, Year: 2004-2005, http://www.mphec.ca/english/statictables.html. Atlantic Baptist University, Annual Report 2004/2005.

Following is a list of the ICT/Bioscience/Engineering bachelor, master, and Ph.D. degrees offered by each one of these universities grouped by location.

Universities in Moncton Université de Moncton – the largest francophone university in Canada outside of Quebec; offers 42 graduate and 187 undergraduate programs in three campuses: Moncton, Edmundston, and Shippagan. Two important areas of focus in S&T are: (1) Innovative Optics and Materials and (2) Information Technology. ICT/Bioscience/Engineering Bachelor degrees: ƒ Engineering (Mechanical and Electrical) ƒ Sciences (Interdisciplinary Degree, Biochemistry, Biology, Chemistry, Informatics/Computer Science, Mathematics, Physics and Astronomy, Special Science Programs, Health Sciences, Medical Laboratory Sciences, Radiation Technology, Respiratory Therapy)

ICT/Bioscience/Engineering master degrees: ƒ Engineering (Applied Mechanical, Electrical, and Industrial Engineering) ƒ Sciences (Biochemistry, Biology, Chemistry, Mathematics, Physics and a Certificate in Information Technology)

Atlantic Baptist University – small private Christian liberal arts and science institution. The only S&T degree offered by the ABU is a Bachelor of Science in Biology.

The University of New Brunswick (Moncton Campus) – A faculty of Nursing, established in Moncton in 1995, offers health sciences degree courses in Nursing and Medical X-Ray Technology and is located in the Moncton Hospital.

Other Universities in New Brunswick Province Educating Most of the Monctonians The University Of New Brunswick In Fredericton – It is the oldest English university in Canada. Its engineering program is ranked in the top 20 percent in North America. ICT/Bioscience/Engineering Bachelor degrees:

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ƒ Computer Science (Areas of Specialization: Hardware Systems, Software Systems, Information Systems, Theory and Computation, Multimedia Systems, and Geographic Information Systems (GIS). ƒ Chemical Engineering ƒ Computer Engineering ƒ Electrical Engineering ƒ Mechanical Engineering ƒ Software Engineering ƒ Biology ƒ Physics ƒ Chemistry ƒ Applied Physics ƒ Mathematics and Statistics

ICT/Bioscience/Engineering Master and Doctoral degrees: ƒ Computer Science ƒ Chemical Engineering ƒ Electrical and Computer Engineering ƒ Mechanical Engineering ƒ Biology ƒ Physics ƒ Chemistry ƒ Mathematics and Statistics

Other Degree Programs: ƒ Professional Experience Program (PEP) - The PEP program provides students with an extended period of continuous work experience (12 to 16 months). ƒ BCS/GGE is a highly technical five-and-a-half-year program that combines knowledge of computer programming and data-base management with Geodesy & Geomatics Engineering (science of positioning, mapping, geographic information systems {GIS} and spatial analysis). Graduates qualify for Canadian Professional Engineering accreditation. ƒ BCS/BSc is a five year program designed for students to pursue a scientific research career that requires a thorough background in computing. For the Bachelor of Science component, students can choose to concentrate in one of the following areas: Biology, Chemistry, Geology, Math or Physics. ƒ BCS/BEd is a five year concurrent BCS and Bachelor of Education program to prepare students to teach computer science in a variety of learning environments. ƒ Certificate in Computer Telephony Integration – The Faculty of Computer Science offers a program leading to a Certificate in Computer-Telephony Integration, that provides individuals with the background required to participate in the implementation of CTI solutions in a business environment. ƒ Certificate in Software Development is a part-time certificate program designed to provide individuals, especially working adults, with an opportunity to acquire the formal background necessary to become effective participants in the Information Technology industry. ƒ Working toward BCS and MBA Degrees – Students can obtain a BCS together with an MBA degree in the same timeframe as a concurrent degree. ƒ Technology Management & Entrepreneurship Program (TME) is taken concurrently with a Bachelor of Science in Engineering and provides students

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with an additional understanding of the rapidly changing business and management environment. ƒ Co-operative Education Programs - Co-op is “hands-on” education extending the learning process beyond the classroom into the workplace by alternating academic study terms with paid periods of career related work experience. Co-op is available within the Chemical, Civil, Computer, Electrical, Forest, Mechanical and Software Engineering programs.

The University of New Brunswick in Saint John ICT/Bioscience/Engineering Bachelor degrees: ƒ Chemical Engineering ƒ Computer Engineering ƒ Electrical Engineering ƒ Geodesy & Geomatics Engineering ƒ Mechanical Engineering ƒ Software Engineering ƒ Computer Science (Areas of Specialization: High Performance Scientific Computing, Software Engineering, and Networking) ƒ Biology ƒ Mathematics ƒ Statistics

S&E Master and Doctoral degrees ƒ Biology

Mount Allison University (Sackville, NB) has been recognized by MacLean’s Magazine as the top undergraduate university in Canada. Its Computer Science Program has drawn particular attention in recent years. A policy of enrollment has kept the university small. ICT/Bioscience/Engineering Bachelor degrees: ƒ Biology ƒ Chemistry ƒ Mathematics ƒ Computer Science ƒ Physics ƒ Biochemistry

Closing the Gap in the Local Supply of University-Educated Workers The lower proportion of workers with a university degree in Moncton (relative to Vancouver or Toronto) may partly be explained by the lack of an Anglophone comprehensive university. As Figure 13 shows, 16.6 percent of the Francophone Monctonians have a university degree, compared to only 11.7 percent of the Anglophone population.67 More important, the proportion of Francophone Monctonians with a university degree is 4 percentage points above the proportion for Francophone Canadians (9.2 percent), while the proportion of university-educated Anglophone Monctonians is 3.3 percentage points below their counterpart in the whole of Canada (11.8 percent).

Figure 13. Percentage of the 15+ Population with a University Degree, 2001

67 Data are for Greater Moncton and include the cities of Moncton and Dieppe and the town of Riverview.

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Fredericton 22.9%

Halifax 21.1%

St. John's 16.7%

Francophones 16.6% - Moncton

Canada 15.4% - Overall

Anglophones 15.0% - Canada

Francophones 12.7% - Canada

Anglophones 11.7% - Moncton

0% 5% 10% 15% 20% 25%

Source: Statistics Canada

Many interviewees described how students leave Moncton to study at nearby universities in Fredericton, Halifax, or Saint John, and do not return to establish home and career. The drain of local talent would be reduced with the presence of a comprehensive university for the Anglophone community, which would in turn reduce the gap in university-educated workers and increase the total supply of engineers to level more comparable to Toronto and Vancouver, on a per capita basis.

Although ICT companies in Moncton have been successful to attract needed talent to the community, the need for a local university is not reduced. The importance of a strong university for knowledge-based economic development is well documented. Stanford in Silicon Valley, MIT in Boston, and the University of Texas at Austin68 played a key role in the success of these regions or cities. Producing high-tech talent for the local workforce is one of several vital roles which these universities play to promote entrepreneurial activity. They provide training in technology commercialization, intellectual property, and business courses for new and already-established entrepreneurs; they help to attract knowledge-based industries from outside the region; they provide highly competitive industry professionals the opportunity to upgrade their education; and they enhance the local knowledge base by attracting R&D funding and creating new technologies.

The Université de Moncton has played an important role in the development of local entrepreneurial activity and in attracting R&D funds for university research. In the future, the Université de Moncton could also play important role in attracting companies from French- speaking countries; however, it can only provide these opportunities for French-literate workers and students. Mount Allison University, located nearby, offers important opportunities for students in biotechnology, but does not have an engineering school or the extensive supply of ICT training such as UNB-Fredericton.

68 For Silicon Valley and Boston, see Anna Lee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, MA: Harvard University Press, 1994). For Austin, see Raymond W. Smilor, George Kozmetsky, and David V. Gibson, Creating the Technopolis (Cambridge: Ballinger Publishing Company, 1988) and Elsie L. Echeverri-Carroll, “Knowledge spillovers in high-technology agglomerations: measurement and modeling,” pp. 146-161 in Manfred M. Fischer and Josef Frölich (eds.), Knowledge, Complexity, and Innovation Systems (Berlin: Springer Verlag, 2001).

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Figure 14. Percentage of Full-time Students Enrolled in New Brunswick Universities with Permanent Residence in New Brunswick

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 1995-1996 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Universitˇ de Moncton - Moncton Universitˇ de Moncton - Shippagan Universitˇ de Moncton - d'Edmundston Mount Allison University St. Thomas University University of New Brunswick - Fredericton University of New Brunswick - Saint John

Unfortunately, developing a completely new Anglophone university in Moncton does not seem feasible in the context of tight education budgets and a declining population of high school graduates. Figure 14 shows that most New Brunswick universities have experienced a decline in the enrollment of students who are residents of the province (which accounts for a large proportion of the student body), with the exception of Mount Allison University, which has been able to attract a relatively large proportion of students from other provinces in Canada, and the University of New Brunswick in Saint John, which has been able to attract a large proportion of foreign students, as seen Figure 15.

Figure 15. Percentage of Int’l Students in New Brunswick Universities

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 1995-1996 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Universitˇ de Moncton - Moncton Universitˇ de Moncton - Shippagan Universitˇ de Moncton - Edmundston Mount Allison University St. Thomas University University of New Brunswick - Fredericton University of New Brunswick - Saint John Source: Maritime Provinces Higher Education Commission, Data and Information — Static Tables, Year: 2004- 2005, http://www.mphec.ca/english/statictables.html

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The New Brunswick Community College campus at Moncton has earned a good reputation for training the technicians in the ICT/gaming industry. Our interviews showed consistent local agreement — among representatives from the New Brunswick Department of Education, the community colleges, and the private sector – that the city would benefit from better alignment of post-secondary capacity in ICT with regional industry needs and the expansion of articulation agreements (community college-to-university, and across universities) to encourage post-secondary educational enrollment, especially among Anglophone students.69

As Elizabeth Rybak, CEO of VE Networks, pointed out during our phone interview, “I’ve been successful in attracting people from major centers like Toronto, Ottawa, and Montreal, with the excitement of the opportunity and the quality of life that we can offer here in the Maritime Provinces.”70 However, Moncton’s capacity to attract, train, and retain talent is also important for two other reasons. First, in the last ten years, local universities such as the Université de Moncton and Mount Allison University have been able to attract R&D funds that provide new opportunity to develop and commercialize new inventions. While the link between R&D and entrepreneurship has been difficult to establish, a labor pool of university- educated graduates will contribute to commercialization activities and entrepreneurship. Second, the capacity to attract existing high-tech companies to Moncton will increase with the opportunity for high-tech employees to continue graduate education and training at a local university (and not all of these will speak French).

It is well known that knowledge-based industries in the United States have benefited from a large supply of foreign graduate students in engineering and science who remain in the country after graduating. According to a report by Michael Finn71 and unpublished 2005 data from the Oak Ridge Institute for Science and Education, 61 percent of the engineering and science students with temporary visas who received doctoral degrees from U.S. universities in 1998 remained in the United States in 2003 (5 years later), which shows an increase from 56 percent in 2001. However, for most universities in New Brunswick, less than 10 percent of the students are foreign-born. A new UNB-Moncton branch could develop policies similar to the ones successfully implemented by the UNB-Saint John to attract foreign students to ICT specializations.

An alternative way to increase the number of Anglophone graduates within Moncton, aside from the region “bootstrapping a university” is to provide special scholarships for distance- learning opportunities for university students, on the provision that they remain and work in Moncton. While it would be more difficult to control, similar scholarships could be provided for education outside of Moncton, on the condition that students return to live and work in Moncton. One example of a scholarship program that could leverage a regional advantage would be to place a team of students through a distance-education commercialization program, such as the Master of Science in Science and Technology Commercialization program offered by The University of Texas at Austin, through the IC² Institute.

69 Another policy alternative is to convert NBCC-Moncton into a technical college similar to the ones that have been very successful in British Columbia. However, Dr. Richard Wiggers, Senior Policy Analyst for Post- Secondary Affairs, pointed out that British Columbia has rapid population growth and one of the lowest university participation rates—the opposite of what Moncton is currently experiencing. 70 VE Networks provides secure internet communications tools to companies and individual customers. Interview on August 17, 2006. 71 Michael Finn, Stay Rates of Foreign Doctorate Recipients from U.S. Universities (Oak Ridge, TN: Oak Ridge Institute for Science and Education, 2003).

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CASE STUDY: VE Networks Interview with Elisabeth Rybak, President

VE Networks was recently founded to develop and market user-friendly security for web-based communication and file transfers. The Moncton company is developing a software suite called TrustMe™ for personal, professional, and corporate use. The software allows users to secure their email interactions within the operations of their current email applications and functionality. A standard edition of TrustMe™ is available for free on the product Web site, and more advanced versions are scheduled to be released for sale by the end of 2006.

Background VE Networks was founded on the vision of a better method to protect web-based interactions. Most computer security systems are based on establishing system perimeters that prevent unauthorized access to files, software, and components. But with these security systems, information remains at risk during transmission (email messages, instant messages or file transfers). VE Networks is designing a security system to protect these inter-computer and inter-network communications, in a format that can be seamlessly imbedded in current operating systems and applica- tions. The program, TrustMe™, employs a public/private key encryption method (used in many advanced security systems) designed for the average user to imple- ment with minimal disruption to their current software systems and internet usage.

The executive team at VE Networks consists of highly experienced NB business professionals including the co-founder and former CEO of Q1 Labs Inc. and the co- founder and CEO of Whitehill Technologies Inc. These seasoned entrepreneurs have designed the company for strong growth. Thus far, the company has been able to obtain preliminary funding of over $2.3M from 200+ local angel investors and is planning to expand its workforce from 11 to 40 by the end of 2007.

Assets and Challenges According to CEO Elizabeth Rybak, the lack of proximity to any of the major money centers of either Canada or the U.S. increased the challenge for VE Networks to obtain the start-up capital to develop its core technology and establish preliminary marketing efforts. The company did not seek funding from the National Research Council’s Industrial Research Assistance Program (IRAP) since their method of software development was not readily fundable within the program’s guidelines72.

Rybak feels that the college and university programs in Moncton are strong and provide a rich talent pool. “I’ve found that we have exceptional post-secondary institutions all around us here in the Maritimes. So being in Moncton, you can draw talented employees from these schools.” Thus far, Rybak has not had difficulties finding intelligent young employees that the company can train into knowledgeable and productive company assets.

72 VE Networks’ software is being developed using a “sprint” methodology in which progress and project plans are evaluated periodically (for example, every 30 days) until tasks are complete. This method can allow the development team to be more agile and respond easily to problems and/or new information about the marketplace. This approach, however, is not easily funded through agencies because it does not outline development plans for the entire project.

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The more challenging component of staffing VE Networks in Moncton is finding individuals to round out a senior management team. She’s found that qualified Vice Presidents of Sales or Chief Financial Officers are scarce commodities in Moncton. One of Moncton’s strongest assets, according to Rybak, is the city itself, and she has attracted experienced executives from other cities by promoting Moncton’s high- quality, low-cost lifestyle. “Moncton is a wonderful place to live and to bring up your kids,” she says, and “…that is a very strong card to play.” Moncton is also a natural geographic hub for the region, and as such, a productive recruiting center for qualified employees. Additionally, Rybak is encouraged by the bilingualism that is prevalent among the city’s youth. She feels that having a strong background in both English and French gives students and young professionals a “bilingual perspective” that can be advantageous to developing innovation in the city.

At the same time, Rybak has found it difficult as a female entrepreneur in a city as small as Moncton. Most professionals she encounters are not accustomed to strong female executives, and she sometimes needs to prove her qualifications to new business partners in a way that may not be required of a man in her position; but her success qualifies her as a strong role model to younger females in the community.

Lessons Learned VE Networks’ financing strategy is to remain open to both U.S. and Canadian capital markets; and the company is structured to be attractive to both types of investors. The company was incorporated in Delaware, which disqualifies local angel investors for certain New Brunswick tax benefits. An operating company was incorporated in New Brunswick, wholly-owned by the U.S. parent, and the company maintains both U.S. and Canadian legal counsel. It can be highly beneficial for young companies in Moncton to incorporate and plan for U.S. involvement within its corporate financing structures, and to have the proper investment instruments for start-up angel investment. Moncton might provide professional advisors and consultants to help companies structure an overall financing strategy that includes an approach toward the U.S. financial market.

To attract a larger talent pool of diversified skill sets to the city, a systematic public relations campaign should be organized to advertise the city's low cost of living, high quality of life, and vibrant technology sector to citizens around Canada. Additionally, the provincial government could establish a repatriation tax credit, both for companies and individuals who return to work in the province. Also, provincial tax credit incentives could encourage more investment in companies like VE Networks if these incentives included investing in companies who operate and employ in the province (regardless of the location of incorporation).

Finally, organizations like Business New Brunswick, Enterprise Greater Moncton, and the Chamber of Commerce should celebrate successful women entrepreneurs like Elisabeth Rybak, who presents a positive role model for young female entrepreneurs in New Brunswick, especially in IT, traditionally a male-dominated industry.

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RESEARCH & DEVELOPMENT BASE CASE STUDY: Wind Energy Research & Development Interview with Yves Gagnon, Université de Moncton, September 22, 2006

Professor Gagnon, the K.C. Irving Chair in Sustainable Development at the Université de Moncton, is a former visiting executive with the Natural Sciences and Engineering Research Council of Canada (NSERC). With a prodigious scholarly record of achievement, Professor Gagnon is widely regarded as Atlantic Canada’s leading expert on renewable energy research in general, and wind energy in particular. Professor Gagnon is strongly committed to establishing a demonstration site on the Université de Moncton campus where student researchers will gain first-hand experience measuring the impact of residential renewable energy by testing small wind turbines and solar panels. The site will make extensive use of education models on the internet and upload real-time data for secondary students around New Brunswick; which in turn will enable climate change studies toward the goal of promoting renewable energy sources.

Background Professor Gagnon recognizes the importance of energy to the economic health of Canada and New Brunswick, from both a production and consumption perspective. “No one can deny that fossil fuels are obviously the dominant source of energy for most of the world now. But renewable energy and energy efficiency are crucially important long-term issues for a region like New Brunswick, where wind energy is so abundant.”

At the same time, he recognizes significant hurdles for technology development and commercialization in the wind energy industry. Technology in large utility-scale wind turbines is mature; the industry is consolidated and it is difficult for small companies to gain entry. For a region to pursue commercialization of new large-scale wind technologies is probably not feasible. On the other hand, the market is more open for small-scale wind turbines for residential and small business applications. Gagnon thinks there is a window of opportunity for commercial development – opportunity that will close as companies emerge to meet this market need.

Education and outreach The Eco-Efficiency Center is a non-profit entity established by Dalhousie University. The center’s activities and programs provide information on how industry (specifically SMEs) can reduce energy use through better energy management, efficient waste processes, and outreach efforts. ACOA and Nova Scotia Power have funded the Center, which has both a campus and an off-campus Halifax presence. In partnership with his collaborators at Dalhousie University, Gagnon would like to open a similar center in Moncton and at Université de Moncton. Such a center, he thinks, could be located at the proposed Moncton incubator for research, teaching, and training, as well as to maximize contact with industry, perform energy balance audits for local companies, and promote renewables for industrial applications. Gagnon is hopeful that he will find financial support for the new center in Moncton because ACOA has indicated a current priority to fund energy efficiency.

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Incubation and commercialization Gagnon is intrigued by the idea of an incubator in Moncton to promote commercialization and technology transfer from university-based R&D. Although much of the technology to produce wind power is mature (especially in blade shape design, materials research, generators and inverters, control systems, and tower construction), Gagnon sees development of wind energy for residential and small business use as a potential market opportunity. Canadian Tire, for instance, sells a $1000, 400-kilowatt wind turbine for residential and small business applications.

Gagnon is considering the creation of a new company to build and commercialize a small wind turbine for residential and small business applications. The new company could be an anchor tenant in the new incubator, attracting more R&D activity in renewables and taking advantage of commercialization expertise to be housed at the incubator. Gagnon believes the elements for success are in place: he could partner with colleagues at UNB who have developed converter technology for wind power generation; a gearbox prototype could be designed and developed with one of the local metal manufacturing partners; AIF funding is probable, because of the collaborative nature of the university/industry partnership, clear commercialization path, and strong credentials of the principals. “Such a project would be contingent on AIF-type funding, of course. But for such a project to work,” says Gagnon, “we would need commercialization expertise. The prospect of locating the company in an incubator, where we could access commercialization resources, is attractive.”

An incubator would also realize many advantages in having Professor Gagnon’s company as an early tenant. An early “win” (moving from prototype to commercialization and then graduating from the incubator) provides the community with confirmation that the incubator could successfully generate economic activity in Moncton. With his expertise, Professor Gagnon’s company would almost certainly prove to be an early win. Additionally, such a success would attract other university- based researchers to locate projects, companies, and research activities at the incubator, enlarging R&D capacity in the city and region (not limited to the renewable energy sector). The synergies with his Eco-Efficiency Center, which also could be located at the incubator, would be numerous.

Action Plan Build in plans and space for R&D activity in new incubator; Provide for commercialization experts at incubator with experience in technology transfer; Promote incubator as a center for R&D initiatives like Gagnon’s, as well as organic ICT companies.

CASE STUDY: Nanoptix Interview with Daniel Vienneau, President

Nanoptix designs, engineers, and manufactures thermal direct printers for point-of- service, gaming, lottery, and kiosk customers around the world. Daniel Vienneau launched the company in 1996 after serving as general manager of Concept Plus and GENIEO at the Université de Moncton; he was also part of Spielo’s start-up team at CADMI. Today, Nanoptix has a staff of 32 and annual revenues of $6-7 million.

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Background The history of Nanoptix is closely linked to the story of CADMI/GENIEO, the incubator and prototyping center at the Université de Moncton. Daniel Vienneau, his brother Michel, and other top managers at Nanoptix benefited greatly from their experience with CADMI/GENIEO. Vienneau believes a new incubator like the proposed Moncton Technology Commercialization Center, properly structured and run by the right people, can recapture CADMI/GENIEO’s innovative spirit. “An incubator creates a momentum that will not stop. CADMI/GENIEO produced the first generation of technology in the area, and companies like Spielo, and Nanoptix are still around as testaments to the effectiveness of science commercialization and business incubation,” says Vienneau.

Nanoptix began operations in 1996. After working closely with thin films and optics professors at Université de Moncton, he developed a $50,000 instrument that measures the optical properties of thin films in the nanometer range – a specialized niche product that the company marketed and sold all over the world. In 1999, the firm sold the intellectual property for the instrument to a company in Cambridge, UK, and moved into the printer market. Spielo was its first customer, bringing in Nanoptix to design and build a printer for its lottery machines for a large contract with the Netherlands. Today, Nanoptix builds its own line of thermal printers and manufactures all of its own products. All of its printers are sold outside of Canada, and Vienneau is especially excited about new gaming markets in Macao, where gambling revenue has already reached Las Vegas levels.

Assets and Challenges Staff cohesion: Much of the firms’ success, Vienneau believes, is a result of extraordinary staff cohesion and dedication to the company’s core mission. The strength of Nanoptix’ staff, Vienneau says, lies not so much in the fact that the majority of staff and management is Francophone, but rather that key employees have developed a high degree of trust over time. “We sell our products all over the world and must be comfortable in many languages and cultures, from Australia to Asia to the states of the former Soviet Union, so the fact that many of us are Francophone is not a big deal to us. What is important to us is that we function well as a team.”

Execution: Currently Nanoptix manufactures 15,000 units a year and has capacity to build 25,000 per year, but the firm’s strength is in engineering and sales. “We will contract out for manufacturing above this level, if need be, in order to focus on our core strengths,” said Vienneau. The firm enjoys impressive and steady annual growth of about 40 percent; revenues have expanded from $4.3 million in 2005 to $6-7 million in 2006, and are projected to be $10 million in 2007. The company recently increased its engineering and sales staff to introduce a new product line. In order to bridge the resulting gap in sales, the firm sold a quarter of its shares to a venture capital group. Rather than worry about a temporary sales and revenue dip, management squarely focuses on a long term strategy for innovation and engineering new products; they plan to buy back the shares in three years.

Finance: Company growth has been financed largely from sales over the past decade, although a small loan from NRC-IRAP, and another from ACOA, helped launch the company in 1996. “Because of my work at CADMI/GENIEO, it was relatively easy for me to get government help at first,” says Vienneau. He adds,

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however, that start-up capital is scarce in Moncton/Dieppe. “Anything that can be done to change the culture of financial risk-taking should be tried,” he said, including organizing angel investors and encouraging wealthy entrepreneurs and business people around the Maritimes to invest in the IT sector, bringing in those with backgrounds in other industries.

Lessons Learned Business in Moncton/Dieppe: Clearly, the region’s high quality of life, sound educational system, and safe family environment is a huge attraction for Nanoptix employees, but for a globally competitive technology company, the region’s relative isolation is a double-edged sword. “Being at least two air flights from any of our customers is a disadvantage,” says Vienneau, “but the extra costs to us, both in time and travel expense, still remain far below the advantages we enjoy by having our labor and infrastructure located here.”

Government support: Vienneau thinks that ACOA is an excellent support program, but NRC-IRAP could be more “user friendly.” Nanoptix spends $600,000 - $700,000 on research and development a year and must continually innovate its products with as much government support as it can acquire. “We had an IRAP grant to support a very high-end R&D project last year, but it required a half-time person just to manage the paperwork for IRAP,” Vienneau said.

Incubation: A major factor in the Nanoptix success story was its start in CADMI/ GENIEO. Recreating the atmosphere of collaboration, innovation, and entrepreneur- ship in the Moncton Technology Commercialization Center, Vienneau thinks, could spark a “second generation” of new technology companies in Moncton and Dieppe.

RESEARCH & DEVELOPMENT FUNDING

Research and development (R&D) is the basis for innovation and therefore economic growth. While innovations of new technologies can produce fast-growing ventures, new technology development remains the root from which these innovations spring. Research centers at universities and private companies require funds to create these new products and processes which necessarily precede commercialization and its vital role in the knowledge- based entrepreneurial process. Moncton is typical in Atlantic Canada, and its economy is dominated by small and-medium size enterprises that allocate few resources to R&D. Low participation in R&D by the private sector means that the region (including the province of New Brunswick and Moncton) relies more heavily on federal research funding, than does Canada as a whole. In 2002, the private sector accounted for 49 percent of R&D funding in Canada, while it accounted for only 20 percent in the province and 17 percent in Atlantic Canada (Fig. 16).73

Moncton industries could potentially commercialize technology emerging from the R&D centers of any of the universities in New Brunswick. However, the following analysis focuses on the four NB universities that show an established record of attracting federal research funds: Mount Allison University, Université de Moncton, University of New Brunswick (Fredericton and Saint John), and St. Thomas University. Figure 16. R&D Expenditure by Funding Sectors—Atlantic Canada & NB Province 1995, 2002

73 Data for figures 16-20 comes from: MPHEC (Maritime Provinces Higher Education Commission), R&D Funding in Atlantic Universities (Fredericton, NB: MPHEC, 2005).

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1995 2002 1% 1% 100% 2% 3% 3% 4% 8% 2% 12% 4% 90% 3%

2% 26% 26% 15% 80% 14% 36% 35% 70%

60% 21% 21%

50% 46% 20% 17% 49% 6% 5%

40% 3% 3%

30%

5% 43% 43% 5% 20% 37% 36% 10% 22% 19%

0% NB Atlantic Canada NB Atlantic Canada (140) (521) (13,754) (184) (736) (22,370)

Federal Government Provincial Government Business Enterprise Higher Education Private Non-Profit Organizations Foreign

Abundant data is available on R&D activity in NB’s universities, including studies on the challenges and opportunities for funding and commercializing research in the province (and Atlantic Canada as a whole). The following data draws on these studies, particularly R&D Funding in Atlantic Universities published by the Maritime Provinces Higher Education Commission (MPHEC) in 2005, which provides detailed information on R&D activities in the NB universities. It is important to identify the assets and challenges currently faced by NB universities’ ICT-related centers in order to increase federal research funds, and to concentrate new effort to increase links between Moncton’s ICT industry and regional research centers.

R&D Investments: Universities Following is an overview of R&D funds available to NB universities, classified by government levels: federal (longstanding, new, and specific to the Atlantic Provinces), provincial, or local.

Type 1. Long-standing R&D programs are distributed through three granting councils: ƒ National Science and Engineering Research Council (NSERC) ƒ Social Science and Humanities Research Council (SSHRC) ƒ Canada Institute of Health Research (CIHR)

In terms of ITC development, the NSERC program is especially important because it funds science and engineering projects, while the other two fund social science and health-related projects. Figure 17 shows that about 8 percent of the total funds from the NSERC granting council go to universities in Atlantic Canada. The University of New Brunswick received $6.3 million in 2002-2003, while the Université de Moncton and Mount Allison University received

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Figure 17. Long-Standing R&D Programs

Long-Standing R&D Program (2002-2003)

NSERC SSHRC CIHR Natural Science & Engineering Social Science & Humanities Canada Institutes of Research Council Research Council Health Research

Atlantic Canada $38.3 million (8% of Total Funds)

New Brunswick Province $8 million (1.7% of Total Funds)

Université de Moncton ($720,000)

University of New Brunswick ($6.3 million)

Mount Allison University ($532,000)

only $0.5 and $0.7 million, respectively. NSERC funds constitute the most important source of R&D funding for all three universities.

Type 2. New R&D programs include federal government sources initiated since 1997, created to expand federal research funding sources. Figure 18 illustrates three new programs which are described in the following paragraphs.74

Figure 18. New R&D Programs

New R&D Programs (1997-2004)

CFI CRCP The Indirect Cost Canada Foundation for Innovation Canada Research Chairs Program Program Atlantic Canada: Atlantic Canada: Atlantic Canada: 94 Chairs (7%) $81 million (4%) $51 million (8%)

New Brunswick New Brunswick

$15 million (0.7%) 24 Chairs (2%)

74 Association of Universities and Colleges of Canada (AUCC), Momentum—The 2005 Report on University Research and Knowledge Transfer, 2005. http://www.aucc.ca/publications/auccpubs/research/momentum_e.html.

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Canada Foundation for Innovation (CFI) is an independent corporation created by the federal government to fund research infrastructure (e.g., computers) and research, with the mandate to strengthen the capacity of Canadian universities, colleges, research hospitals, and non- profit research institutions to carry out world-class research and technology development that benefits Canadians. Between 1997 and 2004, about 4 percent of CFI funds went to Atlantic Canada universities, and only 0.7 percent to those in New Brunswick.

The Canada Research Chairs Program (CRCP) was created in 2000 by the federal government as a permanent program to establish 2,000 research professorships (Canada Research Chairs) in universities across the country by 2008. CRCP invests $300 million a year to attract and retain some of the world’s most accomplished and promising minds. Between 2000 and 2004, nearly 2 percent (24 chairs) were awarded to universities in New Brunswick.

The Indirect Cost Program was created by the federal government to help universities in Canada (especially small ones) defray the indirect costs of research. Since the program was initiated in 2001, universities in Atlantic Canada have received $51 million, or 8 percent, of these funds.

Type 3. Federal Programs Specific to Atlantic Canada are R&D initiatives designed for the Atlantic Provinces to overcome challenges in respect to R&D and its commercialization.

The Atlantic Innovation Fund (AIF) created in 1987, is administered by the Atlantic Canada Opportunities Agency (ACOA). Many R&D initiatives require matching funds which often presents a challenge to Atlantic Canada’s universities. The region’s private sector consists primarily of small to medium-size industries, with limited resources and funding partners to support to R&D. And while provincial governments have been able to provide matching funds in other regions, such provision is relatively new and considerably limited in Atlantic Canada. To help supply matching funds, the federal government introduced the Atlantic Innovation Fund within ACOA. Through ACOA the federal government provides an additional $300 million for investment in the region’s infrastructure, much of it going to universities and research institutions.75

Between April 2001 and March 2006, ACOA funds have supported $10.6 million in R&D at the Université de Moncton (see Table 7). Through the AIF, ACOA also funds Springboard, a research commercialization network that involves a consortium of 14 Atlantic universities, including the four research-oriented universities in New Brunswick. Through Springboard, smaller universities have access to support services from larger universities with more experience in technology commercialization.

Type 4. Provincial programs The New Brunswick Research Innovation Fund (NBIF) is a research fund created by the provincial government in 2002 to increase the innovation capacity of academic and research organizations. It includes the Research Innovation Fund, to provide matching funds for CFI, CIHR, NSERC, and SSHRC grants. It also includes two other initiatives under Programs in Partnerships: the Research Technicians Initiative and the Research Assistantships Initiative, both of which are directed to the academic community. (Other NBIF programs, such as the Enterprise Innovation Fund, the Venture Capital Fund, and the Business Incubator Fund, concentrate on private sector research.)

75 Atlantic Canada Opportunities Agency, Atlantic Innovation Fund, 2000. http://www.acoa.ca/e/library/aif.pdf

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Table 7. ACOA Funding for Université de Moncton, April 2001-March 2006

Year ACOA Approved Project Description Assistance Total Cost 2005 Research infrastructure $130,000 $515,490 Travail hors campus pour étudiants internationaux $31,950 $95,960 2004 Research projects investigating cellular lipid metabolism $215,732 $431,464 Internship Program $200,000 $266,665 Development of learning object repositories $250,000 $560,000 Commercial Mission to the United States spring 2004 $42,860 $66,060 Recrutement d'un Coordinateur ou d'une coordinatrice $81,000 $81,000 2003 Programme de MBA trilatéral $41,280 $74,880 Design/Develop. Innovative Thin Film Smart Systems $2,693,780 $3,367,225 Étude de marché et d'orientation pour le Centre $23,246 $48,415 Programme de Partenariat sur l'Exportation $24,222 $53,422 Incubateur d'entreprises/Parc Scientifique - Phase II $2,600,000 $5,150,000 2002 Advanced Optics: Materials, Devices and Applications $3,876,250 $5,589,663 Centre de d'habitation et de technologies environementales $150,000 $769,500 Compétition atlantique de génie $5,000 $33,034 Develop e-learning tools $57,645 $80,000 Business plan $111,079 $151,000 2001 Export Partnering Program, 2001-2002 $17,100 $33,100 Conference -High Performance Computing Systems/Applications $23,569 $68,569 University resources via internet $63,598 $103,970 TOTAL $10,638,311 $17,539,417 Source: Data obtained from Atlantic Canada Opportunities Agency

The four Atlantic Canada provinces show low participation in government programs to support academic science and engineering research—only 4 to 8 percent. Data for New Brunswick’s universities are even lower, where participation ranges from 0.7 percent to 2 percent. These targeted programs play an important role in helping universities in New Brunswick improve their participation in federal research funding.

Figure 19. Other Federal and Provincial R&D Programs

Other R&D Programs (1987-2004)

AIF NBIF Atlantic Innovation Fund New Brunswick Innovation (ACOA) Foundation (NB Government) $300 million

Research Innovation Fund $3.0 million

Research Technicians Initiative $1.4 million Rsch Assistantships Initiatives $0.8 million

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Distribution of Research Funds at Universities in the Province Figure 20 present an overview of R&D funds received by universities in New Brunswick. NSERC is by far the most important funding source for all universities in the region. CFI is the second most important source of research funding, reaching levels close to NSERC for the 2002-2003 funding period. The provincial government continues to have low participation in total research funding available to the universities in spite of important initiatives such as the Research Innovation Fund and the Programs in Partnerships within NBIF to support academic research.

Figure 20. Sponsored Research Funding at Universities in NB, 1997-98 to 2002-03.

NSERC = Natural Sciences and Engineering Research Council SSHRC = Social Sciences and Humanities Research Council MRC/CIHR = Medical Research Council or the Canadian Institutes of Health Research CFI = Canada Foundation for Innovation CRCP = Canada Research Chairs Program Prov. Gov. = Provincial Government

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At the university level, most R&D funds are channeled into research centers and institutes. Table 8 lists research centers related to engineering or entrepreneurship at four of the NB universities. Following the table is a description of some of the most important activities conducted at ICT and entrepreneurship selected research centers.

Table 8. Engineering and Entrepreneurship Research Centers at Universities in New Brunswick

1. Université de Moncton (Moncton campus) Bureau de soutien à l'innovation Centre Assomption de recherche et de développement en entrepreneuriat (Center for R&D in Entrepreneurship) Centre de Commercialisation Internationale (Center for International Commercialization) Centre de multimédia appliqué Centre de recherche en conversion d'énergie Groupe de recherche en biochimie Groupe de recherche en communications, traitement distribué, langage naturel, programmation logique et bases de données intelligentes Groupe de recherche en entreprenariat Groupe de recherche en information distribuée et éducation sur l’INTERNET Groupe de recherche sur les couches minces et l'énergie solaire UM Scientifique Park

2. University of New Brunswick (Fredericton campus) CADMI Microelectronics, Inc. Center for Entrepreneurial Leadership Centre for Nuclear Energy Research, Inc. Construction Technology Centre Atlantic, Inc. (CTCA) Electronic Text Centre Institute for Materials Visualization and Analysis Institute of Biomedical Engineering Information Technology Centre (ITC) Planetary and Space Science Centre Wood Science and Technology Centre

3. University of New Brunswick (St. John campus) Electronic Commerce Centre

4. Mount Allison University (Sackville, NB) The John Dobson Centre for Innovation and Entrepreneurship Mount Allison Cluster for Advanced Research-TORCH

ICT-RELATED RESEARCH CENTERS

University of New Brunswick at Fredericton CADMI Microelectronics, Inc. is a partner in the application of technology. CADMI represents a true partnership between government, university, and industry to provide state-of-the-art microelectronics technology transfer to New Brunswick businesses. Established in 1983 and located on the UNB-Fredericton campus, CADMI specializes in solving industrial problems through the design of custom circuits and systems for industrial processing and product development. Incorporated in its own right, CADMI is managed by a board of directors drawn from the three sponsoring partners.

Information Technology Centre (ITC) was established in 1998 through the support of UNB and the Canada/New Brunswick Regional Economic Development Agreement to assist and support the growth of the IT industry in New Brunswick. It strives to make NB a world leader in the development and marketing of high-quality global IT products and services.

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Mount Allison University (Sackville, NB) Mount Allison Cluster for Advanced Research–TORCH is an infrastructure initiative supported by the Canada Foundation for Innovation and the New Brunswick Innovation Foundation to assist Mount Allison research requiring high-performance computing resources.

CENTERS RELATED TO ENTREPRENEURSHIP

Université de Moncton Centre de Commercialisation Internationale (CCI) (Center for International Commercialization) is funded by the Department of Industry, Science, and Technology Canada, the Tourism and Economic Development Department of New Brunswick, and ACOA. CCI offers international internships, studies abroad, and immersion programs through the Academic Partnership and International Youth Program. CCI actively participates in activities at institutions such as the NB Economic Council, Greater Moncton Chamber of Commerce, and Forum for International Business organized by the Francophone Summit.

University of New Brunswick at Fredericton International Business & Entrepreneurship Center (IBEC). IBEC was formed in 2004 by merging the Center for Entrepreneurial Leadership (CEL) and the Center for International Business Studies (CIBS). CEL was established in 1996 in partnership with the Bank of Montreal to promote and support entrepreneurial activities in the Faculty and on campus. CIBS was established in 1988 through an endowment from ACOA to promote and support research and teaching in international business. IBEC developed the Export Partnership Program (EPP) to promote exports of Canadian goods and services to the New England market. IBEC and the NB Department of Education work together to improve entrepreneur- ship courses in the high school curriculum. It has formed a relationship with Babson College to provide UNB with innovative training and teaching materials in entrepreneurship. Among its recent activities, IBEC sponsored a conference in Fredericton in October 2006 on entrepreneurship and skills development for young entrepreneurs in the information, communications, and technology fields.

University of New Brunswick at Saint John Electronic Commerce Centre (ECC). UNB-Saint John established ECC in 1997 to foster the growth of eCommerce and eBusiness among the founding partners, including NBTel, Nortel Networks, and the Province of New Brunswick. ECC has focused on developing eCommerce/eBusiness degree programs in the UNBSJ business school.

R&D INVESTMENTS IN THE NB UNIVERSITIES: ASSETS & CHALLENGES

Assets ƒ Many research centers at NB universities conduct research in ICT engineering and science fields. ƒ Two case studies document important research groups in wind energy and in thin films and photonics at the Université de Moncton. Both groups have nationally leading skills in those fields, as they compete for federal funds. ƒ ACOA and the provincial government provide matching funds to help applicants to secure additional federal funds in other programs.

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Challenges Funding through most federal government programs is contingent on applicants providing matching funds and demonstrating previous grant funding success. The region’s limited matching capacity hampers the ability of the universities to benefit from both long-standing (e.g., NSERC) and new (e.g., CFI) federal research funding programs. Forging private sector partnerships is difficult for NB universities given the limited ability for the private sector to contribute to R&D; therefore the region would benefit from initiatives such as Springboard for collaborative university-based technology transfer.

While many provincial R&D centers conduct engineering and science research, there are few linkages with NB industry. Interviews indicate that little current research benefits ICT business in Moncton. The knowledge-based entrepreneurial process that exists in Moncton is not the result of the commercialization of new products developed at the local university. More effort needs to be made to help researchers with commercialization, and to re-evaluate the effectiveness of the present IP regime.

ACTION PLAN TO ACCELERATE MONCTON’S KNOWLEDGE-BASED GROWTH

Near-term Action Items Develop a bilingual (French and English) website that lists the projects in NB universities’ research centers. Include the names, credentials, and email addresses of researchers who are interested in consulting with the private sector. The provincial government and the universities should develop a formal policy that creates incentives for professors to work with the local private sector. Strengthen Springboard activities to facilitate the participation of the private sector in technology commercialization activities.

Longer term Action Items Increase the provincial matching-funds capacity. Develop a support system to commercialize new products emerging from academic research groups, initially in wind energy and in thin films and photonics at the Université de Moncton, perhaps through the Moncton Technology Commercialization Center.

INTELLECTUAL PROPERTY & TECHNOLOGY TRANSFER

Preferred IP Policies and Technology Transfer Practices The Organization for Economic Co-operation and Development (OECD), includes among its membership and its active relationships over 100 countries; Canada is an original member country. The OECD’s Committee for Scientific and Technological Policy collects empirical evidence on the legal and regulatory frameworks that govern IP at public research organizations. Across OECD countries, IP ownership policies are shifting toward institutional ownership of academic inventions by transferring title from governments or individual researchers to public research organizations. Following the U.S. lead, “nearly all other OECD member countries have reformed research funding regulations or employment laws to allow research institutions to file, own, and license the IP generated with public research funds.”76

76 “Patents And Innovation: Trends And Policy Challenges,” OECD, 2004, page 20 “…it is possible that the results under-estimate the total amount of academic patenting in some countries, especially those in which public

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The rationale is that ownership by public research organizations provides greater legal certainty, lowers transaction costs and fosters better channels for technology transfer. International tech transfer practitioners hold the view that research institutions are well positioned to implement management structures, assess patent values, and pursue commercialization of inventions.77

IP Ownership: The Oxford and Cambridge Model New Brunswick’s university-based R&D path for technology transfer could be accelerated and optimized if the current inventor-owned IP policy was revised to an institution-owned policy in conformance with the international trend. The IP policy of the premier British research institutions may provide a lesson in point. Both Oxford and Cambridge Universities have struggled with IP ownership institutional policy. Cambridge recognized that with an inventor-owned IP policy, a supportive infrastructure was needed to capture opportunities for the application of new knowledge. A few years ago Cambridge began a re-evaluation of its IP ownership policy78 and found that “…the University's policy differs from other leading UK research universities in that it does not make claim to all the intellectual property generated by its employees in the normal course of their duties.” In mid-2002, the Joint Report of the Council and the General Board on the ownership of intellectual property rights found that “...given the inconsistency in the current policy, it is hard to justify its continuation.” Inventors without specialist advice were found to be “…vulnerable to predatory external parties.” The Report went further to recommend that under most circumstances “...the University should assert ownership over all intellectual property generated by its employees in the normal course of their duties.”

The three most reasonable implementation options for the institution included taking ownership of all intellectual property that was: ƒ generated past, present, and future by all employees where it has not been licensed, assigned, or is in any other way subject to third-party obligations; ƒ created by all employees after an agreed date ƒ created by new employees who join after an agreed date

The Cambridge Joint Report recognized that Oxford had chosen in 1995 to take ownerhsip of all IP created by all employees after an agreed date. Cambridge chose the same option on July 22, 2002. These same three options could be recommended for consideration by New Brunswick’s research institutions. The trade to the inventors in the case of Cambridge took the form of a generous royalty schedule: 90 percent of the first £20,000, then 70 percent of the next £40,000 and then 50 percent of the next £40,000, far more generous than the normal U.S. university royalty-sharing schedule.

Notwithstanding the minority views of Canadian proponents for inventor-owned IP policies,79 from a Canadian national perspective, the Prime Minister’s Advisory Council on Science and research organizations do not automatically claim title to inventions or cede them to industry or individual inventors.” http://www.oecd.org/dataoecd/48/12/24508541.pdf 77 Analysis of the Legal Framework for Patent Ownership in Publicly Funded Research Institutions, Andrew F. Christie et. al., Research Evaluation Programme Higher Education Group, “The common points shared by the UK and Canadian proposals for reform of IP management in publicly funded research bodies can be summarized as follows: IP should be vested in the research bodies…” ISBN 0 642 77331 9 (Electronic Version) Commonwealth of Australia 2003 accessed on line June 5, 2006 http://www.dest.gov.au/sectors/research_sector/publications_resources/other_publications/patent_ownership_ in_publicly_funded_research_institutions.htm 78 http://www.admin.cam.ac.uk/reporter/2001-02/weekly/5894/15.html 79 “Commercialization Productivity of Canadian Universities” Bruce P. Clayman, Simon Fraser University, AUTM presentation www.sfu.ca/vpresearch/vp-research/ICUR.ppt Slide 21. accessed online June 5, 2006

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Technology “strongly believes that university ownership of IP (either in the first instance or through assignment) would greatly increase the number of commercialization opportunities emanating from university-based research. University researchers do not need to own IP in order to benefit from successful commercialization undertakings…”. It was also recommended that “…in those universities where the ownership of such IP resides with the researcher(s), the IP must be assigned to the university for possible commercialization (subject to appropriate sharing of benefits).”80 The Panel flatly reports that “…vesting IP ownership with university researchers is one of the single biggest factors accounting for lost commercialization opportunities in Canada.”81 Nevertheless, throughout Canada, rules on IP ownership by universities vary across Provinces, and range from the sponsor retaining the sole ownership of the invention, to the inventor owning the invention, and to the university having the sole ownership, with considerable variations within.82 Persuasive arguments are made that IP ownership policies are directly related to the return on investment made in research. The Prime Minister’s panel on the commercialization of university research believes that “the best way to measure Canada’s commercialization performance is to examine rates of return on investment. The ideal benchmark would be return on investment measures for American universities which are considered to be world leaders in this area.”83

The favorable U.S. position relative to Canada is illustrated in Figure 21.84 The graph demonstrates that colleges and universities in the U.S. enjoy a return on investment approximately three times greater than that of Canadian universities. In the context of ROI with the United States as an example, it is suggested by the Standing Committee that “…one of the key (U.S.) policies which was made in 1980 was to pass legislation to say from now on when researchers develop intellectual property it won’t belong to the government, it will belong to the university where the research is performed with the obligation for that university to organize a commercialization office and to commercialize in such a way that it favors the American enterprises and preferably the SMEs.”85 Most research performed at New Brunswick universities is currently conducted under an IP policy that runs contrary to the globally preferred model whereby IP ownership devolves upon the institution rather than to the inventor, or is substantially shared between the two.

Moncton: Existing IP Practices The present IP policy results from a collective bargaining agreement86 that established the relationship between researchers and the four primary research universities in New Brunswick. The agreement places IP rights and the decision of whether or not to take a first step toward commercialization in the hands of the inventor exclusively, since “the employee(s) who is the owner of intellectual property is solely responsible for the decision to

80 Public Investments in University Research: Reaping the Benefits, Report of the Expert Panel on the Commercialization of University Research Presented to: The Prime Minister’s Advisory Council on Science and Technology, May 4, 1999 page 3 http://dsp-psd.pwgsc.gc.ca/Collection/C2-441-1999E.pdf http://acst- ccst.gc.ca/comm/rpaper_html/report_title_e.html 81 Ibid. page 19. 82 Industry Canada Research Publications Program, University Research and the Commercialization of Intellectual Property in Canada, Occasional Paper Number 21 April 1999, Table 17 and page 79. http://strategis.ic.gc.ca/epic/internet/ineas-aes.nsf/vwapj/op21e.pdf/$FILE/op21e.pdf 83 Ibid page 16. 84 See “MATC: Medical and Assistive Technologies Consortium SWOT Analysis for the Medical and Assistive Technologies Sector in Ontario and Western New York,” Soloninka and Associates, May 2002. http://www.htx.ca/HTX/DesktopModules/Links/..%5C..%5CFiles%5ClocalDocuments%5CSWOT%20Report.pdf 85 “A Canadian Innovation Agenda for the Twenty-First Century, Fifth Report of the Standing Committee on Industry, Science and Technology,” Susan Whelan, M.P. Chair, June 2001. http://www.parl.gc.ca/infocomdoc/37/1/INST/studies/reports/indu04/22-ch10-e.htm 86 http://www.unb.ca/hr/aunbt/art38.html

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Figure 21. Canada and U.S. Universities: A Comparison of Return on Investment

of whether or not commercialize or not to commercialize such intellectual property.”87 An equivalent situation exists at non-profit research institutions Moncton General Hospital and the Atlantic Cancer Research Institute.88 The inventor-owned IP policy has been tied to the collective bargaining agreement for many years; it is passionately defended in principle and is unlikely to be revised without higher intervention or intense give-and-take negotiation.89

Exceptions to the general rule in New Brunswick do exist but are limited in scope and application. For example, at UNB, when IP has been developed with the use of UNB resources over and above normal UNB resources, the faculty member is required to enter into an IP agreement with UNB specifying the share of net proceeds. In the absence of an agreement, the fees, royalties, or other income shall be shared 50:50 between UNB and the faculty member. In addition, if a faculty member decides to commercialize an intellectual property produced with UNB resources over and above normal University resources, the faculty member must grant UNB a license to use the property, including the right to grant others the right to use the work on certain terms and conditions.90 On the public side, resources “over and above normal” include funds from the Granting Councils (NSERC, CIHR and SSHRC). The funds constitute the bulk of public research dollars and are a significant source for university research funds. Private funding sources would sometimes qualify as well. Other normal exceptions concern the copyright on artistic and literary works including a professor’s own course materials.

The economic effect of an inventor-owned IP policy is quite significant in the long term view, and should be examined in spite of its controversial nature. The threat looms that the university research inventor may refuse to participate in any (or all) commercialization initiatives. Non-participation might take endless forms, but could include:

87 38.04(a) 88 http://www.bereskinparr.com/English/publications/pdf/Ownership-of-IP.pdf 89 The Canadian Association of University Teachers, Intellectual Property and Academic Staff “Because ownership by academic staff of their creative works plays an important role in protecting scholarly independence and integrity, academic staff and their associations must forcefully protect intellectual property rights at the negotiating table.” http://www.caut.ca/en/about/committees/dp_intellectualproperty.pdf 90 30.04 (d)

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ƒ An inventor holds the right to initiate or refrain from taking a first step toward commercialization; and also to orchestrate what that first step would be and with whom it is taken in the form of an industry partner. As a mere co-owner of a patent, the university could not grant exploitation licensing rights without the agreement of the inventor co- owner. In the event of a conflict, licensing would be paralyzed.91 ƒ A for-profit commercial entity, including a foreign entity doing business primarily beyond the borders of Canada, without regard to any other interest, could negotiate directly with an inventor and contract for IP management or even ownership of an inventive act performed by a researcher at a university in New Brunswick. Technologies can be commercialized outside the province with economic return of solely in the form of an individual financial return to the inventor. The Prime Minister’s Advisory Council on Science and Technology reported that “faculty ownership of publicly funded IP is creating a disturbing situation in Canada... running a technology supply house for other countries.”92 ƒ Inventors who work on cutting edge technologies are often unskilled in business administration, IP law, and the nuances of technology licensing. The institution is in a weak position to control the fate of IP arising from its campus if the inventor opts to negotiate outside the institution’s office of technology transfer.

As recently as 1999/2000, the three federal Granting Councils invested almost $1 billion dollars in university research. Full disclosure by researchers of any IP generated from those federally funded research grants was not required and ownership of any resulting IP was not claimed by government.

A research institution may exercise a “research exemption” under 38.05(a) on its campus, but only at the discretion of the inventor and only for non-commercial applications in the form of further research undertaken by other researchers at the institution. The question is left open whether any commercial benefit ultimately resulting from further research would be the property of the first inventor.

A university will make investments in research infrastructure (in the form of labs and equipment) in order to accrue reputation as a research center, increase its ability to attract research funds, and support regional economic development. However, there is no motivation for a university to undertake technology transfer unless an inventor opts to assign the institution IP rights for management, licensing, and/or commercialization. The motivation for an inventor to commercialize stems from the institution’s ability to establish an effective commercialization infrastructure on and off the campus, and to market these services to their faculty. When inventor ownership is the rule, inventions are delicately pulled out of the lab and are not pushed out by act of law.

Action Items A renegotiated collective bargaining agreement to redistribute IP ownership between university-based researchers and their host institutions would contribute toward greater technology transfer and commercialization activity in New Brunswick. Develop Springboard’s tech transfer and commercialization operation more fully throughout New Brunswick, thereby demonstrating the benefits of University IP ownership over inventor-owned.

91 The Prime Minister’s Advisory Council, page 19 92 ibid at §4.1.2

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KEY OBJECTIVE 4: Partnership and Alliances Foster and leverage national and international value-added partnerships and alliances.

Vision: Greater Moncton’s existing resources and assets will realize larger markets due to enhanced national and global alliances and partnerships. Challenge: Building regional agreement and support for the value of national and international networks and partnerships for quality research and education and targeted economic development Strategies: Build on the region’s existing international programs and activities and characteristics of openness, tolerance, and friendliness to develop national and global partnerships. Promote programs that recruit talented, entrepreneurial immigrants. Specific Actions: Target several carefully chosen partnerships, alliances, and opportunities for collaboration that would benefit Greater Moncton’s academic and business sectors such as: Creative Learning Institute in Digital Media, Bioscience. Leverage IC² Institute’s existing regional economic development programs with Mexico, Portugal, and Poland as well as IC² Institute’s international networks and international conferences. Promote a strategic alliance with Austin Technology Incubator and incubators worldwide in target industry sectors. Foster “Immigrant Entrepreneurship.” Organize international student exchange focused on entrepreneurship and business venturing such as Université de Moncton student exchange and entrepreneurship competition with students from France, Poland, Portugal, and Austin increasing international connections and exposure. Explore links to IC² Institute’s Master of Science in Science and Technology Commercialization (http://msstc.ic2.org/). Work to collaborate on research and development and innovation with other regions and countries such as Russia, Portugal, and Poland using Canada as a gateway to the Americas.

ECONOMIC BENCHMARKING: Model for Success

In today’s expanding global economy, cities increasingly recognize that they face global competition to attract local investment. A key task for municipal policymakers is to identify the policies that have led competing cities to success, and to tailor these policies to the local environment. Economic benchmarking compares one city to another of similar size and basic assets in order to examine strategies and policies to accelerate knowledge-based growth.

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MONCTON—A SMALL CITY WITH HIGH TECHNOLOGY GOALS

The IC² Institute has a long record of advising cities in America, Asia, and Europe to accelerate knowledge-based growth, but Moncton has two unique characteristics that have especially pleased and challenged the IC² team. The first is the richness of the data and information available on Moncton’s economy and quality of life, which facilitates the design of local development policies. Second, the local community (in particular, businesses and government) has high expectations to be major players in the research and production of new technology, which is unusual for a city of Moncton’s size.

In 2006 the consulting firm KPMG released a study entitled Competitive Alternatives Highlights—KPMG’s Guide to International Business Costs.93 The study compares business costs in North America, Europe, and Asia Pacific. Data covers 128 cities in nine countries: Canada, France, Germany, Italy, Japan, The Netherlands, Singapore, the United Kingdom, and the United States. Moncton ranks number two as the lowest-cost city in Canada and number three among the 95 largest cities in the study. The study estimates that Atlantic Canada’s business costs were up to 10 percent less than in the United States. However, Moncton faces serious challenges to attain high rank among the world’s knowledge cities. To forge a path to accelerate its knowledge-based economy, Moncton may learn from other cities that have been successful in the process.

Choosing a Benchmark City for Moncton A search for “the” benchmark city for Moncton began in the United States, because of our familiarity with the U.S. economic profile, and the abundance of information available on U.S. cities, including policy development. In short, U.S. cities with a large concentration of technology companies are usually larger than Moncton.94 Only three cities show a high degree of high-tech activity with a population of “less than one million”: Ventura, California; Albuquerque, New Mexico; and Wichita, Kansas. Albuquerque’s high-tech industry flourished because of a political decision in Washington, DC to divert large defense funds to the city (e.g., to Los Alamos and Sandia National Labs). Wichita is a hub for manufacturing aircraft – an industry fueled by a large and successful oil industry in the last century. Ventura County has the Port of Hueneme, the only deep-water port between Los Angeles and San Francisco. Since Moncton does not have a deep-water port, a large oil industry, or the political clout to attract large defense funds, none of these cities provide an appropriate benchmark. Moreover, each of these U.S. cities is at least five times the size of Moncton.

The Nordic countries of Finland, Sweden, and Norway take the lead in current knowledge society indicators, and many of their successful knowledge cities are small. Based on the experience of IC² team members who teach and perform business consultancy abroad, three Norwegian cities were examined as potential benchmark cities for Moncton: Oslo, Bergen, and Stavanger. As outlined in Table 9, Oslo is one of the most expensive places in the world to live and eight times the size of Moncton. Bergen and Stavanger both have a population

93 This study is available at http://www.competitivealternatives.com. 94 Using a methodology from the Milken Institute (America’s High-Tech Economy—Top Technology Centers (Santa Monica, CA: Milken Institute, 1999) and data from the 2000 Census of Manufacturing, we developed a high-tech agglomeration index for the 100 largest metropolitan areas in the United States (see Appendix E). The larger the value of the index, the more high-tech economic activity is concentrated in the metropolitan area. San Jose, the heart of Silicon Valley, shows the largest index (7.33) in the sample. One fact that emerged from this table is that only cities with a population greater than 1 million have a high-tech agglomeration index above the average for our sample of cities (1.1).

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size closer to Moncton and have been successful in developing an important knowledge- based industry; however, their knowledge-based industry has been fueled by oil wealth. Table 9. Cities Considered for Moncton Benchmark

o o

federal chosen industry oil & gas oil & gas industries industries Oil money Greater Los government Reason not Angeles Area NW section of Most high-tech Most high-tech is supported by financed aircraft Majority of R&D industries relate t industries relate t § The Economist. Air capital of the US National Institute for Aviation Research at Wichita State University Major aircraft manufacturing center Major employers: Boeing, Cessna, Raytheon, Bombardier, Spirit Aerosystems Intel employs over 5,000 persons Sandia National Laboratories at Kirtland AFB; Univ. of New Mexico Port of Hueneme, the only deep-water port between LA and SF US Naval Base Technical Corridor 101 (concentration of high-tech industries) Oil capital of Norway Corporations are BP, ConocoPhillips, Shell, ExxonMobil, Total and Statoil IBM will locate international venture on oil and gas in Stavenger Strong research environment, varied high-tech industrial sector Tourism University of Oslo -- 30,000 students, 5,000 staff Norwegian School of Information TechnologyWorld's most expensive place to live in 2006, up from 3rd 2005. Too big Emerging aviation mfg. center; Private spaceport supported by state government 45,000 people employed in oil and gas industry -- 50% of Norwegian & industry 40% of Norway's exports concentrated in oil and gas, maritime fishing industry 712,738 753,197 Population Notes NA= not available. § According to NA= not available. † NA 173,132 NA 213,585 NA 811,688 0.85 545,200 0.46 0.70 Index , NM Oslo Bergen Ventura Stavenger lbuquerque County, CA Wichita, KS A

Country City 103 † High-tech agglomeration index Report B

Table 9. continued.

chosen Helsinki Helsinki Helsinki Helsinki Reason not Very close to Very close to Very close to Very close to T urku Science Park hosts over 300 companies in biotech and Info Central economic hub of southwestern Finland Port of Turku Large oil industry University of Turku has 18,000 students Helsinki-Vantaa International Airport Vantaa Centre for Environmental Affairs Aviapolis has growing number of international businesses Heureka Science Center (opened to public in 1989) Univ. of Tampere has 2,100 staff & 15,400 students Tampere University of Technology has 10,000 students Regea Institute for Regenerative Medicine Hermia Science Park - 150 companies Headquarters of Nokia and 6 divisions University of Technology has 3,190 staff & 15,000 students Technical Research Centre of Finland has 1,900 employees Oil and gas industry is major Capital of FinlandNokia Research Center headquarters Too big T 201,271 174,825 560,000 Population Notes NA= not available. † NA NA NA 184,956 NA 229,500 NA Index Turku Espoo Vantaa Helsinki Tampere Country City † High-tech agglomeration index

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Finland is the second most competitive economy in the world according to the 2006-2007 Global Competitiveness Report,95 and enjoys a large endowment of smaller cities with a concentration of high-tech activity. Helsinki’s economic base is the oil and gas industry and its population is five times the size of Moncton. Vantaa, Espoo, Tampere, and Turku are located very close to Helsinki, and, while smaller than Helsinki, are still much larger than Moncton. The city of Oulu is not close to any large city, does not have an important oil industry, and has a population of 126,122—characteristics very similar to Moncton.

Oulu —Small In Size, Big In Technology Oulu, located close to the Artic Circle about 400 miles north of Helsinki (see map), is the sixth largest city in Finland and promotes economic development with the slogan “Small in Size, Big in Technology.” Exceptional technological transformation has occurred over the past thirty years – from large-scale industries that depend on natural resources, to knowledge-based industries. Oulu’s current city profile is shown in Table 10.

Table 10. Reasons why Oulu, Finland was chosen as Moncton's Benchmark City

General: Oulu is one of Finland’s most successful regions Sixth largest city in Finland First in international competitiveness¹ First on the European Innovation Scoreboard² Well-connected by air, water, and train Population: 129,000 Universities: educational opportunities University of Oulu has 3,100 staff and 15,800 students Oulu Polytechnic has 7,700 students Research institutions: information technology is growing VTT Electronics Centre for Wireless Communications Infotech Oulu within U. of Oulu has 500 staff Medialab Oulu Private sector: information technology is growing Biocenter Oulu within U. of Oulu has 270 staff Technopolis science park has 700 companies with 9,000 personnel (est. 1982) Nokia has 8 divisions located in Oulu with 4,600 employees Polar Electro (measuring & controlling devices manufacturer) High-technology clusters: industrial clusters with employment in 2002 High-tech cluster: 800 enterprises with 15,000 employees³ Information technology cluster: 260 companies with 8,467 employees Content and media cluster: 1,289 employees Medical cluster: 3,718 employees Biocluster: 257 employees Environmental cluster: 997 employees

*Source: The Lisbon Review, World Economic Forum, 2004. **Source: European Commission, 20 ***Source: Statistics Finland, 2002.04.

95 The 2006-2007 Global Competitiveness Report (published by the World Economic Forum) found that the Nordic countries were on top in relation to factors such as the information society, liberalization, innovation and research policy, network industries, efficient and integrated financial services, enterprise environment, social inclusion, and sustainable development.

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The Beginnings Oulu University opened in 1959, and its Department of Electrical Engineering was established in 1966. Through active participation to develop local knowledge-based industries and to attain R&D investments from the federal government in the 1970s, the Department of Electrical Engineering provided the seeds for Oulu’s rapid knowledge-based growth in the following decades. Low labor costs and a large supply of an educated workforce were major factors in getting new electronics industries to invest in Oulu. One of the most important companies to locate in the city was Nokia, which began production of U.S. military radio equipment in Oulu in 1972. The University of Oulu’s active role was an important factor to attract Nokia to the city. In 1974, the Finnish government created the Technical Research Center in Oulu as part of a national regional decentralization policy. The center developed new mobile technologies and was a major employer of engineers graduating from Oulu University’s Department of Electrical Engineering.

In 1984, Oulu proclaimed itself a technology city. As expressed in the Oulu 2006 Growth Agreement, “It was a bold bet, even daring, but it was also foresighted with sufficiently high goals.”96 In 1982, a joint effort between the city of Oulu, the University of Oulu, and local businesses was successful in creating the first technology park in a Nordic country, The Technopolis. Although the park was initially small, its symbolic value was important. The park mission was not only to support R&D activities, but also to facilitate technology commercialization.

Oulu Today Today two large universities are located in Oulu. Oulu University has a vibrant science and learning community of 15,300 students; Oulu University of Applied Sciences (formerly known as Oulu Polytechnic), with approximately 8,000 students, is one of the largest universities of applied sciences in Finland.

The city’s reputation has spread beyond Finland’s borders: in a distant, cold, dark North, a city exists where the world’s hottest technology is produced and researched; that city has become a global leader in wireless communication, thanks to a strong R&D base. In 1999, per capita R&D expenditure was three times higher than the national mean.

96 Oulu 2006 Growth Agreement, http://www.oulu.ouk.fi/kasvusopimus/english/index.html.

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Hourly flights connect Helsinki and Stockholm to Oulu’s international airport—the second busiest airport in Finland after Helsinki-Vantaa. Oulu represents an important logistics center; it is located on a harbor on the coast of the Gulf of Bothnia and also provides major land transportation facilities. The Technopolis Oulu City Center is an impressive new building of 11,000 square meters hosting over 600 companies and employing 8,000 people.

Behind Oulu’s Success Strong linkages exist between the university and the local private sector, and a large portion of public funding is connected to programs that require a university to cooperate with an industry partner.

Oulu’s development strategy concentrates on a few important factors that are handled by large, active networks between government, university, and business sectors. The modest size of the city has facilitated dynamic networks, and individuals and firms work closely together on joint projects through strategic interactions. Two large technical universities provide a large supply of high quality university graduates and contribute to local economic development by working closely with the local industries and the local government on technology initiatives.

NEAR-TERM ACTION ITEMS

Moncton can learn from Oulu’s success story. Many of the actions taken by Oulu’s network of government, university, and private sector initiatives have already been suggested for Moncton in this report. One thing is clear in Oulu’s beginnings as a high-tech city: Oulu University’s Department of Electrical Engineering played a key role. The department’s activities proved crucial to Oulu’s transformation from a local economy based on natural resource industries to a techno-economy dominated by information technology (data communication, software production, and electronics). The importance of a local university is underscored yet again. In Moncton, the role of the Université de Moncton is indeed critical, but enrollment is limited to students who are fluent in French. Moncton is challenged to expand Anglophone university capacity, especially in information technology course offerings, in order to raise rates of Anglophone university graduates with IT skills to meet regional industry demand and economic goals. Since Moncton is a bi-lingual city, education excellence is required in both sectors, as well as communication between disciplines, universities, and across languages.

Oulu demonstrates the importance of incubating technology companies. Moncton should move forward with the recommended near-term plan to develop a Technology Commercialization Center, and, longer-term, the vision of a Technology Park.

In the case of Oulu, a large portion of public funding is connected to programs where the university is required to cooperate with a partner in industry. On the contrary, few linkages

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exist between industry and research conducted at universities in New Brunswick aside from ACOA/AIF research funding. More incentives for professors to work with the local private sector should be implemented, especially through Springboard programs expanded to enhance technology transfer and commercialization activities in the province.

One of Oulu’s most important assets is the large R&D expenditure in the city. However, Moncton (and the Atlantic region as a whole) has experienced bottlenecks in the effort to attract funding from the Canadian research programs. It is important to increase provincial funding in order to overcome the matching funds limitations. Increasing the rate of technology commercialization in Moncton includes a support system to commercialize new products emerging from research groups.

CASE STUDY: Thin Films and Photonics Research Group (GCMP) Interview with Professor Pandurang Ashrit, Director GCMP, Dept. of Physics & Astronomy, Université de Moncton

Background Professor Pandurang Ashrit has served as the Director of the Thin Films and Photonics Research Group (GCMP) since 1998. The GCMP was founded in 1984 to undertake fundamental and applied research in the area of thin films and optics. The core research team presently consists of seven physics professors, one chemistry professor, a Canada Research Chair (CRC) in photonics, four affiliate professors from the Université de Moncton and Mt. Allison University, two research associates, eight post-doctoral researchers, two research assistants, two project managers, eight master’s students, and two research technicians. An additional six or seven research personnel will be hired before the end of 2006. The entire group, including all associates, consists of about 35 members who work on a project-by- project basis. (Dr. Ashrit is confident that masters and post-doctoral students are well represented in the group, but he hopes to involve more PhD students in future projects.) In addition, the GCMP collaborates on research papers and other initiatives with a number of international scholars and industrial partners.

The group works in well-equipped laboratories that include a Class 100 clean room facility for the preparation, characterization and manipulation of low-dimension materials, generally called advanced materials (nanoparticles, photonic crystals, quantum dots) in the size range of 5 to 200 nanometers. These advanced coatings and materials, as well as their associated phenomena, are studied to understand their properties and for their applications in the area of optics, photonics, energy efficiency, and instrumentation. Among GCMP’s newly acquired advanced equipment is a laser-assisted molecular beam deposition (LAMBD), which relies on high-temperature chemistry among various gases and metals that occurs in the presence of blue plasma. (The LAMBD is only available in two places: the GCMP and Stanford University.)

The properties of materials in thin film and nanostructure form can be controlled in a way that is not possible in their natural state. Advanced materials are created through manipulation of a material’s nanostructure to implant new properties and enhance their relevant performance. One example is the desire to control solar energy (heat and light) passing through a window into a room. The group’s goal is to create parameters for this control: in mass production and over large areas. Surface

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selective coatings, chromogenic coatings, low-E coatings, thermal conductivity, and advanced optical instrumentation represent the greatest potential for commercialization.

Assets and Challenges Funding: A number of different agencies have funded the group’s activities over the years, including Natural Science and Engineering Research Council (NSERC) and the Canadian Foundation for Innovation (CFI). The initial CFI grants have been instrumental in the purchase of equipment and the creation of a photonics laboratory as a seed-point for the present growth of GCMP. Major funding to GCMP also has come from the Atlantic Innovation Fund (AIF) initiative, with matching funds from industrial partners; the Canadian Space Agency (CSA); New Brunswick Innovation Funds (NBIF); and Université de Moncton. Innovative projects and group dynamism has led to repeated AIF funding, including an initial project entitled “Advanced Optics,” and a second one called “Innovative Thin Film Smart Systems.” Both of these projects rely on over ten industrial partners from regional, national, and international private sectors. Dr. Ashrit’s group is unique to have received funds in both AIF rounds. Roughly half of all funding was invested in infrastructure and instrumentation. Academic collaborations include world-renowned academic institutions in Switzerland, Italy, France, USA, India, and across Canada.

Commercialization: GCMP has a significant history of successfully commercializing its technology and inventions, and Professor Ashrit himself has been instrumental in guiding these efforts. Some years ago, three researchers in the group formed Optik Instruments, to build and sell a new generation of ellipsometers. After securing initial success, the team sold the company rather than abandon academia to pursue the new commercial venture full time.

Today, the GCMP’s inventions are knowledge assets that are ripe for up-scaling and commercialization. Care should be taken that these assets are committed in a way that neither limits their commercialization potential, nor denies the Université de Moncton fulfillment of its dual publication and teaching missions. Within a year, Professor Ashrit anticipates hiring a full-time commercialization manager for the group – someone with both scientific and business expertise. Providing outside management for the company will allow the research group to preserve the momentum they have achieved in the laboratory.

Intellectual property: Important innovations in optics, photonics, thin films and materials are evident in the group’s accomplishments. Work related to disclosures and patent protection are managed by Rejean Hall and Giselle Leveque at the Université de Moncton; David Foord at UNB, in a collaboration with Springboard; and an Ottawa-based IP attorney. As a result of AIF funding, negotiations are underway post-disclosure to determine relative ownership of rights between the institution and the inventor in whose name patents are filed. The group is creating a clear connection between the fundamental research and its applications.

ENLARGING NETWORKS The necessary networks to accelerate Moncton’s economic development begins with: an angel network, an entrepreneurs’ network, a formal internship program, and the development of the MTCC to bring cross-cultural networking between these related groups.

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As individuals “pool” personal contacts outside of Moncton, a larger organic network will evolve to the international scale. But planned international networking is also recommended: with the cities of Austin, Texas (and through IC² Institute the cities of Lodz, Poland; Lisbon, Portugal); and also Oulu, Finland. City policy makers should investigate these possibilities methodically, both as models and as potential partners in development.

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KEY OBJECTIVE 5: Promote a Common Vision for Development Promote a common vision with coordinated action initiatives targeted to brand greater Moncton as an important emerging center of technology-based entrepreneurship and business development.

Vision: The community will share a positive image of Greater Moncton that reflects the current realities as well as the vision of tomorrow. Overall ƒ Importance of Civic Leaders – business, academic, and government – having unified regional visions and actions – use this report and the targeted action initiatives as a means to work toward increased regional cooperation to build a regional view of how best to: • Accelerate technology-based business development in established and emerging industry clusters with the greatest growth potential. • Develop Greater Moncton as an emerging center of technology-based entrepreneurship. • Foster academic and research excellence that is specifically linked to regional economic development. • Foster and leverage regional, national, and global value-added partnerships and alliances. Challenges: ƒ Existing regionalism ƒ Bilingual requirements Strategies: Develop a coordinated media program: Newspapers, magazines, TV. From 1985 to 1995, Austin, Texas successfully changed its brand from a university and government town in ranch and cowboy country to a technology growth and entrepreneurial region that attracted talent and VC funds from Silicon Valley and Boston and to a global image as an international “Technopolis.” A land development initiative, as part of the Moncton Technology and Commercialization Center (MTCC), could be a viable long-term strategy for anchoring Moncton’s ICT and R&D activities for years to come and branding Moncton as a leading center of innovation and entrepreneurship in Canada. In the near term, “bioinformatics” is seen as a bridge between on-going R&D activity and ICT companies in the area, especially if MTCC provides both commercialization services for Moncton’s R&D centers and incubation services for ICT companies. Specific Actions: Work to transform how regional, national, and global media write, talk, and show the region by publicizing the region’s significant entrepreneurial heritage and celebrating Greater Moncton’s leaders and entrepreneurs. Engage local newspaper and other press and media to: o Profile Business and Civic (public) entrepreneurs and leaders.

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o Celebrate Entrepreneurial business successes and examining failures. o Recognize entrepreneurs and public-private leaders who have returned to Moncton. Fund college and university faculty and students to compile research reports on Greater Moncton’s programs that illustrate and exemplify the region’s creative and innovative activities. Promote international workshops and events such as an international gaming competition. Market regional educational and business development assets as a package of resources for fostering successful entrepreneurship.

CLOSER REGIONAL NETWORKS AND LOCAL EXPERTISE

BUILDING KNOWLEDGE-BASED INFRASTRUCTURE IN MONCTON

Bioinformatics: The Bridge between ICT and Research & Development (R&D) Centers Moncton’s dual assets in ICT and the R&D sectors provide a strong base for regional development, which will increase with communication across these sectors. The strength of the ICT sector in Moncton resides in the organic development of commercial firms in the private sector, many of which have “bootstrapped” their way to profitability without extensive venture capital or governmental support. The R&D centers, on the other hand, have thrived by attracting grant money to build research capacity at the Université de Moncton and the two local hospitals, but have been less successful to commercialize emerging technology from the laboratories.

The pre-existing niche of “bioinformatics” provides one arena in which these two areas of excellence can work together to achieve greater regional strength. The growing areas of medical informatics, bio-markers, bio-statistics, health informatics, and bioinformatics in general presents a clear opportunity to brand Moncton as a center of excellence by bridging ICT and R&D efforts to increase both business and research. Housing representatives from the IT departments of Moncton’s two hospitals in the proposed MTCC would be one way to effectively raise the profile community-wide and encourage business development in bioinformatics.

Beauséjour Regional Health Authority One potential partner to initiate the bioinformatics bridge includes The Atlantic Cancer Research Institute. Housed at the Dr. Georges-L. Dumont Regional Hospital, ACRI is a leading R&D center of excellence in Moncton, and one of its areas of expertise includes bioinformatics tools and methods. Robert Goguen, Manager of Development and Programmer Analyst for the Beauséjour Regional Health Authority in Moncton, has kept the hospital on the edge of technological innovation. His team of eight IT specialists is completely funded by the Regional Health Authority. (Not every New Brunswick health authority funds an IT team at every hospital).

Custom Software: It is not unusual for modern hospitals to sustain digital intranets to track patients and their treatment. At Beauséjour, Goguen has developed custom software applications not only to manage patient records but to track results in clinical trials and

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projects in specific areas like tele-nephrology and tele-oncology. Goguen’s IT team developed these project-tracking applications in-house, and the team is willing to share applications with the other regional health authorities (in the province and elsewhere). Licensing the software to a wider market is also a possibility. Software development projects arise continually, and Goguen says, “It would great to partner with a software firm, especially when we need to develop a large application. Locating in an incubator would raise our exposure and help us find the right partners.”

Bio-Statistics: Apart from these patient record management functions, one emerging asset at Beauséjour is the proliferation of bio-statistics generated from various projects, research, and clinical trials underway at the hospital. Goguen recognizes the vast potential for extensive research against the data collection; he feels that data mining with .SQL Server from Microsoft will be an important new direction for his team to pursue in coming years. “There is not much current research being done against the data accumulated at my hospital, but the potential is there,” says Goguen, who has spoken with NRC representatives about the potential to fund expansion of data mining.

South-East Regional Health Authority, Moncton Hospital Moncton’s largest employer, with 2700 employees and an annual budget of $180 million is Moncton Hospital. Like the Dr. Georges-L. Dumont Regional Hospital, the Moncton Hospital also has an undervalued asset in its IT department. Jacques Lirette, CIO, oversees an IT staff of 44. “For us, IT in the hospital setting is about shaking up the status quo, showing how we can improve workflow to improve patient care, always with a focus on our patients.”

Medical and Health Informatics: Lirette sees huge potential growth for the hospital in IT- driven medical and health informatics, or the storage, retrieval, and analysis of health- specific data. For Lirette, the biggest issue for the department’s near-term horizon is improving the use of data that is collected to increase patient safety and reduce errors. “There is a huge amount of data flowing around our hospital. The problem is overcoming clinical specialties within the hospital to better communicate patient treatment histories. So much data exist in isolated silos and are not well integrated,” he says. Lirette’s team has developed a reputation among OEM’s across Canada as a test bed to evaluate new technologies, such as mobile communications, for doctors and hospital staff. “We have been testing prototypes for RIM, for instance, for completely novel medical applications,” Lirette says. “While we don’t publish our own results, the findings from OEM testing have appeared in industry journals, and that is extremely gratifying to us.”

Incubation: The IT department is a big consumer of software, much of it custom made for the hospital, and Lirette would like to see more local software vendors compete for contracts at Moncton Hospital. “In many cases,” he believes, “local companies are neither aware of us and our needs, nor are they experienced enough in the bidding process to win our contracts. But if our IT department had a presence in a local incubator, we could meet regularly with local and regional software developers, discuss our needs, and keep more of our purchasing local. Revenue generation is not a big priority for the IT department, but licensing and partnering with local companies through the incubator could be a big win for us and for the Moncton IT community.” He envisions the hospital being a testing facility not just for the RIMs of the technology world, but also for small local and regional companies to test technology products through the IT department.

Lirette believes that securing an office in an incubator would also grant him more opportunity to recruit talent for his department. Because the government-owned hospital’s wage scale is

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less flexible than in the private sector, he finds it increasingly difficult to compete for employees, as Moncton’s IT industry expands. “Luckily, we can offer outstanding technology and fascinating problems on which to work. My experience has been that employees working for our department enjoy the added benefit of exposure to industry-specific knowledge and expertise in healthcare. In effect, we turn IT people into healthcare specialists with IT training,” says Lirette. He also says that NBCC-Moncton is a great provider of IT workers. Lirette trains 8-10 NBCC IT students per year in an internship program run by Errol Persaud, an NBCC instructor; typically he hires a few of those interns into permanent positions every year, as well as a few from UNB, Université de Moncton, and Mount Allison University.

Health Research: Michelina Mancuso, manager of research services for the hospital, believes that IT’s role in health and medical informatics is to harness health data for research purposes. The recent increase in clinical trials, medical research, and contract studies at the South-East Regional Health Authority raises the hospital’s profile as a research center; like Goguen, she perceives the untapped potential in researching the abundant data captured in patient and clinical trials. Mancuso recognizes that biomedical researchers in Atlantic Canada require both clinical expertise and a “real laboratory” to improve medical devices during their research and development phases. Working with the hospital’s Supervisor in Nuclear Medicine, Paul Colosimo, she recently identified an opportunity to move imaging informatics forward. Moncton Hospital operates the only SPEC-CT machine in Canada that has been in use for over one year, and she has paired the hospital’s diagnosticians to work with nuclear engineers from UNB and industry, in order to research the machine’s diagnostic and functional capabilities.

Mancuso’s largest need is for advice on intellectual property and commercialization. “The hospital doesn’t have the IP specialists to manage the tools, datasets, and clinical results developed here. We need help to negotiate licenses and research contracts with large private sponsors. Having a presence at an incubator with commercialization services could help.” She stresses the connection to local economic development, “The entire health field across the province should perceive that medical informatics has the potential to generate benefits for our hospitals while it sparks entrepreneurial activity in the community, as well.”

Action Plan Include space in the MTCC for Health and Bio-informatics organizations, events, and activities. Encourage an initial meeting of interested parties in the Health and Bio-informatics area, including: o Dr. Rodney Ouellette, Atlantic Cancer Research Institute o Jacques Lirette, CIO; South-East Regional Health Authority o Michelina Mancuso, Manager of Research Services, South-East Regional Health Authority o Robert Goguen, Manager of Development and Programmer Analyst, Beauséjour Regional Health Authority. Promote Health and Bio-informatics and related commercial potential.

CASE STUDY: Atlantic Cancer Research Institute (ACRI) Case Study Interview with Dr. Rodney Ouellette, Scientific Director and CEO, August 28, 2006

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The largest cancer research institute in Atlantic Canada, ACRI, specializes in research on breast cancer, leukemia, and lymphoma. The institute is a non-profit research facility located in the Dr. Georges-L. Dumont Regional Hospital, and employs a total of 30 employees, with 20 directly involved in research activities. Though the number varies, there are also approximately 30 clinical trials underway at the Institute, where cancer patients receive the benefits of cutting-edge cancer research.

Background Formerly the Beauséjour Medical Research Institute, the organization was re-branded in June 2006 to better reflect its focus on cancer research and the regional impact of its scientific activities. Since its founding in 1998, ACRI has attracted more than $12 million in grant funding for its programs and has an annual budget of $1.5 - $1.8 million, approximately two-thirds of which is grant dependent.

Assets and Challenges Commercialization: Dr. Ouellette’s largest challenge is commercialization of his research. Three years ago, granting agencies like ACOA and AIF encouraged ACRI to “build capacity” for the region through its research. The ACRI team ramped up clinical trials, revived a fertility clinic, and sought out contract work to supplement the institute’s research programs. Today, as he applies for follow-on funding from the same granting sources, the agencies are making renewed funding contingent on commercialization activity. “My biggest need is for help and advice on how to begin the process of commercialization of our research,” says Dr. Ouellette. “None of my researchers has experience in commercialization, nor do I. We are investing in our institute and professional resources for the longer term. And while I certainly understand the need and potential for commercial applications from what we do – and believe there is a huge opportunity in our research – I’ll need help from other experts to begin commercializing our findings.”

As Atlantic Canada raises its technology profile in terms of attracting R&D funds and increasing commercialization activity, Dr. Ouellette believes ACRI can be the “tip of the sword” in moving research forward in the biosciences. “ACRI is nucleating regional expertise in life science and biotechnology for the long term,” he says, “and commercialization will be part of the success story in the long run.”

University partners: “We are not going to be able to build research hospitals in every New Brunswick town,” Dr. Ouellette argues, “so a reasonable strategy would be to consolidate research efforts.” Toward this end, ACRI partners with Fredericton-based the Cancer Populomix Institute in a “virtual” collaboration that involves clinical, IT, and research labs around Atlantic Canada. Beyond that effort, however, Dr. Ouellette sees an opportunity for ACRI to study human disease by co-sponsoring faculty positions at regional universities. “By creating unique collaborative arrangements with our university partners, mainly UNB, Mount Allison and Université de Moncton, we could really leverage our resources by offering these faculty members and their students lab space and research opportunities they might not have otherwise.” With UNB’s nursing program already in Moncton, the blueprint is in place for collaboration.

Intellectual property: ACRI has accelerated protection of its Intellectual Property, with one patent moving through the U.S. system, another patent application being readied, and a license under negotiation. NRC is absorbing patenting costs on the

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Institute’s behalf and is marketing the license for ACRI. But, by his own admission, Dr. Ouellette could use assistance with IP issues. “None of us at the Institute really understands the intricacies of negotiating with private investors, nor should we. That’s not our core competency,” he says. “But if we could find help locally with licensing, patent development, technology transfer, and commercialization, we could take much better advantage of our research results.” If incubator space were available to ACRI, he thinks, the Institute would be very willing to be an initial tenant, to take advantage of business management expertise made available through the incubator, and to work with other R&D tenants to pursue more opportunities.

Any future expansion of the Dr. Georges-L. Dumont Regional Hospital, where ACRI is located, should expand integration of training and research functions. In addition, Dr. Ouellette proposes that space be included in the renovation plans for business development and incubation services. “Few role models exist in Canada, so it has been a difficult sell. But this is exactly the sort of activity the federal funding agencies are emphasizing, and we should pursue it,” he says.

CASE STUDY: Spielo/GTECH Interviews with Jon Manship, Founder; and Bob Rybak, Vice President, Technology

Jon Manship leveraged his experience as a video game repair technician at a local arcade to found Spielo in Moncton in 1990. The company markets Video Lottery machines to Atlantic Lottery Corporation, and by the end of 1992, the company had earned $3 million after taxes. After additional product development, the company enlarged its market across Canada, the U.S., and Europe, and opened a manufacturing facility in Quebec. In April 2004, Spielo was acquired by Rhode Island-based lottery and gaming company GTECH for $185 million USD. After the merger, Manship left the company and formed Technology Venture Corporation a private venture capital firm. GTECH, in turn, was acquired in August 2006 by Italian lottery company Lottomatica S.p.A. for nearly $4.5 billion.

Background In 1988 Jon Manship began technology development and organization of funds for Spielo. In 1990 he was able to develop a prototype video lottery terminal and establish the company. The start-up enjoyed support from a broad range of initial investors: he started with just over $1 million from his own savings, the Atlantic Canada Opportunities Agency (ACOA), the National Research Council Industrial Research Assistance Program (NRC-IRAP), local banks, and a small number of private investors. Manship credits Spielo's initial success, in large part, to his ability to access qualified people and use equipment and lab space at CADMI, the Provincial Micro Electronic Research Center located on the Université de Moncton campus. “I would never have been able to develop the prototype without collaborating with CADMI engineers,” says Manship. “CADMI played such a vital role in Spielo's early years. Being able to consult with engineers from CADMI, and to build and test machines on their high-end hardware was crucial.” So important, in fact, that when Spielo outgrew CADMI and brought its R&D function in-house, Manship took several CADMI engineers with him.

Spielo began by marketing a video lottery machine system to Atlantic Lottery Corporation. Legislation in the early 1990s opened the market and by 1992, Spielo had generated $3 million after taxes. All of this revenue was reinvested into

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research, to facilitate the additional product development that was necessary to bring the product line to the U.S. market. In 1993 the company negotiated U.S.- based investors in Minneapolis for a $2.4 million USD financing arrangement (subordinated debt at 9 percent with a warrant kicker). These funds were used to buy out the equity positions of the start-up investors, other than Manship.

As the company rapidly expanded in the late 1990s, it underwent bold structural changes to better accomplish its goals. “At 50-100 employees, the dynamic was totally different than at 300 employees. We had to make big structural changes,” says Manship. The company was reformulated so that each business line had a vice president responsible for its profit and loss. “The critical success factor that drove the business was our goal to have the number one machine in every market we were in. We wanted our machine to make more than any other machine in any market we played in,” he says, and these organizational changes helped fulfill that mission. Spielo's senior management team used textual business resources, as well as the expertise of the large public accounting firms with offices in the region, to develop and execute the business structure evolution.

In 2003, Spielo entered negotiations to sell the company to GTECH, a global lottery and gaming company based in the U.S. GTECH acquired Spielo for $185 million USD in April 2004 and has developed Spielo into GTECH's R&D division. GTECH, in turn, was acquired in August 2006 by the Italian lottery company, Lottomatica.

Assets and Challenges Manship reports that, after launching its first products, it was difficult for Spielo to find the necessary start-up capital in Atlantic Canada. Though Spielo received governmental support in the early product development phase, it was unable to find the later-stage financing it needed in 1993 because the region seems to have a low risk tolerance. “We had to seek U.S.-based investors because Atlantic Canada lacks an established 'angel' culture and struggles with low risk tolerance for start-ups,” says Manship.

According to Bob Rybak, low wages in Moncton have enabled GTECH/Spielo to manufacture at a lower cost than either competitors or other GTECH locations. Production in Moncton can be executed at per unit costs just slightly above the costs of producing in India (while the company avoids language, cultural, and physical distance difficulties). As a result, production has migrated from the high-cost GTECH facilities in Rhode Island and Austin, Texas, to Moncton. The trick, however, will be to avoid the “low-wage” snare, and to keep technology wages at a level high enough to attract workers from other technology centers in Canada.

Attrition is low for GTECH employees in Moncton, which Rybak attributes, in part, to the small size of the city. Since there are fewer large companies to offer employment in Moncton, employees are motivated to work through minor difficulties, in order to stay with the company.

The executive team, however, has found it difficult to fill necessary positions. As of August 2006, Spielo/GTECH was unable to fill nearly 50 employment opportunities with local talent, with particular difficulty in finding qualified senior staff management and executive team positions. As a result, Rybak said that the company either hires

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less experienced applicants, or relies on its extensive networks to recruit individuals from outside the area.

Lessons Learned Access to capital: Receiving ACOA and NRC-IRAP support were critical components for the launch of Spielo. Access to other capital in the region, however, is difficult to find. One way to raise “risk tolerance” among regional investors may be to establish local tax benefits or a loss provision that would refund a percentage of an unsuccessful investment. Additionally, Moncton could provide matching funds for certain investments in young companies, which would reduce risk for angels and capital venture firms by reducing their investment per project.

Business incubation: Moncton would also benefit from a start-up incubation center to provide young companies with inexpensive office space and technical resources. “What is important is to have access to engineering staff and the best equipment at cost,” says Manship. It is also pivotal to have access to university professors’ expertise when it is needed. An incubation center to centralize these resources, and provide administrative staff and common business equipment, would help launch entrepreneurship in the region.

Mentoring: The incubation center could also launch a strong business mentorship program to bring together established entrepreneurs and young start-up executives to help them solve common growth problems. A board of business leaders in the community could be established as a resource for local start-ups in the incubation center, for both mentoring and consulting.

Attracting senior managers: Spielo has had difficulty filling its upper level management positions. Qualified Chief Financial Officers and Chief Operating Officers in Atlantic Canada are hard to find; many people seem to be moving to larger corporate centers in Ontario, Quebec, Alberta, and British Columbia. Moncton needs to attract and retain qualified executives with business experience. It might be beneficial to initiate an advertising campaign in major Canadian cities to highlight Moncton’s low cost of living, high quality of life, and its targeted economic focus and hi-tech potential.

International collaboration: Spielo/GTECH has enjoyed a close working relationship with the GTECH's Rhode Island and Austin offices. The communication stream among the facilities, particularly between Austin and Moncton, has been beneficial to both parties. Rybak states, “…an infrastructure and management capability exists in Austin that helps Moncton address those needs and allows Moncton to grow.” And, while it is beneficial to have strong communication networks with growing technology cities such as Austin, it should also be beneficial to develop a coalition with two to three other cities similar to Moncton to share and develop growth ideas, contacts, and experience.

Air links: It is also important to Moncton’s growth that more direct flights be established between the city and the major business centers of the world. Continental Airlines recently established a non-stop flight between Moncton and Newark, and additional flights that link the region with both Canadian and American cities would broaden the city's networking and business capacity. The city should offer incentives to airlines to establish these flights.

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Increased networking with convenient travel links to select cities around the world may also be beneficial to recruiting experienced talent for Moncton companies. Rybak has found that one method to fill his higher-level management positions has been to use his company networks in other cities to locate people who were originally from the region. These people can have a personal interest in returning to Atlantic Canada and can bring a level of experience not easily attainable in Moncton. If stronger networking links with other cities are established at a municipal level, it may enable companies to recruit talent to relocate to Moncton.

University graduates: In the effort to locate qualified talent, Rybak also seeks out applicants who have completed both an undergraduate degree and a year or two of augmented technical training. These employees bring the company both a broad general understanding and a specialty. Moncton should encourage and perhaps subsidize a program to train university graduates in specialized IT skills. Undergraduates at local universities should be informed of this possible career path and the benefits they may enjoy as a result.

Skunkworks: In 2004, Spielo/GTECH opened an R&D lab, the Advanced Technology Center, supported by NSERC and NRC. In the Center's formal R&D stream, 30-40 percent of the net funds spent are reimbursable by the government. Beyond this stream, Spielo/GTECH developers have a catalog of 450 discrete “pure research” ideas with the goal to discover disruptive technologies, patentable concepts, and other breakthroughs that – while not specifically related to new product development – will provide the firms with a competitive advantage. It would be advantageous for Moncton to establish a subsidized research center, like a “Skunkworks,” to fund a portion of this work. “One way to approach this would be to bring all of the institutional sources of funding and support together at the table at one time, and all of the companies that might benefit from this, into a consortium,” says Rybak. Rather than companies individually seeking government funding for suitable projects, a technology center could be established with government funds. Companies could contribute financially and with in-kind contributions. Rybak believes this would promote research cooperation between institutions and industry, and could lead to a number of spin-off technologies and start-ups.

A LAND DEVELOPMENT INITIATIVE

Clustering Digital Content Assets and R&D Commercialization Assistance The City of Moncton, through a T1044 non-profit corporate organization (“NP”) may embark on two parallel strategies for knowledge-based economic development by creating an alliance with a private sector partner (“PP”). One strategy is to commercialize innovation arising from the information and communication technology industrial sector (particularly digital content including digital media, gaming, software programming, informatics and other related niches). Tactics may be undertaken to operationally dedicate resources to an ICT strategy. One prerequisite for a successful public-private alliance is shared commitment to a common desired result: a vibrant, financially successful land development project to house commercial and educational ICT activities, including commercialization services for Moncton’s science and bioscience R&D centers.

Background

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Moncton has an abundant skilled work force, ambitious entrepreneurs, and (if financing is favorable) a population subset of buyers for commercial space attached to a land development project – executed in phases -- with the long-range goal of clustering ICT digital content regional assets. A first phase of the land development project is to construct a building to house an incubator with necessary office space; a second phase would consist of a building to house an innovation center with the related office space; subsequent phases would continue according to demand. (Other initiatives would provide additional resources, including seed capital, angel investment, business skills training, etc.) The budget for a first phase could total $5-10 million.

Deal Structure Available financing alternatives will determine the structure of the initiative/s initiated, and will ultimately determine the preliminary plans for this endeavor. There are at least four financing alternatives for funding public infrastructure including a Bond Issue, a Public- Private Partnership (“P3”), a CNRC-NRC Advanced Strategic Research Initiative, and, Brand Monetization and Private Donations. Project funding could be arranged through a combination of one or more alternatives:

1. Bond Issue -- The issuance of bonds for the purpose of funding public infrastructure is a common municipal activity in Canada and elsewhere.97 Factors to consider include the public appetite in Moncton for bond indebtedness, the City’s long term debt rating, and the transaction costs involved in what could be a relatively small issue. The tax exempt status of interest on municipal bonds could motivate wide subscription, given the broad consensus the MTPG has cultivated among corporate and individual civic champions.

2. P3 -- The City of Moncton has previous successful P3 experience with the privatization of its troubled water treatment plant in 1998. Although P3s can be controversial, Canadian proponents point to the example of Moncton’s finance-design-build-operate type the City undertook.98 A P3 design-build type could appeal to private sector candidates such as Giffels Management, Ltd., that is currently developing a 60-acre site where the Emmerson Business & Technology Park is located:99 a desirable target for a subject site. However, the requirements for transparent competitive bidding among private sector partners, and the preparation of an objective cost benefit analysis, argues against early favoritism toward any particular PP candidate; consequently a formal request for proposals or information should be preferred over open discussions with Giffels and other companies. It is recommended to circulate a draft proposal for interested parties to review. Policy restrictions and commercial feasibility would severely impact the P3 planning process.100 A City of Moncton representative could be appointed to serve on a P3 committee, lead the Project Team, and serve on the Selection Panel and the Negotiating Team. The IC² Institute could serve as an Outside Technical Advisor throughout the process. The Moncton City Manager currently sits as a board member of the Canadian Council for Public Private Partnerships, a non-profit formed for the purpose of providing information about P3s.101

3. Provincial or Federal Grant - CNRC-NRC Advanced Strategic Research Initiative – A number of provincial and federal grant programs provide funds to develop infrastructure.

97 http://www.edmontonairports.com/bins/content_page.asp?cid=13-67-240-242 98 http://www.publicintegrity.org/water/report.aspx?aid=58 99 http://www.giffels.com/emmersonparkuc.asp 100 http://strategis.ic.gc.ca/epic/internet/inpupr-bdpr.nsf/vwapj/guide-e.pdf/$FILE/guide-e.pdf 101 http://www.pppcouncil.ca/aboutUs_governance_bod.asp

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One promising possibility was mentioned by the Director of NRC - IIT located in Fredericton: NRC’s Advanced Strategic Research Initiatives Program is currently exercising a preference for topics related to 3D, data mining, and gaming. The application’s requirement for a commercial plan with a corporate and a government partner could be satisfied by the proposed alliance.

4. Brand Monetization and Private Donations – Naming rights to the incubator, innovation center, the research park itself, and/or buildings within the park could serve to monetize the project’s brand and afford private capital for leveraging against public funds. Public sentiment in favor of naming rights has been demonstrated in Canadian metropolitan areas.102 A number of Canadian companies offer consulting services on narrow topics (i.e. permanent vs. fixed term) related to naming rights issues,103 and targeted marketing campaigns can be self-managed.104

Finance The NP could provide: ƒ Initial interim financing for building construction and site improvements held under the ownership of the PP, without fixed term and secured with a first mortgage against parcels at the site ƒ Public funds to underwrite permanent mortgage financing that would retire interim debt as buildings and/or individual units of ownership are sold

Sales activity will restore liquidity as real estate is removed from the balance sheet of the PP. As the City’s bond indebtedness is retired, partners can be positioned to undertake further development: new buildings could be planned, designed, and constructed in accordance with the master planned concept and market demand.

Marketing Buildings could be developed and sold in units of office condominium ownership rather than leasing to tenants. The shells of buildings, common areas, equipment, instrumentation, fixtures and other elements of the project can be owned in common by unit buyers as is normally the case with condominium projects, and costs associated with common elements can be shared by unit owners. Precedent exists in Canada for public funding of residential condominium development.105

At the discretion of the NP, a combination of covenants can establish deed restrictions to ensure that the development and the use of the land comports with the common desired result of the alliance. A master planning process could predetermine appropriate covenants for the project’s land use, zoning, architectural controls, leasing restrictions and more. Covenants will ensure that both building construction and site development facilitates synergy among the owners of the units, raising the reasonable expectations for a reliable outcome for both the NP and potential buyers. A subcommittee of directors (appointed by the NP’s governing board) could oversee ongoing administration and enforcement of covenants.

102 http://www.city.vancouver.bc.ca/commsvcs/oca/naming/policy.htm http://www.city.vancouver.bc.ca/commsvcs/oca/naming/pdf/execsummaryofinputs.pdf 103 http://www.theoffordgroup.com/service.html#V http://www.give-canada.ca/ 104 http://media.eventbooking.com/27429_06.pdf#search=%22canada%20naming%20rights%20%22 105 http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2004/2004-11-08-0900.cfm

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If marketed optimally, units can be pre-sold, and thereby reduce financial exposure for the partners. The City would benefit from an aggressive marketing campaign that brings publicity for its ingenuity in fulfilling its public mission. A major key to the clustering of ICT and R&D resources in Moncton is public involvement.

Benefits, Motivation and Rewards The aggregation of Moncton’s ICT and R&D industries should increase the effectiveness of both toward the common goal of regional economic development. The PP would benefit both financially and from positive publicity and public relations. Condominium unit sales can be motivated by the prospect for buyers to build equity in real property vs. expensing rent – as well as attaining an environment with enhanced commercial, educational, and creative synergies. A land developer with an appropriate site could be motivated to join the alliance in order to liquidate property equity in a manner that limits financial risk, through the PP.

CASE STUDY: Moncton Flight College Interview with Craig Prosser, MFC Business Manager; Holly McKnight, MFC Board Member

The renown Moncton Flight College (MFC), located at Moncton International Airport, is a center of excellence with a regional, national, and international impact. The partnership between MFC and NBCC-Moncton's IT department, through the two-year Diploma in Aviation Technology program, is just one reason MFC plays an important role in technology development in the community.

Background MFC, a non-profit organization, has been serving the Maritimes since 1929. It was originally established as the Moncton Aero Club and became the Moncton Flight College in 1997 when it introduced its joint diploma program with NBCC-Moncton. The school has trained 15,000 pilots over its 77 years of existence and currently graduates approximately 120 pilots per year. The college received the 2005 Award for Business Excellence presented at the Dieppe Entrepreneur’s Award Banquet.

MFC attracts students from all over the world because of its individualized curriculum and low student-to-teacher ratio (6:1). Close supervision ensures an extremely high graduation rate. The Air Transport Association of Canada projects a 4.8 percent annual increase in the number of pilots needed in Canada, and applications to MFC programs are up across the board.

The school offers four programs; the most popular is a two-year Diploma in Aviation Technology program. This program attracts young high school graduates to pursue coursework both at NBCC and MFC so they can receive pilot accreditation and begin accumulating the necessary flight hours to become commercial pilots. The Diploma program typically attracts 20-24 students per year, but applications jumped to 41 in fall 2006. The related program offered by NBCC-Moncton, in Avionics-Aircraft Technology, has a 100 percent placement rate for its graduates. CCNB-Dieppe delivers an Aircraft Mechanic program, as well.

MFC enjoys a wide global reach. In 2003, the college began working with Saint John- based CANLink Global in order to pursue an opportunity to train Chinese pilots in Moncton. In 2005, MFC signed a groundbreaking $60 million contract to begin a pilot training program with the Beijing University of Aeronautics and Astronauts in 2006. Over a five-year period, MFC expects to train 120 Chinese pilots per year. The

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demand for pilot training in China is huge: China has six times the population of the U.S., but has only one twentieth the number of pilots. Nationally, China needs 1200 new pilots per year and 15,000 by 2015, and Chinese universities do not have the facilities or capacity to meet this growing need. “They are actually building airports in China before they have the aircraft and pilots,” says Craig Prosser, MFC Business Manager. MFC competed for this contract with flight training schools from Vancouver and Montreal and won after representatives from the Civil Aviation Authority of China visited and audited the MFC program. “Our winning bid is a strong indicator of the high level of quality that MFC delivers,” says MFC Board member and NBCC-Moncton IT Department Head Holly McKnight. The first 30 Chinese students arrived in July 2006 to begin the new program. Building on the Chinese connection, MFC plans to expand into other international markets. Says McKnight, “India is our next target market. India is following the same growth pattern for pilot demand that we see in China, about five years behind China.”

Assets and Challenges MFC is a tenant at Moncton International Airport and as they enlarge their services, they will attract increasing aviation activity for the airport. Historically, Moncton has been the commercial hub of the Maritimes, and while the city’s rail freight has declined, its truck and air traffic is expanding. Continental Airlines added direct flights from Newark, New Jersey, to Moncton in May 2006; Federal Express and UPS are expanding their Moncton operations every year. As commercial aviation traffic continues to grow, Moncton’s importance as a regional air hub will also increase.

In spite of cold winters, Moncton’s weather is surprisingly accommodating for aviation. Moncton experiences fewer days of fog than other airports in New Brunswick and is more centrally located than airports on Prince Edwards Island, Nova Scotia, or Newfoundland. Certainly, the weather in Moncton is a great asset compared to unfavorable training and flying conditions in Beijing and other Chinese cities, where smog is heavy and growing worse.

Lessons Learned International connections and collaboration. MFC’s success is due to the strong relationships it has built with organizations in New Brunswick and abroad. Partnership with NBCC-Moncton adds educational value to the core aviation training program, while international training contracts like the one with China contribute to MFC's reputation as a center of excellence. MFC's global brand is well-known and should expand as its international reach increases. It may also be valuable for the city to offer more English as a Second Language (ESL) training as larger numbers of non-native English speakers come to the region. Such a program could also increase international immigration to Moncton and enrich the Moncton economy.

Expansion. Other airports in the region appear to be underutilized, and in future MFC might expand its brand and programs to other regional airports in the form of satellite operations.

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CONCLUSION

THE OPPORTUNITY AT HAND

Building a global brand as a technology hub is not principally about marketing Moncton, although marketing activities will publicize the region’s assets, commercial opportunities, and achievements. More importantly, branding Moncton requires progress toward select strategic actions such as: Focusing investment, organization, and wealth creation around Moncton’s existing clusters in ICT and the bioscience and thin films sectors by launching the Moncton Technology and Commercialization Center (MTCC). Making Moncton a supportive location for technology entrepreneurs by organizing angel investors, venture capitalists, and government funding agencies around the need to fund more start-up companies. Improving post-secondary educational attainment rates, particularly among Anglophones, and expanding post-secondary ICT offerings through area institutions and collaboration. Actively pursuing international private and municipal partnerships with established technology centers, such as Austin, Texas and Oulu, Finland. Promoting a common vision for Moncton’s technology development and by pursuing niche opportunities like bioinformatics and a “Creative Learning Institute in Digital Media.”

Accordingly, this report presents strategies to enhance two key principle assets: the ICT sector represented by numerous regional-based companies, and emerging research and development activities based in Moncton’s two hospitals at the Université de Moncton, and at Mount Allison University. Both represent key local strengths around which Moncton can build a national and international brand as a technology center of excellence.

Branding Moncton as a technology center of excellence and the “hub city” of Atlantic Canada for entrepreneurship and innovation also addresses larger demographic issues facing both the city and the province. In post-secondary education institutions across New Brunswick, enrollment is slipping in the face of overall population declines and the lure of jobs in rapidly growing parts of Western Canada and other locations. And even though Moncton itself is growing, data collected from the survey of Moncton college and university graduates and from interviews with young local entrepreneurs indicates that Moncton must do more to attract and retain young talent. Infrastructure improvements including the recommended “Creative Learning Institute in Digital Media,” and the Moncton Technology Commercialization Center will augment existing and important programs like “Geeks on Ice” and the “Cyber Socials.”

This report emphasizes five key objectives for accelerating technology-based growth in Greater Moncton.

OBJECTIVE 1. Accelerate technology-based business development in established and emerging industry clusters with the greatest growth potential. Moncton has two clear asset areas in its growing knowledge-based economy: organically launched ICT companies and R&D activity represented by centers of excellence like the Atlantic Cancer Research Institute. Within this context, Moncton’s knowledge-based innovation economy is currently developing

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along two paths. The first path is innovative, in which start-up companies, mostly in the ICT sector and outside the R&D centers, arise spontaneously from entrepreneurial initiatives. The second path for increasing knowledge-based entrepreneurship in Moncton involves commercialization of R&D coming out of research centers in the region, much of which is in the bioscience disciplines. Developing companies and creating wealth along both these paths will involve strategies that are both distinct and overlapping; the Innovation Paradigm and the R&D Paradigm.

OBJECTIVE 2. Develop Greater Moncton as an emerging center of technology-based entrepreneurship. Local investors can help to secure the larger vision at hand as they focus investments in targeted areas of development. It typically takes a focused regional effort to help investors understand emerging industry sectors when they have an established pattern of investment in more traditional ventures. It is important to celebrate local entrepreneurs and increase their profile in local events and media as positive role models. Broad awareness of entrepreneurial patterns of success (and common concerns) helps to secure a grassroots level of support for change.

OBJECTIVE 3. Foster academic and research excellence that is specifically linked to regional economic development. Engaging young students with a vision for technology development and entrepreneurship is important, as is targeting education to promote the skills needed in technology-based jobs.

OBJECTIVE 4. Foster and leverage regional, national, and global value-added partnerships and alliances. Networks and information sharing in an inclusive and open society is needed to enable regional economic acceleration. Multiple avenues for communication for cross- disciplinary interaction need to function at several levels: person-to-person, group-to-group, company-to-company, college-to-college, industry-to-industry, city-to-city, etc. These can be given local prominence through workshops, conferences, and appropriate media coverage.

OBJECTIVE 5. Promote a common vision and coordinated action initiatives targeted to brand Greater Moncton as an important emerging center of technology-based entrepreneurship and business development. Government, and business, and academic champions need to collaborate in order to determine the most meaningful actions to create widespread synergies to coordinate change. While collaboration does not require complete agreement from every party on every issue, it does require broad regional commitment to the larger objectives as well as support for targeted actions. Institution-based excellence – whether it be academic, business, or government – is not sufficient. Rather a wider view is required in which individuals and institutions actively support the larger community’s potential. When this wider view is grasped in both public and private effort, regional assets can be leveraged against regional challenges.

Moncton’s opportunity to build on its ICT and R&D assets is real. With targeted funds, organized effort, meaningful international partnerships, and a renewed emphasis on reinforcing a culture of entrepreneurship and innovation, Moncton can enhance its growing reputation as a bilingual technology center of excellence.

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APPENDICES

A. SURVEY OF GRADUATE STUDENTS RESULTS, ANALYSIS, ETC.

B. SURVEY INSTRUMENT

C. OPEN RESPONSES TO SURVEY

D. TIMELINE COMPANIES

E. BENCHMARKING CITY COMPARISONS

F. THE RESEARCH TEAM

G. INTERVIEWS

H. BIBLIOGRPAHY

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APPENDIX A. 2006 SURVEY ANALYSIS, MONCTON REGION GRADUATE STUDENTS

To gain a better understanding of the career plans, attitudes, and work perspectives on Moncton of recent college and university graduates from area schools, a web-based survey was conducted via a commercial service (SurveyMonkey.com).

The results of the survey indicate that a significant proportion (over 40 percent) of students are planning to stay in Moncton to work after they graduate. The students who are planning to leave cited numerous factors affecting their decision, including better job opportunities and higher wages in other places. Students generally value the quality of living in Moncton, and some stay to be close to their family. There were numerous complaints indicating that the jobs available in Moncton were inadequate and paid wages that were too low. Most students leaving the city would require a salary between $35,000 and $65,000 to stay.

Survey Sample The names and email addresses of 2006 graduates were requested from two local universities, Mount Allison University and Université de Moncton, and from the two community colleges, NBCC-Moncton and CCNB-Dieppe. Mount Allison, NBCC-Moncton, and CCNB-Dieppe were able to provide the names and email addresses of combined 372 students.106 Of these, 73 email addresses were invalid, leaving 299 students to contact. A total of 100 of these students responded to all or part of the survey, yielding a 33.4 percent response rate. See the chart below for detailed statistics, by school.

Table A.1: Survey Response Rate

NBCC Mount Allison CCNB Total 2006 Graduates 393 430 192 1015 Data Provided 161 142 69 372 Invalid Emails (19) (35) (19) (73) Total Contacted 142 107 50 299 Respondents 44 35 21 100 Response Rate 31% 33% 42% 33%

To determine if this sample is representative of the population of Moncton graduates, survey respondents were compared with college and university graduate data provided by the schools using statistics on gender, age, and region of origin. Overall, the survey population was very similar to the population of 2006 graduating students and NBCC-Moncton, CCNB- Dieppe, and Mount Allison.

The gender breakdown of students in the survey sample is almost precisely that of the population of graduating students surveyed, Figure A.1. Likewise, the survey respondents were of similar ages as all the 2006 graduates of the three universities surveyed, Figure A.2.

106Université de Moncton was unable to provide the names and e-mail addresses of its 2006 graduates for technical reasons.

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Figure A.1. Gender Breakdown of Surveyed Students

Gender

56% 54% 55% 54% 52% 50% Population 48% 46% 45% Survey 46% 44% 42% 40% Females Males

Figure A.2. Age Breakdown of Surveyed Students

Age

90% 85% 80% 80% 70% 60% 50% Population 40% Survey 30% 20% 9% 6% 5%5% 10% 3% 5% 1% 2% 0% 50 and over 40-50 30-40 20-30 under 20

The largest discrepancy between the survey sample and 2006 Moncton graduates is the region of origin, Figure A.3. The survey results are fairly similar to that of the population of graduates, but there is a larger percentage of students from New Brunswick and fewer representatives from Nova Scotia. While it is possible that this difference may skew survey results, any deviation is likely insignificant.

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Figure A.3. Province of Origin of Surveyed Students

Province of Origin

85% 90% 80% 71% 70% 60% 50% Population 40% Survey 30% 20% 16% 4% 10% 6% 6%4% 1% 2% 2% 2% 3% 0% AB BC NB NS ON PE QC Other

Survey Methods The survey was designed by the IC² Institute’s Moncton Research Team and approved by all university representatives, including the University of Texas at Austin’s Internal Review Board.107 An email sent to all addresses by the team explained the project and the survey and asked students to follow a link to the SurveyMonkey site.108 Links were individualized so it was possible to track whether or not a particular student had responded. Survey questions were available in both English and French and all students were required to consent to the terms of the survey before proceeding. After two weeks or more had passed, if a student had not completed the survey, another email was sent reminding them of the project and again asking for their participation. Survey results were analyzed for outliers and abnormalities and none were found.

KEY SURVEY FINDINGS

Following is an analysis of the primary findings from the survey results.

“What was your major or primary field of study?” The largest proportion of students (27 percent) majored in a business-related major, followed by engineering technologies (9 percent), psychology (9 percent), and computer and information systems (8 percent), Figure A.4.

107 The full text of the survey is included in Appendix A. 108 The text of all email communications is included in Appendix B.

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Figure A.4. Primary Fields of Study

What was your major or primary field of study? (N=77)

30.00% 27% 25.00% 20.00% 15.00% 9% 9% 10.00% 8% 5% 4%4% 5% 4% 4% 4% 0% 3% 3% 3% 5.00% 1% 1% 1% 1% 1% 1% 0%0%0% 1% 0% 0%0% 0% 0% 0%0%0%0% 0%0%0% 0% 0.00% Percentage of Respondents s s e s s re es ts e s n y s n g es r es y e ies e e s s n y s es es u ng i r c e o e io n i u c r g d c nc c ies ies g ices ie c i lt i n ti og d t at ons a d v g i d u n A ien si a l ra log r i u tu ien ie isti og lo o n u ic o T ca cien ss g S c c l ligio iences o er erv tu ic la Sc B n u ineerino ite S e Histo l tat o Military e c h S S r P n h d L r a S n S c l S al g al c on E e rof Lan g d ry S h ary Stu l sy a chnole A re/ c mu ti Eng d e n a ec n P ci e v ic Area Studi Te c Techn L a nd S li o ti g tu g m n u a s ibr a T p T c c lo o o tr g e lth P rt L ir e te Social Sciencesterials Moving te o C s in g ea A ath a sci c o eolo i n a l Physica r h ch Bi o H a M sophy and R ien P T /Ma r icati C d Consum ces and Conservationo c d n A un ineer n er Rep il S n ib d Recreationh and Fitnes c Admin/S m Langu n P a Engh L a sour y e sonal and Culinary Services rit Com anic l R Precision PubliProduction Trades Family a h Multi/Interdi Per ecu nsportatio Computer/Information SciencesEnglis c S a e Tr M Natura Major

“Professionally what are you planning to do immediately after graduation?” The largest portion of respondents (43 percent) are planning to stay in Moncton to work after graduation, while 27 percent are planning to leave Moncton to work, and 19 percent will attend graduate school, Figure A.5. Other plans included: returning to hometown; continuing with education in some form; and completing an internship abroad.109

Figure A.5. Professional Post-graduate Plans

Professionally what are you planning to do immediately after graduation? (N=84)

45.00% 43% 40.00% 35.00% 30.00% 27% 25.00% 20.00% 19% 15.00% 11% 10.00%

PercentageRespondents of 5.00% 0.00% Attend graduate Stay in Moncton to Leave Moncton to Other school work work Post-Graduation Plans

109 Complete list of responses to open-ended questions can be found in Appendix C.

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“Why or why not are you planning to stay/not stay in Moncton?” Reasons for staying included: ƒ Job in the city; ƒ City is growing; ƒ Grew up in Moncton; and ƒ Access to needed facilities and community for involvement in the arts.

Reasons for not staying included: ƒ Lack of career opportunities; ƒ Desire to be close to family and/or return to hometown; and ƒ Not enough room for career expansion in Moncton.110

Students were asked to provide the name of the organization for which they were working if they were planning to stay in Moncton to work. The following organizations were listed by students. ƒ UPS Moncton (2) ƒ Air Canada ƒ Armour ƒ School District II ƒ Mount Allison University ƒ RBC ƒ Student’s own company ƒ The Travel Store ƒ Sounds Fantastic ƒ Atlantic Wholesalers, Ltd. ƒ Jacques Whitford ƒ Manpower ƒ Wildwood Cabinets ƒ Fairmont Hotels and Resorts ƒ Exxon ƒ Downeast Plastics, Inc. ƒ OAO Technology Solutions, Inc. ƒ AOL

Students were asked, “If you are remaining in Moncton to work, how important is each of the following factors in your decision to stay?” The largest percentage of students (64 percent) thought quality of life issues were “Very Important.” The three issues that the most students thought were either “Very Important” or “Somewhat Important” were quality of life (90 percent), friends in Moncton (85 percent), and family related issues (82 percent). The largest percentage of students thought that high paying jobs and the local/regional economy were “Somewhat Unimportant” or “Not Important” (25 percent and 23 percent, respectively), Figure A.6.

110 The full list of open ended responses is included in Appendix C.

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Figure A.6. Ranking Reasons to Stay in Moncton

If you are remaining in Moncton to work how important is each of the following factors in your decision to stay? (N=39) 70.00% 64% s 60.00% 51% 51% 49% Ve ry 50.00% 44% 46% Important 36% 36% Somewhat 40.00% 33% Important 31% Somewhat 30.00% 23% 26% Unimportant Not Important 20.00% 15% 13% 15% 13% 8% 8% 10.00% 5% 5% 5% Percentage of Respondent of Percentage 10% 5% 8% 0.00% y e f re m obs i on a no J L ct issues f ing y o y Mon ated al Eco lit n Healthc el a i r on h Pa s g Qu Hi /Regi riend Family- al F oc L Factor

Students were also asked, “If you are NOT going to stay in Moncton to work how important is each of the following factors in your decision to leave?” The largest percentage of responding students (48 percent) indicated that not having enough high-paying jobs in Moncton was “Very Important” to their decision to leave. The factors that the largest percentage of students considered “Very Important” or “Somewhat Important” included not enough high paying jobs (76 percent), a relatively stagnant local economy (66 percent), and family related issues (66 percent). The issues that largest percentage of students thought were “Somewhat Unimportant” or “Not Important” included access to healthcare facilities (55 percent), and a relatively poorer quality of life in Moncton (52 percent).

Figure A.7. Ranking Reasons to Leave Moncton

If you are NOT going to stay in Moncton to work how important is each of the following factors in your decision to leave? (N=29) 60.00%

50.00% 41% 41% 48% 38% 41% 40.00% Very 31% Important 28% 28% Somewhat 30.00% 24%24% 24% 24% 21% Important 20.00% Somewhat 14% 14% 14% Unimportant 10% 10% 10% 10% Not Important 10.00%

Respondents Percentage 0.00% y g s es bs g jo in f Livin y Facilitie l Econom a h lated issu a -p ity o al y-re il high Qu Healt m Region r o l/ gh e s t Fa a ou or n o Loc e P ot Acces N Factors 133 Report B

Students were asked, “If you are NOT going to stay in Moncton after graduation what income level would it take in a job in Moncton to persuade you to stay and work here?” The majority of students (52 percent) would require a salary between $45,000 and $65,000 CN to stay in Moncton. A significant proportion of students (91 percent) would require less than $65,000 to stay in Moncton, Figure A.8.

Figure A.8. Salary Required to Stay in Moncton

Salary Required to Stay in Moncton (N=23)

30.00% 26% 26% 25.00% 22%

20.00% 17%

15.00%

9% 10.00%

5.00% Percentage of Respondents 0% 0% 0% 0.00% $15,000 - $25,000 - $35,000 - $45,000 - $55,000 - $65,000 - $75,000 - $85,000+ $24,999 $34,999 $44,999 $54,999 $64,999 $74,999 $84,999 Salary Requirement

Students were asked, “If you are moving from Moncton, to what city will you be moving to work or look for work?” Though responses varied significantly, the most common response to this question was Halifax with 7 responses, followed by Fredericton with 4, and Toronto (3). Other cities listed included Bathurst (2), Calgary (2), Aldouane, Edmonton, Montreal, Fort McMurray, Hamilton, Ottawa, Quebec, Vancouver, and Oita City, Japan. The full list of responses can be found in Appendix C.

Students were asked, “Why are you moving there?” A number of responses included:

ƒ For a change really. I've lived in Moncton my whole life. I want new exciting adventures.

ƒ I moved to Ottawa following graduation to attend graduate school at Carleton University. Once I have received my MA in Experimental Psychology, I will probably not move back to Moncton because there are no jobs there that are in my area of expertise. There are more job opportunities in Ottawa. Also, attending grad school in Ottawa, I will have made connections that I will not have in Moncton.

ƒ I am actually already living in Calgary, for the reason that there is no work in NB. I was offered a job here before even living here. And the money is really good!

ƒ I found a job in Fredericton immediately following graduation. The job offered good pay, good benefits, and job security.

ƒ Better work opportunities. Even if the cost of living is slightly higher, my income potential compensates for it. There is also an efficient public transit system in Toronto, which is

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important to me -- I will not require a vehicle in order to go to work which saves a significant amount of money (not to mention better for the environment). I also have family in Toronto.

ƒ To attend school and to work.

ƒ Better pay; More opportunities in my field; More culture (restaurants, arts, entertainment, theatre); Bilingualism not an issue.

ƒ Hired by a major engineering firm.

ƒ It's hard to stay in the same city you grew up in, especially if you haven't done much traveling. I'd like to get out and see the rest of Canada before I settle down.

ƒ More culture, music, entertainment, etc.

Students were asked, “Did you work when attending college or university?” Responses varied by university, but overall, the majority of students (56 percent) did not work while they were attending college. Mount Allison was the only university at which the majority (53 percent) of students worked while attending school, Figure A.9.

Figure A.9. Did You Work When Attending College or University?

Did you work when attending college or university? (N=70) 60.00% 56%

50.00% 44%

40.00%

30.00%

20.00%

Percentage of Respondents of Percentage 10.00%

0.00% Yes No Response

Students were asked, “Did you have an internship (part-time) or a summer job with a Moncton-based employer during your degree plan?” The majority of students (55 percent) had an internship with a Moncton-based employer while they were in school, Figure A.10.

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Figure A.10. Internship or Job in Moncton? Did you have an internship (part-time) or a summer job with a Moncton- based employer during your degree plan? (N=71)

70.00%

60.00% 55%

50.00% 45%

40.00%

30.00%

20.00%

Percentage Respondents of 10.00%

0.00% Yes No Response

Students with internships were asked to indicate whether the position paid or unpaid. The majority (68 percent) had paid internships, Figure A.11.

Figure A.11. Status of Internship: Paid or Unpaid

Status of Internship (N=41)

100.00% 90.00% 80.00% 68% 70.00% 60.00% 50.00% 40.00% 32% 30.00% 20.00% Percentage of Respondents of Percentage 10.00% 0.00% Paid Unpaid Response

Students were asked, “What could Moncton do to help you make a decision to work and live in Moncton?” A sample of responses is included below. The full list of responses can be found in Appendix C.

ƒ More higher paying jobs. Equal opportunity for both French and English speaking citizens. A place of employment should have the same number of English speaking employees as they do French speaking. Bilingualism eliminates a lot of valuable

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employees both French and English speaking. As long as a company can service the public in both languages, bilingualism is unnecessary.

ƒ Moncton can't do much itself. If the province paid teachers more, I'd stay in New Brunswick for sure.

ƒ Work with landlords to have more affordable housing.

ƒ Increase wages.

ƒ Organize business conferences for recent graduates. Maintain high degree of bilingual services, as well as good relations with neighboring Dieppe and Riverview. Continue to open the economy (i.e. international flights, diversified sectors, etc).

ƒ More recruiting from companies in science based business.

ƒ Ensure that those coming out into the IT filed have well paying jobs.

ƒ A more vibrant arts community.

Students were asked, “In which field are you currently working or seeking employment?” The largest percentage of students (20 percent) are currently seeking careers in business and finance. Other popular fields include social sciences (9 percent), construction (8 percent), education (6 percent), and information technology (6 percent), figure A.12.

Figure A.12. Employment Fields

In which field are you currently working or seeking employment? (N=65)

25.00% 20% 20.00% 15.00% 9% 10.00% 8% 8% 6% 6% 5% 5% 5% 3% 3% 3% 3% 3% 3% 3% 3% 5.00% 2% 2% 2% 0% 0% 0% 0% 0% 0% 0% 0% 0.00%

Percentage of Respondents of Percentage t t s e t re ts n n n y ir n nt s es n s n nt r en ig ort ent gy e le nc A tio s lo pa me tion tio me ectu nm e pp tm o n a Sa ie me ervices D a gem ervic ScienceSc op op S struc Su hnologhn d Re nic S orta el d Finance Educatio ic e re c c n u al d Fitnesp v Agriculture n ial on ph ar T e e Production ci n ns Archit c C Enviroa d T T n a Mana tive a De r n n io c So Develts G h C a io te re r Tra alt is t o a me e s llat d Comm a Health a aw and Govern Pr Spo G usiness a H no L o B ag Inst a a Softw Informa i ide V h Di lt Med ea Community and So H Office and Administrative Support Personal care and Culinary Services Field

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Students were asked, “What do/did you enjoy most about living in Moncton?” Selected responses are included below. The full list can be found in Appendix C.

ƒ Awesome people, diverse culture (i.e. Anglophone and Acadians), everything else is within a short distance (i.e. Parlee Beach, PEI, Halifax, Saint John). Moncton really is the hub of the Maritimes.

ƒ Family, clean city, maritimes.

ƒ Centrality of services, family and friends, friendliness of the general populace.

ƒ Close proximity of goods and services. Smaller size in terms of metropolitan.

ƒ It’s a small city, but at the same time we have all the conveniences very close by.

ƒ Just being home with family. People were pretty nice. And it's easy to get around cause it's not a huge city, but it's big enough for what you need.

ƒ A lot of things to do, great night life, easy to get around town (buses).

ƒ Being close to everything - I live outside of the city limits but it is easy to access Moncton's center.

ƒ Ability to volunteer at several places. Cheap rent. Areas are relatively close together, within biking distance

ƒ Plenty to do and close to beaches.

ƒ Being close to the bars and stores.

ƒ The atmosphere, friendly people, close to everything.

ƒ Close to everything that I needed while at school.

ƒ I have never lived in Moncton although I work there full time right now. I really enjoy working there however I commute from Sackville every day and I do not enjoy the drive.

ƒ Low crime rate, clean environment, friendly neighbors and relatively happy and low stress attitude of many citizens.

ƒ Students were also asked, “What do/did you least enjoy about living in Moncton?” Results varied significantly. Selected responses are included below and the full list can be found in Appendix C.

ƒ Downtown is too small. Other cities the size of Moncton (such as Fredericton) have a more bustling downtown life. Moncton has one older street (Main Street) and it lacks character.

ƒ Low wages.

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ƒ Few special events of interest, lack of vibrancy in the downtown, lack of some specialty shops and services.

ƒ The struggling downtown section. Moncton officials should reduce the focus on mini- malls and suburb expansion, and focus instead on attracting quality jobs (services, manufacturing - something other than retail), as well as build up (with high rises). At present, Moncton is expanding too much geographically, and taking over important countryside land.

ƒ Pollution. (Hard time sleeping in Moncton.

ƒ High Cost in rent that makes it hard on students.

ƒ A lot of jobs, but no decent wages.

ƒ Poorly planned city - requires a personal vehicle to really live in the city. No defined downtown business area, instead businesses are spread across a large area.

ƒ No pro sports team, and lack of concerts.

ƒ Lack of culture. Lack of tolerance from the French community for non-French speaking individuals

ƒ Not diverse enough for me.

ƒ Lack of jobs in my field.

Students were asked to indicate how many years they had lived in Moncton. The largest percentage of respondents (37 percent) have been in Moncton for more than 20 years and over half (52 percent) have been in the city for more than 10 years, Figure A.13.

Figure A.13. Years Lived in Moncton

Number of Years in Moncton (N=65)

40% 37% 35% 31% 30% 25% 20% 15% 15% 9% 10% 8%

Percentage of Respondents Percentage 5%

0% Less than 1 year 1 - 5 years 5 - 10 year 10 - 20 years More than 20 years Number of Years

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Students were asked, “Did you have financial aid while you attended college?” The majority (64 percent) indicated that they did, though results varied by university, Figure A.14.

Figure A.14. Financial Aid for College

Did you have financial aid while attending college? (N=66)

70% 64% 60%

50%

40% 36% 30%

20%

Percentage Respondents of 10%

0% Yes No Response

Students were asked, “Would you have benefited from more career counseling and/or job placement assistance at your college or university?” The majority (57 percent) indicated that they would have benefited from additional career counseling while they were in school, Figure A.15.

Figure A.15. Career Placement Interest

Would you have benefited from more career counseling and/or job placement assistance at your college or university? (N=67) 70.00%

60.00% 57%

50.00% 43% 40.00%

30.00%

20.00%

Percentage of Respondents of Percentage 10.00%

0.00% Yes No Response

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APPENDIX B. SURVEY INSTRUMENT

English

Page 1

In what language would you prefer to take the survey?

Dans quelle langue préféreriez-vous pour prendre l'étude?111

English Français

Page 2

Thank you for participating in this survey of recent university graduates in the Moncton area. The survey is designed to gather information on your career plans and your perspective on Moncton’s future growth. It should only take a few minutes to complete the questions.

Please note that your survey data may be compromised if you start on one computer and finish on another. Partially completed surveys may be saved and finished later, provided the same computer is used.

If you have any questions about completing the survey, please contact Dr. Bruce Kellison via e-mail at [email protected] or by phone at (512) 475-7813.

We thank you in advance for your cooperation.

Page 3

Consent Form for Moncton Survey

Scroll down to consent to the terms of the survey.

Introduction You are being asked to complete a survey as part of a research study being conducted on behalf of the City of Moncton by the University of Texas at Austin (UT Austin). This form provides you with information about the study. Please read the information below. Your participation is entirely voluntary. You can refuse to participate without penalty or loss of benefits to which you are otherwise entitled. You can stop your participation at any time and your refusal will not impact current or future relationships with UT Austin, the City of Moncton, your school, or your employer. The purpose of this study is to analyze the technology economy of Moncton, NB, and recommend strategies for accelerating business creation and economic development in the city. Total estimated time to complete the survey is 20 minutes.

Risks of taking the survey: • The risk associated with this survey is no greater than everyday life. •This survey may involve risks that are currently unforeseeable. If you wish to discuss the information above or any other risks you may experience, you may call the Principal Investigator listed on this form.

Benefits of taking the survey:

111 Students were directed to either page 1 or page 9 depending on their response to the question.

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• There are no individual benefits for participation in this survey. • One possible benefit to Moncton might be accelerated development of the city’s technology workforce and business base.

Compensation/Costs: • There is no compensation or cost for participation in this survey.

Confidentiality and Privacy Protections: • The University of Texas at Austin procedures for handling confidential data will be strictly followed. Data will be stored in a locked room; all parties who have access to data will sign Data Confidentiality agreements; and data analysis will be conducted on computers without internet access to minimize the risk posed by potential hackers. • The data resulting from your participation may be made available to other researchers in the future for research purposes not detailed within this consent form. In these cases, the data will contain no identifying information that could associate you with it, or with your participation in any study. The records of this study will be stored securely and kept confidential. Authorized persons from The University of Texas at Austin, members of the Institutional Review Board, and the City of Moncton have the legal right to review your records and will protect the confidentiality of those records to the extent permitted by law. All publications will exclude any information that would make it possible to identify you as a subject.

Contacts and Questions: If you have any questions about the survey or the study, contact the researchers directly. Their names, phone numbers, and e-mail addresses are at the bottom of this page. If you have questions about your rights as a research participant, complaints, concerns, or questions about the research, please contact Lisa Leiden, Ph.D., Chair of The University of Texas at Austin Institutional Review Board for the Protection of Human Subjects, (512) 471-8871 or email: [email protected].

Research conducted by: Dr. Bruce Kellison of the Bureau of Business Research, IC² Institute, The University of Texas at Austin (512-475-7813, [email protected]); and Dr. David Gibson of the IC² Institute, The University of Texas at Austin (512-475-8941, [email protected]). If you agree to take the survey, please click the box, below, and you will begin the survey.112 I agree to the terms and wish to proceed. I do not agree to the terms.

Page 3

You cannot proceed until you choose to consent to the terms of this survey. If you have questions about any of the items stated in the agreement, please contact the researchers:

Dr. Bruce Kellison IC² Institute The University of Texas at Austin (512) 475-7813 [email protected]

Dr. David Gibson IC² Institute The University of Texas at Austin (512) 475-8941 [email protected]

112 Students were required to answer this question to proceed. If a student chose not to consent, he/she was directed to page 3. If the student consented he/she was directed to page 4.

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Your opinions are valuable to this endeavor and can be highly beneficial to the City of Moncton. You may review the consent form again by clicking “review” below. Otherwise you will be prompted to exit the survey.

Review Exit

Page 4

What was your major or primary field of study?

Agriculture and Related Sciences Architecture and Planning Area, Ethnic, Cultural, and Gender Studies Arts, Visual and Performing Biological and Biomedical Sciences Business Communication and Journalism Communications Technologies Computer and Information Sciences Construction Trades Education Engineering Engineering Technologies English Language and Literature Family and Consumer Sciences Health Professions and Related Clinical Sciences History Languages, Literatures, and Linguistics Law and Legal Studies Liberal Arts and Sciences, General Studies, and Humanities Library Science Math and Statistics Mechanic and Repair Technologies Military Multi/Interdisciplinary Studies Natural Resources and Conservation Parks, Recreation, and Fitness Personal and Culinary Services Philosophy and Religion Physical Sciences Precision Production Trades Psychology Public Administration and Social Services Science Technologies Security and Protective Services Social Sciences Theological Studies and Religious Vocations Transportation and Materials Moving

Professionally, what are you planning to do immediately after graduation?

Attend graduate school. Stay in Moncton to work.

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Leave Moncton to work. Other (please specify) ______

Page 5

Are you planning to stay in Moncton to work now that you have graduated?113

Yes No

Why or why not?

Page 6

If yes, for what organization will you work? Organization Name ______Don’t know ______

If you are remaining in Moncton to work, how important is each of the following factors in your decision to stay? (Choose only one response for each factor.)

Very Somewhat Somewhat Not Important Important Unimportant Important

Family-related issues (parents, spouse, significant other) ° ° ° °

Relatively vibrant local/regional economy in Moncton ° ° ° °

Good high-paying jobs available in my field in Moncton ° ° ° °

Good quality of life (cost of living; recreation; weather; lifestyle) in Moncton ° ° ° °

Friends in Moncton ° ° ° °

Access to, and quality of, health care facilities in Moncton ° ° ° °

113 Students were directed either to page 5 or page 6 depending on their response to the question.

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Page 7

If you are NOT going to stay in Moncton to work, how important is each of the following factors in your decision to stay? (Choose only one response for each factor.)

Very Somewhat Somewhat Not Important Important Unimportant Important

Family-related issues (parents, spouse, significant other) ° ° ° ° in another region

Relatively stagnant local/regional economy in Moncton ° ° ° °

Not enough high-paying jobs in my field in Moncton ° ° ° °

Relatively poorer quality of life in Moncton than where I will live now (cost of living; recreation; weather; lifestyle) ° ° ° °

Access to, and quality of, health care facilities that do not exist in Moncton ° ° ° °

If you are NOT going to stay in Moncton after graduation, what income level would it take in a job in Moncton to persuade you to stay and work here?

$15,000 – 24,999 $25,000 – 34,999 $35,000 – 44,999 $45,000 – 54,999 $55,000 – 64,999 $65,000 – 74,999 $75,000 – 84,999 $85,000+

If you are moving from Moncton, to what city will you be moving to work or look for work? ______

Why are you moving there?

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Page 8

Did you work while attending college or university?

Yes No

Did you have an internship (part-time) or a summer job with a Moncton-based employer during your degree plan?

Yes No

If you selected yes, was it:

Paid Unpaid

What could Moncton do to help you make a decision to live and work in Moncton?

In which field are you currently working or seeking employment?

Agriculture Architecture, Engineering, and Drafting Arts, Visual and Performing Business and Finance Community and Social Services Construction Education, Museum Work, and Library Science Environment Graphic Design Health Care Support Health Diagnosis and Treatment Health Technology Information Technology Installation and Repair Law and Government Management Media and Communications Office and Administrative Support Personal care and Culinary Services Production Protective Services Sales Science Social Science Software Development Sports and Fitness Transportation Video Game Development

What do/did you enjoy most about living in Moncton?

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What do/did you enjoy least about living in Moncton?

Please tell us a little about yourself.

Gender:

Male Female

Age:

Under 20 years 20 – 30 years 30 – 40 years 40 – 50 years Over 50 years

Number of Years in Moncton:

Less than 1 1 – 5 5 – 10 10 – 20 More than 20

Did you have financial aid while attending college?

Yes No

Would you have benefited from more career counseling and/or job placement assistance at your college or university

Yes No

Hometown Province (Check one)114

Alberta British Columbia Manitoba New Brunswick Newfoundland and Labrador Northwest Territories Nova Scotia Nunavut Ontario Prince Edward Island Quebec Saskatchewan Yukon Territory Other (please specify) ______

114 Students were directed to page 17 after completion of this question.

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Français

Page 9

Merci de participer à notre sondage de récents ou futurs gradués universitaires dans la région de Moncton. Ce sondage est conçu pour rassembler des renseignements sur vos plans de carrière et vos impressions sur la croissance future de Moncton. Ceci ne devrait exiger que quelques minutes de votre temps.

S.V.P prendre en notes que ce sondage ne peux pas être commencé sur un ordinateur et terminer sur un autre. Cependant, les sondages partiellement complétés peuvent être enregistrés et complétés plus tard si faits sur le même ordinateur.

Si vous aviez des questions concernant le sondage, s.v.p. contacter M. Réjean Hall par courriel ([email protected]) ou par téléphone au (506) 858-4336.

Nous vous remercions à l’ avance pour votre coopération.

Page 10

Formulaire de consentement pour l’étude de Moncton

Introduction: Nous vous demandons de compléter un sondage dans le cadre d’une recherche dirigée pour le compte de la Ville de Moncton par l’Université du Texas à Austin (UT Austin). Ce formulaire vous fournit des renseignements sur l’étude.

Svp lire le texte ci-dessous.

Votre participation est entièrement volontaire. Vous pouvez refuser de participer sans encourir quelque peine que ce soit perte d’avantages auxquels vous êtes autrement autorisés. Vous pouvez arrêter votre participation à tout moment et votre refus sera sans conséquence aucune sur vos relations actuelles ou futures avec l’UT Austin, la Ville de Moncton, l’Université de Moncton, votre institution ou votre employeur.

Le but de cette étude est d’analyser l’économie du secteur des technologies de Moncton N.-B., et de recommander des stratégies pour accélérer la création d’entreprises dans la ville et son développement économique.

Le temps total estimé pour compléter ce sondage est de 20 minutes.

Risques de compléter ce sondage: -Le risque associé avec ce sondage n’est pas plus grand que la vie de tous les jours. -Cette étude pourrait impliquer des risques qui sont actuellement imprévisibles. Si vous souhaitiez discuter des renseignements ci-dessus ou autres risques que vous pourriez éprouver, vous pouvez contacter l’Investigateur principal identifié sur ce formulaire.

Les avantages de compléter ce sondage: - Il n’y a pas d’avantages personnels découlant de la participation à ce sondage. - Un avantage possible pour Moncton serait un développement accéléré de la main-d’œuvre technologique de la ville et la sa base d’entreprises.

Compensation/Coûts

148 Report B

- Il n’y a aucune compensation/rémunération ou aucun coût associé à votre participation à ce sondage.

Protections de la confidentialité et de la vie privée: - Les procédures de l’Université du Texas à Austin visant le traitement de données confidentielles seront suivie à la lettre. Les données seront emmagasinées dans un local fermé à clef. Toute personne ayant accès aux données devront des ententes de confidentialité de données. Les analyses de données seront effectuées sur des ordinateurs sans accès à l’internet pour minimiser les risques éventuels posés par les pirates informatiques. -Les données qui résultent de votre participation pourraient à l’avenir être mises à la disposition de d’autres chercheurs pour des fins de recherche non précisées dans ce formulaire de consentement. Dans ces cas, les données ne contiendront pas de renseignements spécifiques qui pourraient vous associer avec celles-ci ou avec votre participation dans n’importe quelle étude.

Les dossiers de cette étude seront stockés dans un endroit sûr et seront gardés confidentiels. Les personnes autorisées de l’Université du Texas à Austin, les membres du Conseil de Revue Institutionnel de l’U. du Texas à Austin, et la ville de Moncton auront le droit légal d’examiner vos données et protégeront la confidentialité de ces données dans la mesure permise par la loi. Toute publication exclura toute information qui puisse permettre de vous identifier comme sujet du sondage.

Contacts et questions: Si vous aviez des question concernant l’étude ou la recherche comme telle, contactez M. Réjean Hall par courriel ([email protected]) ou par téléphone au (506) 858-4336, ou encore les chercheurs dont les noms, numéros de téléphones et adresses électroniques apparaissent au bas de cette page. Si vous avez des questions concernant vos droits comme participant ou participante de recherche, des plaintes, des inquiétudes ou des questions concernant cette recherche, s.v.p. contacter Lisa Leiden, Ph.D, la présidente du Conseil de revue institutionnelle pour la protection de sujets humains de l’Université du Texas à Austin, (512) 471-8871 ou [email protected].

Cette recherche a été préparée et est dirigée par:

Dr. Bruce Kellison, Bureau of Business Research, IC² Institute, The University of Texas at Austin (512- 475-7813, [email protected]); et Dr. David Gibson du IC² Institute, The University of Texas at Austin (512-475-8941, [email protected].)

Si vous consentez à compléter ce sondage, s’il vous plaît cliquer sur la case « oui »: Oui Non

Page 11

Vous ne pouvez pas procéder jusqu'à ce que vous choisissiez de consentir aux termes de cette étude. Si vous avez des questions de n'importe quel des articles affirmés dans l'accord, S.V.P. contacter les chercheurs:

Dr. Bruce Kellison Institut de IC² Université de Texas à Austin (512) 475-7813 [email protected]

Dr. David Gibson Institut de IC² Université de Texas à Austin (512) 475-8941 [email protected]

149 Report B

Vos opinions sont important à cette étude et peut être extrêmement avantageux pour la Ville de Moncton. Vous pouvez réexaminer la forme de consentement encore en cliquetant “revue” au dessous. Autrement vous serez incité pour sortir l'étude.

Revue Sortie

Page 12

Quel était votre domaine principal d’études?

Agriculture Architecture et planification Études régionales, ethniques, culturelles, et portant sur les genres (femmes/hommes) Arts visuels ou de la scène Sciences biologiques ou médicales Commerce ou administration Communications et journalisme Technologies des communications Informatique ou sciences de l'information Métiers de la construction Éducation Ingénierie Technologies de l'ingénierie Littérature et langue anglaise ou française Sciences familiales Professions de la santé et sciences cliniques connexes Histoire Linguistique, langues et littérature Droit Humanités Bibliothéconomie Statistiques et mathématiques Mécanique et réparation Militaire Études multidisciplinaires Conservation et ressources naturelles Parcs et récréation Services culinaires et soins personnels Philosophie et religion Sciences physiques Métiers de production de précision Psychologie Administration publique et services sociaux Technologies des sciences Sécurité et services de protection Sciences sociales Études théologiques et vocations religieuses Transport et manutention des matériaux

Professionnellement, quels sont vos plans émidiatement après la graduation ?

Suivre d’autres études Trouver un emploi avec le gouvernement. Trouver un emploi avec un secteur Autre ______

150 Report B

Page 13

Planifier vous de travailler, ou travailler vous actuellement dans la région de Moncton après la graduation ?115

Oui Non

Pourquoi oui ou pourquoi non ?

Page 14

Si oui, pour quel organisation voudriez-vous travailler ? Nom de l’organisation ______Je ne sais pas______

Si vous restez a Moncton pour travailler, comment important sont les facteurs suivant pour votre décisions de rester ? (Choisir seulement une réponse par facteur.)

Très Relativement Relativement Sans Important Important Sans Important Important

Facteurs familiaux (parents, époux, conjoint, conjointe) dans une autre région ° ° ° °

Économie locale / régionale relativement stagnante à Moncton ° ° ° °

Nombre insuffisant à Moncton d’emplois à salaire élevé dans mon domaine ° ° ° °

Qualité de vie relativement pauvre à Moncton en comparaison du lieu ou j’irai vivre (coût de la vie ; récréation ; climat ; style de vie) ° ° ° °

Accès à des installations de soins de santé de qualité qui ne sont pas disponibles à Moncton ° ° ° °

115 Students were directed either to page 5 or page 6 depending on their response to the question.

151 Report B

Page 15

Si vous ne restez PAS à Moncton pour le travail, quelle est l’importance des facteurs suivants dans votre décision de partir ? (Choisir seulement une réponse par facteur.)

Très Relativement Relativement Sans Important Important Sans Important Important

Facteurs familiaux (parents, époux, conjoint, conjointe) dans une autre région ° ° ° °

Économie locale / régionale relativement stagnante à Moncton ° ° ° °

Nombre insuffisant à Moncton d’emplois à salaire élevé dans mon domaine ° ° ° °

Qualité de vie relativement pauvre à Moncton en comparaison du lieu ou j’irai vivre (coût de la vie ; récréation ; climat ; style de vie) ° ° ° °

Accès à des installations de soins de santé de qualité qui ne sont pas disponibles à Moncton ° ° ° °

Si vous ne restez pas à Moncton après la graduation, quel serait le niveau de revenu d’un emploi à Moncton qui réussirait à vous convaincre de rester et travailler ici ?

$15,000 – 24,999 $25,000 – 34,999 $35,000 – 44,999 $45,000 – 54,999 $55,000 – 64,999 $65,000 – 74,999 $75,000 – 84,999 $85,000+

Si vous comptez déménager de Moncton, à quelle ville déménagerez-vous pour travailler ou chercher du travail ? ______

Pourquoi déménagerez-vous là ?

Page 16

Avez-vous travaillé pendant vos études ?

Oui

152 Report B

Non

Aviez-vous un stage (à temps partiel) ou un emploi d’été ici-même à Moncton?

Oui Non

Si oui, étiez-vous:

Payé Non rémunéré

Qu’est ce que Moncton pourrait faire pour vous aider à prendre la décision de travailler et vivre à Moncton ?

Quel est le domaine dans lequel vous travaillez présentement ou cherchez un employ ?

Agriculture Architecture, ingénierie, et dessin Arts visuels ou de la scène Commerce et finance Communauté et services sociaux Informatique et mathématiques Construction Éducation, muséologie et bibliothéconomie Environnement Soutien à la santé Diagnostic et traitement en santé Technologies de la santé Installation et réparation Droit et gouvernement Administration Communications et média Soutien de bureau ou de gestion Soins personnel et services culinaires Production Services de protection Ventes Sciences Sciences sociales Conditionnement physique et sports Transport

Qu’est ce que vous aimez ou aimiez le plus comme résident de Moncton ?

Qu’est ce que vous aimez ou aimiez le moins comme résident de Moncton ?

S.V.P. parler nous un peu de vous.

Sexe:

Mâle Femelle

Age:

153 Report B

Plus jeune que 20 20 – 30 30 – 40 40 – 50 Plus vieux que 50

Années vécues à Moncton

Moins que 1 année 1 - 5 années 5 - 10 années 10 - 20 années Plus que 20 années

Avez-vous reçu de l’aide financière pendant vos études ?

Oui Non

Auriez-vous profité de plus de conseils sur la carrière et/ou sur la recherche d’emploi à votre collège ou université?

Oui Non

Votre province d'origine:

Alberta Colombie Britannique L’île du Prince Edward Manitoba Nouveau-Brunswick Nouvelle Ecosse Nova Scotia Nunavut Ontario Québec Saskatchewan Terre Neuve et Labrador Territoire du Nord Ouest Territoire du Yukon Other (please specify) ______

Page 17

We thank you very much for your time and effort in completing this survey.

If you wish to provide additional substantive comments or to communicate other relevant information beyond your responses, please send an email to: [email protected]

Nous vous remercions pour votre temps et votre effort pour compléter ce sondage.

Si vous souhaitez fournir d’autres commentaire importants ou communiquer d’autres idées pertinentes au-delà de vos réponses , s.v.p. envoyer un courriel à : [email protected] et [email protected]

154 Report B

APPENDIX C. OPEN RESPONSES TO SURVEY

Note – responses are not distinguished by university and French responses have been translated

Professionally what are you planning to do immediately after graduation? Other (please specificy): ƒ “Stay in Moncton while taking distance ed graduate studies” ƒ “Staying in Sackville for time being” ƒ “Get letters after my name, wherever” ƒ “Attend school” ƒ “Internship in France” ƒ “Going out west then back to Moncton” ƒ “Go to university then get my CGA” ƒ “I'm from out of town, so I'm staying in my town” ƒ “Take 2 more courses at [different local university]”

Why or why not are you planning to stay/not stay in Moncton? ƒ “At the moment as I have bought a home and have access to the facilities and community I need in regards to my involvement with the arts while living in a small town” ƒ “Not in the long run, not much room for expansion in Moncton. While I am in Moncton for now, I don't see it being for a lifetime. Moncton offers jobs, not careers and we hardly have a business sense in this city, everything is handled cheaply and we get 'dead-end' sector jobs, such as call centers. I have a good job, but the city itself is rather dull.” ƒ “I am going to university to get my Education degree, then I want to go back to Moncton to work. I want to do back to Moncton because I grew up there and the city is doing a lot to grow and is becoming one of the top cities in the Maritimes.” ƒ “At the moment I am in Paris teaching English in order to improve my French speaking skills as I did a French major and am looking to do my best to eventually become a French teacher in Canada.” ƒ “I’m working right now.” ƒ “No openings in the aircraft industry.” ƒ “Interesting.” ƒ “I’d rather be home close to family.” ƒ “Not from Moncton.”

Why are you moving there? ƒ “For a change really. I've lived in Moncton my whole life. I want new exciting adventures.” ƒ “I moved to Ottawa following graduation to attend graduate school at Carleton University. Once I have received my MA in Experimental Psychology, I will probably not move back to Moncton because there are no jobs there that are in my area of expertise. There are more job opportunities in Ottawa. Also, attending grad school in Ottawa, I will have made connections that I will not have in Moncton.” ƒ “It's hard to stay in the same city you grew up in, especially if you haven't done much traveling. I'd like to get out and see the rest of Canada before I settle down.” ƒ “I have moved to Oita because I have a job here.” ƒ “My fiancé would like to move there and I feel that there are more job possibilities there. Also I am considering going to grad school there.” ƒ “More culture, music, entertainment, etc.” ƒ “To take a Bachelor of Science Degree in Pharmacy.” ƒ “Better work opportunities. Even if the cost of living is slightly higher, my income potential compensates for it. There is also an efficient public transit system in Toronto, which is important to me – I will not require a vehicle in order to go to work which saves a significant amount of money (not to mention better for the environment). I also have family in Toronto.” ƒ “Higher positions and better business people to deal with. Overall, a more professional city for my line of work.” ƒ “To attend school and to work”

155 Report B

ƒ “Better pay; More opportunities in my field; More culture (restaurants, arts, entertainment, theatre); Bilingualism not an issue” ƒ “Personal reasons/bigger city, thus more diverse” ƒ “To work in my field; greater openings” ƒ “I am actually already living in Calgary, for the reason that there is no work in NB. I was offered a job here before even” ƒ “I'm moving in any state or province that has good high-paying jobs. Mostly, a warm place as well as west Canada, mid-east or mid-west and south of United States.” ƒ “Much opportunity” ƒ “Family” ƒ “This is where my future is” ƒ “I found a job in Fredericton immediately following graduation. The job offered good pay, good benefits, and job security.” ƒ “Because I found a job there. I am also considering continuing my education in Moncton again next year.” ƒ “Hired by a major Engineering Firm” ƒ “This is my home town, all my family is here, and it was mine and my boyfriend’s decision to move back” ƒ “Higher paying jobs. Unionized work.” ƒ “Money”

What could Moncton do to help you make a decision to work and live in Moncton? ƒ “More jobs available to work in the government.” ƒ “Assist in career finding” ƒ “Actively recruit graduated students to work in their city. Offer attractive pay. Alberta is attracting a lot of graduated university students because the pay is better. The Maritimes in general have a reputation as not doing so well economically speaking.” ƒ “Offer more variety in employment that are NOT related to call centers. Enough with claiming Moncton as the 'call center' capital of North America.” ƒ “More higher paying jobs. Equal opportunity for both French and English speaking citizens. A place of employment should have the same number of English speaking employees as they do French speaking. Bilingualism eliminates a lot of valuable employees both French and English speaking. As long as a company can service the public in both languages, bilingualism is unnecessary.” ƒ “Moncton can't do much itself; if the province paid teachers more, I'd stay in New Brunswick for sure.” ƒ “Offer better paying positions” ƒ “I would not stay in Moncton to work” ƒ “Work with landlords to have more affordable housing.” ƒ “Nothing” ƒ “Increase wages.” ƒ “At present, nothing. Perhaps, the foundation of an English University to better suit the needs of the population.” ƒ “A more vibrant arts community.” ƒ “Organize business conferences for recent graduates. Maintain high degree of bilingual services, as well as good relations with neighboring Dieppe and Riverview. Continue to open the economy (i.e. international flights, diversified sectors, etc)?” ƒ “Build an economy and jobs for the least. Moncton is the so called city where nothing happens. For business people, Moncton is not a good place to be.” ƒ “More diversified business opportunities, allow for Anglophone individuals to not be as readily discriminated against when applying for work, work towards improving their greenspace development, and implement a downtown revitalization project to attract businesses to their dying downtown area.” ƒ “Offer well paying jobs for university graduates.” ƒ “More recruiting from companies in science based business.” ƒ “Recruit more businesses that are looking for young talent with opportunity for advancement (i.e. no more call centers!)”

156 Report B

ƒ “Trees - it is a very ugly city. Better road planning - for the small size traffic and layout is horrid.” ƒ “I am attending med school in the states, and I want to come back to Canada. If my family is still in Moncton, and if Moncton continues to grow, then I might come back” ƒ “A good paying job that is related to my field in social sciences” ƒ “Having more companies that do aircraft maintenance” ƒ “Better jobs which offer better money.” ƒ “Have new businesses that give good wages.” ƒ “To offer good jobs in the field and raise a little bit of the wages.” ƒ “I'm in Alberta right now and they pay a lot better here I know the economy is based on oil but hey students can get good pay here compare to New Brunswick. People are getting tired of New Brunswick low paying jobs me too. Do something Moncton or else bye bye!!!!!!!!” ƒ “Help business start-ups” ƒ “Encourage local employers to hire recent graduates from local universities and colleges.” ƒ “Have higher wages and more jobs open to the public for Federal and provincial Government jobs” ƒ “Top everything I currently have at work. (pay, benefits and security)” ƒ “Offer better transportation plans. Offer more jobs related to my field of study; most available jobs in New Brunswick are in Fredericton or Saint John.” ƒ “Better jobs in Accounting that don’t request too much experience I did a job hunt [and found] nothing interesting or full-time. That's a [frustrating] for me and I'm still frustrated that I have to do work at a job with very little accounting in it for less than $10 per hour I was getting that before going to college I didn't go to college for an extra quarter” ƒ “Offer online graduate degrees for working people. Help pay down my 60, 000 dollars in student loan debt. I graduated from Human Resources, and I currently work in Human Resources. (No available choice in scroll)” ƒ “Offer me a decent paying job.” ƒ “More Engineering firms” ƒ “Increase wages” ƒ “More jobs for English speaking people. Too many employers are asking for bilingual workers when it is not really mandatory, especially the federal & provincial government. Many employees claim they are bilingual because they can speak French, however, when asked to communicate in written French, they would rather communicate in English - but yet they get the jobs!” ƒ “Better paying jobs for our field of study” ƒ “Ensure that those coming out into the IT filed have well paying jobs.” ƒ “Not were I want to be” ƒ “Not much” ƒ “Make it easier to find work & easier/cheaper to pay/find apartments with everything included because most apartments do not have everything included.” ƒ “Better planning in the road system particularly connecting highways such as wheeler and # 2” ƒ “I’d never live in Moncton city taxes are to high there is very little jobs in marketing and business unless you got 3-6 years experience I got a course thought can only work in call centers” ƒ “N/A I have lived in Riverview (a suburb of Moncton) all my life and will not be leaving anytime soon.” ƒ “Unionized jobs.”

What do/did you enjoy most about living in Moncton? ƒ “Sport teams and facilities” ƒ “Family, clean city, Maritimes.” ƒ “It's more relaxed than a huge city. It's relatively safe and has nice parks (although Mapleton Park will suffer once Frampton Lane is put through to Mapleton which is a major turnoff for me).” ƒ “I actually don't live in Moncton though I grew up there I would not return to the city or surrounding area the closes I would reside to Moncton is Sackville.” ƒ “Low crime rate, clean environment, friendly neighbors and relatively happy and low stress attitude of many citizens.” ƒ “Family” ƒ “Awesome people, diverse culture (i.e. Anglophone and Acadians), everything else is within a short distance (i.e. Parlee Beach, PEI, Halifax, Saint John)...Moncton really is the hub of the Maritimes.”

157 Report B

ƒ “My family” ƒ “Having friends and family close by.” ƒ “I have never lived in Moncton although I work there full time right now. I really enjoy working there however I commute from Sackville every day and I do not enjoy the drive.” ƒ “Relatively safe” ƒ “Close proximity of goods and services. Smaller size in terms of metropolitan.” ƒ “Centrality of services, family and friends, friendliness of the general populace.” ƒ “Lots of space, easy transportation, abundance of daily services, central locality in the Atlantic region.” ƒ “It is fairly dynamic relative to most places elsewhere in the Maritimes; the bilingual community, the arts scene.” ƒ “Quiet, not much traffic.” ƒ “Friends and family. Peacefulness.” ƒ “Friends and Family” ƒ “Enjoyed the small size of the city, mainly for transportation reasons.” ƒ “Big city feel without Big city problems; Low cost of living” ƒ “Technically I have never lived in Moncton, seeing that [local university is located in Sackville, some 50km away towards the Nova Scotia boarder. The drastic differences between Moncton and Sackville are beyond comparing.” ƒ “It’s a small city, but at the same time we have all the conveniences very close by.” ƒ “The size, culture, and bilingualism. It’s also simple to get around” ƒ “The people” ƒ “Family and friends are here” ƒ “My friends, sports, downtown scene” ƒ “Friendliness, size, family” ƒ “Good social life” ƒ “Just being home with family. People were pretty nice. And it's easy to get around [be]cause it's not a huge city, but it's big enough for what you need.” ƒ “Nothing specific” ƒ “People are great” ƒ “I mostly enjoy the calm and visiting the surrounding area of Moncton.” ƒ “Peace and quiet” ƒ “The women.” ƒ “A lot of things to do, great night life, easy to get around town (buses).” ƒ “Being close to everything - I live outside of the city limits but it is easy to access Moncton's center.” ƒ “Friends, cost of living, environment” ƒ “Close to everything that I needed while at school.” ƒ “Ability to volunteer at several places. Cheap rent. Areas are relatively close together, within biking distance” ƒ “Friends and a lot of activities in Moncton since it's an area that's booming (as in growth)” ƒ “Moncton Mariposa Skating Club (volunteer four nights a week) Close to Nova Scotia where I am originally from. Both official languages are used.” ƒ “It has a lot of things. A lot to offer people living in the Moncton area.” ƒ “City offers almost everything” ƒ “People, social life” ƒ “The atmosphere, friendly people, close to everything” ƒ “The nice area.” ƒ “The atmosphere the activity's that Moncton offers their residence” ƒ “Great shopping” ƒ “There is always something to do. I am never bored in a big city like Moncton since I grew up in a small town.” ƒ “The bilingualism” ƒ “My family and friends” ƒ “Being close to the bars and stores” ƒ “Plenty to do and close to beaches” ƒ “I live in Riverview, not Moncton. And I live there because it is 'home'”

158 Report B

ƒ “Everything was not a far drive away, good highway system.” ƒ “Everything”

What do/did you least enjoy about living in Moncton? ƒ “Poor bus system.” ƒ “Dieppe” ƒ “Downtown is too small. Other cities the size of Moncton (such as Fredericton) have a more bustling downtown life. Moncton has one older street (Main Street) and it lacks character.” ƒ “The lack of decent jobs, you either work in a call centre or you get minimal pay for one of the few other options. The constant road work being done. It seems that Monctonians have a fetish with digging holes in the middle of streets, constantly.” ƒ “Nothing, really. Great city. But I gotta move out, live on my own, in a different community for a while, before I come back.” ƒ “It is boring and lacks culture.” ƒ “The city is too small.” ƒ “Boredom.” ƒ “Low wages.” ƒ “Lack of job opportunities for [non-bi]lingual persons. ƒ “Few special events of interest, lack of vibrancy in the downtown, lack of some specialty shops and services.” ƒ “The struggling downtown section. Moncton officials should reduce the focus on mini-malls and suburb expansion, and focus instead on attracting quality jobs (services, manufacturing - something other than retail), as well as build up (with high rises). At present, Moncton is expanding too much geographically, and taking over important countryside land. “ ƒ “It's homogenous in general, and I missed the diversity of Toronto.” ƒ “Not sure where to start. It seems frustrating that most people are either on EI or work in a call center in Moncton. I'm very fortunate to have the job I do.” ƒ “No pro sports team, and lack of concerts.” ƒ “Least enjoyed the requirement of speaking French proficiently.” ƒ “Lack of culture. Lack of tolerance from the French community for non-French speaking individuals” ƒ “Smell - tidal boar has some interesting odors” ƒ “Not diverse enough for me” ƒ “It was dirty” ƒ “Not being able to find a decent paying job that isn't call centre related” ƒ “Poorly planned city - require a personal vehicle to really live in the city. No defined downtown business area, instead businesses are spread across a large area” ƒ “Lack of jobs in my field” ƒ “No jobs....or pay way too low.” ƒ “Just needed a change I guess.” ƒ “A lot of jobs, but no decent wages.” ƒ “I enjoy shopping, and the clubs at least.” ƒ “There’s nothing there!!!!” ƒ “Everyone else.” ƒ “Lack of culture - there are many big venue concerts but there is no decent museum or venue for local artists or performers. The Global Festival Place caters to the older crowd & family events not venues for the 20 something. The Capitol Theatre has a limited variety. I would like to see more promotion of local artists in the music scene and not solely focused on Acadian culture - which is a vital part of the city but it is emphasized so much that the Anglophone community seems to be forgotten - and I am sure there is just as much English talent as there is Acadian!” ƒ “The jobs were hard to get quick with a good pay” ƒ “Insane driving conditions.” ƒ “There is very little to do for somebody who does not enjoy the bar scene.” ƒ “High Cost in Rent that makes it hard on students.” ƒ “The dirtiness, and the TERRIBLE transit system.” ƒ “The traffic at times.” ƒ “I really liked Moncton”

159 Report B

ƒ “Lost paying jobs due to quantity of technicians in area.” ƒ “Salaries; lack of activities” ƒ “That Moncton High School was located near a sketchy part of town.” ƒ “Nothing” ƒ “It is not my hometown” ƒ “I guess I can't really say anything bad about Moncton but I would have to say that I least enjoyed getting use to Moncton's environment, such as rush hour. It's tough moving from a small town to a big city, there's lots of stress, but it's worth it.” ƒ “The city planning or lack of” ƒ “Gulls eating my garbage on the road; there worst that the raccoons in the country; the public transit in Moncton is poorly organized” ƒ “N/A” ƒ “My banking area was downtown.[Toronto Dominion]” ƒ “Pollution (Hard time sleeping in Moncton)” ƒ “A few spots in the city are a little dodgy because of the drug problems there”

160 Report B

APPENDIX D. MONCTON TRI-CITY AREA IT COMPANY TIMELINE

Methodology & the Dataset To create the Moncton Tri-City Area Information Technology Company Timeline, four primary data elements were sought: company name, date established, basic services rendered, and current number of employees. Preliminary on-ground research was conducted in Moncton by a student researcher; this research was followed by IC² Institute staff research, which was based on information available through a group of online business directories116. These efforts resulted in a list of 482 company names that were reviewed for timeline inclusion, Table D.1.

A surprising number of these companies have little or no Web presence, while many others did not indicate date established in their online information. On a limited basis, companies were contacted for this information in person, by telephone, or by email communication. These combined efforts yielded 108 companies for the timeline graphic. Regrettably, the research was unable to secure date established for many companies which were appropriate to the dataset. Consequently the data presented should be considered as a “random survey” of local IT companies.

The dataset focuses on IT companies, although some may be peripheral to that industry. A very real obligation in collecting this data is to determine which companies define this sector. Companies represented on this timeline include business-to-business IT and telecommunications service providers. Some niche “high tech” industries, which are represented in the Moncton tri-city area, would have been excluded as research progressed, including aerospace and several others.

Timeline Trends The timeline shows that at least eight present-day IT companies existed before 1970. Twelve companies were confirmed as “established” between 1970 and 1979. In the 1980’s that number increased to 25. In the 1990’s, that number more than doubled to 55 companies established. However, following the dot.com bust in 2000, new company formation slowed appreciably. The growth rate for this decade will probably not match that of the 1990’s, with 17 new companies established (in seven out of the ten years from 2000 to 2009). While the information presented is not a prefect representation of IT companies residing in Moncton, the following trends seem true: • many companies that now provide IT services were established before 1970, and these companies “grew” technology in their ranks providing an innovative business base in the region • the establishment dates for the companies shown on the timeline reflect the overall growth pattern of the North American IT industry • there is a relatively high rate of companies that have been acquired, and that number is hard to separate from the actual attrition rate of companies that have failed over the last three decades

116 The following online directories were accessed: Auracom, Canadian Manufacturers & Exporters, CanadaIT.com, FinditinCanada.ca, Localintheknow.com, strategis.gc.ca, Moncton for Business, YellowPages.ca., YLM (Your Local Marketplace). In addition, networking links listed on some company Web sites were sometimes investigated in the effort to identify additional Moncton area companies. While larger companies appeared in most of these sources, small companies (especially micro-enterprises) showed inconsistent presence, which indicates high probability that many small and emerging companies may not represented in any of these sources, and therefore not included in the “larger” list presented in this study.

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Table D.1. Companies Reviewed for Timeline Inclusion (Moncton, Dieppe, Riverview)

Company Year Est. Employs 1. 2001 Digital Communications Inc. 2. A C G Ltd., (Atlantic Communications Group Ltd.) 1974 6 3. A.R.N. Ltd. 4. A-3 Speedy Cabling 5. ABC Networks 6. ABC Sound Services 7. Academy of Learning 6 8. Acadia Consultants & Inspectors Ltd. 1943 20 9. Accra Group Inc. 1994 10. Accra Med Software Inc 1999 6 11. Accra Solutions Inc 2004 6 12. Accra Web Services Inc 1996 3 13. ACS Accounting Consulting Services 14. ADI (Association of Designers & Inspectors) 1952 200 15. ads|help2003 16. Advanced Energy Management Ltd. 1986 27 17. Advanced Interactive inc 18. Advan-Tel Products Inc. 19. Advatek Systems Inc. 1987 7 20. Airconsol Aviation Services 21. Alexem Webs 22. Aliant 1999 10,000 23. All Star Communications 1983 24. Altron Color Imaging Ltd. 1991 4 25. AMEC E&C Services Ltd. 1982 20 26. Amiko Control System & Consulting 1999 7 27. Analyse Statistique des Maritimes 1990 1 28. Andrew McGillivary Architect Ltd. 1994 1 29. Antidote Entertainment 1999 30. Apex Industries Inc. 1961 240 31. Approach Navigation Systems 1992 13 32. Apropos Marketing Communications 2002 5 33. Aqua-Web Inc. 5 34. Architects Four Ltd. 1975 14 35. Architecture 2000Inc. 1990 18 36. Ardent Development 2003 37. Artech Technical Services Group Ltd. 1994 4 38. AstroCom Associates Inc 1993 39. Ataway Computer Training 40. Atelier de Design (NB) Ltee/Design Workshop (NB) Ltd. 1989 20 41. Atheneum Priority Management - Atlantica Learning 42. Atlantic Blue Cross 1943 1,200 43. Atlantic Cancer Research Institute 1998 20 44. Atlantic Cooperative Publishers 45. Atlantic Data Group 1973 9

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46. Atlantic Foundation Ltd. 47. Atlantic Lottery 1976 360 48. Atlantica Learning Corporation Inc. 1984 11 49. Audio Data Co Ltd. 50. Audio-Video Specialists Inc. 51. Aurocom Moncton Internet Services 5 52. B.I.G. Info Tech 1 53. BBM Canada 1996 201 54. Bell Canada 55. Beltek Systems Design Inc. 1990 10 56. Big Data Computer Services Inc. 57. Biosense 1 58. Biotech Diffusion Inc. 59. BJW Electronics Ltd. 60. BKM Research & Development 1990 30 61. Black & McDonald Ltd. (IT Connection not clear) 1921 3,000 62. Blue Dragon Web Development 3 63. BMG Consultants/NetworkCentrix 1997 9 64. Bo Neon Ltee/Ltd. 1990 6 65. Boart Longyear Inc. 1957 20 66. Bourgeois VanDommelen Architect Group Ltd. 1994 2 67. Boyd R. Algee Architect Ltd. 4 68. Branch Graphic Design 1998 1 69. Bridgenet Technology Solutions 70. Brikson Computer Cabling Ltd. 1998 4 71. Bristol Communications Inc. 1997 125 72. Bryan M. Pettipas Surveys Ltd. 73. Business Development Bank of Canada 1944 74. Business New Brunswick 75. Business Technology Training Institute 76. Butterfly Moon International C S 77. Calhoun Research & Development 78. CallStar Ltd. 79. Canadian Manufacturers & Exporters (CME) 1996 80. Canadian Technology Network 81. CanadianParents.com 82. CandleWeb Creations 1998 2 83. Canos Consultants Inc. 84. CanSupply.com 85. Capital CAD Supplies Ltd. 2000 1 86. CareLink Inc. 87. CARIS 88. Caughtup.com 89. CCNB-Bathurst 90. Centennial Office Products Ltd. 91. Centre de recherche sur les aliments (CRA) 92. Centre de Technologie Manufacturière 93. Centre for Learning and Technology 94. Centre for Research and Development Services

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95. Centric Systems Corp. (Celerity Enterprises) 96. Centrinity Inc. 97. CertifyOnline.com 98. CGI 99. Choice Resume Services 100. CIDIF 101. Cisco Systems Canada Ltd. 102. Clearflow.com 103. Clinidata Corporation 1983 350 104. Coastal Internet International 105. Coates Computer Services 106. cogniwiz 107. Com Dev Wireless Group 108. Compass Data Systems inc. 109. CompuCollege 1986 110. Computer Generated Solutions Canada 111. Computer Guy (The) 112. Computer World Inc. 113. Concept + Inc. (Concept Plus Inc.) 114. Concept Communications 115. Concept J MULTIMEDIA Inc 1999 116. Connectik Technologies 2002 5 117. Connetik Interactive/Connetik Technologies Inc 2001 118. ContentAlive 119. Cormier Gibbs 120. Corporation Hospitaliere Beausejour 121. Cotton & Associates 122. Crandall Engineering Ltd. 123. Credentia 2005 124. CrescentStudio.com 125. Custom Electronic Assemblies Ltd. 1985 126. Custom Webz 127. Cyber Outlaws 2 128. CyberDesign 26 129. Cynaptec Information Systems Inc. 1987 17 130. Daigle Surveys Ltd. 131. Data Nine Inc. 132. DataQC Inc. 133. dbi Systems 134. Dentech Dental Laboratory Inc. 135. Designed Solutions Ltd. 136. Digitus Communications 137. DISCribe Ltd. 138. DMG Consultants (STEP) 139. DMR Consulting Group Inc. 140. Double Port 141. dpt Communications Inc. 1996 142. Drake International 1951 143. Dramis Network Cabling Ltd. 1989 15

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144. Eagle Eye, 1974? ACG Company 2000 1 145. Earthseed.ca 146. Eastern Battery Systems (1989) Ltd. 147. Eastern Business Computer Institute 148. Eastern Reinforcing Ltd. 149. Eastern Telecon 1 150. E-Com Inc. 1995 20 151. ecomdrive.com 152. EDP Consultants 153. EDS Canada 154. Edwards Sprinkler 155. EGA Computer Services 5 156. E-Hub Inc. 157. E-HUB.com 158. e-Hub.net 10 159. Electronic Components 160. Endless Realty 161. Energie NB Power 1,920 162. Enerplan Consultants Ltd. 1981 30 163. Engage Interactive Inc. 164. English Tutoring Services 165. Enterprise Saint John 166. Entertaining Knowledge 167. Environmatics 168. e-Perform 169. Executive 500 Business Centre Inc. 170. Exide Electronics Inc. 171. Falstaff Media 1992 172. FCS – Fundy Computer Services 1975 173. Fennelley Group 174. Fitsoft Systems Inc. 175. FLOW Communications 176. Force/Robak Associates Ltd. 177. Foresight Animation Studios 1982 3 178. Foresight Marketing & Design Ltd. 1982 8 179. Freeway Technologies 180. Fundy Computer Services Ltd. 1975 181. Funeral Director's Choice 182. G4L Consulting Inc. 183. Galva Industries 184. Game Agents Corp 185. GCP 186. GDJ Cohoon & Associates 187. GE Capital 188. Genieo Prototype Inc. 189. Geo Referencing Systems Inc. 190. Geo Terra Mapping Inc. 4 191. Geodat 192. Geoplan Consultants Inc.

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193. Giffels Enterprises 1951 1000 194. GK Computer Consulting 195. Global Advanced Technology 196. Global Net Solution 2000 197. Government of New Brunswick 198. Greater Moncton Economic Commission 199. Greystone Energy Systems Inc (IT Connection unclear) 200. Group Telecom 201. Groupe de développement Consortia 202. GTA Consultants en Peche 1987 3 203. Hansen Enterprises Ltd. 10 204. Hatchard Software 2003 205. Hawk Communications Inc. 1981 65 206. Health Connect - 80/20 Communications 25 207. Hi Lan Data Division 208. Hi Lan Electric 40 209. Hi-Tech Gaming 1989 45 210. Houssennet 211. Hub Dental Laboratory Ltd. 212. Hudson Design Group 1985 213. HUM Designs 214. iBank Custom Solutions 215. ICGlobal.com 216. ICT/Canada Marketing Inc. 217. ID Concept 218. Ikon Office Solutions Inc. 219. imagicTv Inc. 220. Imagine Success Inc. 221. Impact Blue 222. InColor Inc. 223. Incutech Brunswick Inc. 224. Indipro Systems Inc. 225. Indosoft 226. Industry Canada 227. infiKnowledge Inc. 1993 91 228. Infin Escape 229. Infoplexxus 1997 1 230. Information Technology Institute (ITI) 231. Inno Média 232. Inno Tech Inc. 233. Innovatia / Aliant 234. Innsystems 235. Inova Web.com 236. InteliSys Aviation Systems 1987 237. Intelisys Aviation Software 238. Interactive Visualization Systems Inc. 239. InterExport Consultants Inc 240. Internet Business Logic 241. Internet Outlook Inc.

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242. Internet Software Technologies 1 243. Intertech Global Marketing Inc. 244. Inter-TRAIN-ment 245. Invensys Systems Canada Inc. 246. Irving Oil Limited 247. ithink interactive inc. 248. J. Van Horne 249. Jetha Aircraft Services Inc. 250. JM Computer Consultants Ltd 1987 1 251. John M. MacLean Management Ltd. 252. jot.inc 253. Kaidmar Services 254. Kaisen Group International 255. Kara Interactive 256. Keltic Technologies Group 257. Ken-Dar Computer Cleaning 258. Kensington Associates 259. Kerberos Information Technology 260. KV E-Living 261. Kwik Kopy Design & Print Centre 262. Landal inc. 5 263. Lansbridge University 264. LearnStream Inc. 265. Les Entreprises Giffels Inc 266. Les Productions Melodie D'Acadieville 267. Lexi Tech 1988 50 268. Librairie La Grande Ourse 269. Linx Technologies 270. Lloyd's Business Machine Repairs 271. M.O. Consultants 2 272. MacAulay Surveys 1985 273. MacFen Dot Com 274. Macfen.com 4 275. Mana-I enr 276. Maricor Group, Canada Ltd. 2003 100 277. Maritime Digital Colour 278. Maritime Information Management Services 279. Maritime Internet Properties Inc. 280. Maritime Technology Services 281. MarketGround 282. MarketNet 283. McCain Foods (Canada) 284. Media Magic 285. Media Planet 286. MediaNet Communications Inc. 2 287. MedSenses Inc. 288. MesoNetWorks 2006 289. Micro Action 1991 3 290. Micro Optics

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291. MicroAge 1976 15 292. Millenium Info. Tech. Solutions Inc. 293. Mindsweep 2003 294. Miramichi Region Development Corporation 295. Miratech Inc. 296. Moncton Computer Exchange Ltd. 297. Moncton.net 298. Mondata IS Inc. 2 299. Mosaic Technologies Corporation 300. MotionFab Ltd. 301. My City Web.Com 302. Nanoptix 1996 303. Nanoptix Inc. 1996 25 304. National Research Council 305. NB Tel 306. NBTA 307. Nebs-Payweb 308. Nedco Telecom 309. Netco Electric Ltd. 310. NetworkCentrix 1994 9 311. Networks-911 312. New Brunswick Pharmaceutical Society (Society??) 313. New Wave Technologies 314. NexInnovations 315. Nortel 316. Nova Communications 1982 3 317. nrd designs 318. NuFocus 1996 5 319. Nuratek Enterprises Inc 320. N-Vision Plus Web Solutions Inc. 321. OAO Technologies Solutions 1996 300 322. Ocean Optical 323. OCRI 324. OMICS Software Inc. 325. Omnifacts Research Ltd. 326. On Power Systems Inc. 327. On Time Design 328. Optex Software 329. Opti Info 330. Optical Software Inc. 1989 20 331. O'Reilly C & Consultants 332. Owens Aerospace 333. PACE Engineering Ltd. 5 334. Papyrus Training (Formation) 335. Paradigm 336. Particle Works Inc. 3 337. PC Housecalls 1993 3 338. PC Medic 339. Peak Performance Systems

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340. Petrel Communications Assoc. 341. Pierre Gallant Architect Inc. 1988 1 342. Pierre M. Boudreau 1 343. Pinnacle Wireless Solution 344. Pitney Bowes 345. Plexus Connectivity Solutions Ltd. 1989 30 346. Precisionart Technical Illustration 347. Premiere Lamination (appropriate?) 348. Primus Training & Consultants Associates 1997 12 349. Prizecade.com 350. Pro-Boards & Cables Ltd. 351. ProCare Water Treatment Inc. 352. Production Libres 353. Progressive Learning Centre Inc. 354. Proplus 2000 Inc. 1991 4 355. Pro-Results Inc. 356. Province of New Brunswick 357. Puff In A Cloud 358. Puppy Doodle Entertainment 2002 2 359. Quantum Training & Development Ltd. 360. R.E. LeBlanc Consultants Inc. 361. Red Ball Internet 362. Red Lion Group Inc. 363. Reeves Technologies 364. Regional Development Corporation 365. Reseau Innovation Nouveau-Brunswick 366. Rockwood Software Ltd. 367. Rogers AT&T Wireless 368. Rogers Communications - Call Centre 1986 3 369. Rogers Internet 370. Romulin Group Inc. 19 371. Rosalba Santori 372. Roy-Babin Multimedia Productions 373. Rydan Computer Services 374. S.B.P. Training Group 375. Satellite Services & Programming 376. Scorpio Net 2000 Inc. 377. Senior Watch Inc. 378. Service NB 379. Servicetek Electronics 1979 380. SG5 Innovation 381. SGE Acres Ltd. 382. ShareLine Systems Ltd. 9 383. ShiftCentral 2000 5 384. Showdog Productions Inc. 385. Silk Ventures Group Ltd. 386. Silver Fox Developments 387. Skills For You 388. Skyridge Systems Inc. 1996 1

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389. Skyway Communications Inc. 390. Smart Force 391. Snowy Owl Productions 392. Softec 393. Software House International 1989 394. Softworld 2002 395. Sonoptic Technologies Inc. 1995 15 396. SOS Computer Data Recovery 397. Sound Specialists Inc. 1987 398. Sounds Fantastic (Aliant) 1979 20 399. South East Economic Commission, Inc. 400. Southhampton Computers 1991 401. Spectral Visualization and Development Inc. 1996 402. Speedy Communications 403. Spheric Technologies 2004 404. Spielo Manufacturing Inc. 1992 400 405. St Thomas University 1910 406. Standard Sound Systems Co. Ltd. 407. Steph Daigle Design 1992 1 408. Strategies Design & Communication 1998 6 409. Strophe Inc. 1992 410. Success College of Applied Art & Tech 1983 15 411. Sybertooth Inc. 1996 3 412. SYLC Solutions Inc./WSI 1995 413. Sylnx Systems 7-14 414. Systems Management Ltd. 415. Talbot Richard & Co-Numero de Cellulaire 416. Tantramar Interactive 1997 6 417. TeamWorks New Media 2002 418. Techno-Logic Machining Inc. 1997 419. Technology PEI 420. Telav Audio Visual Services 421. Tele Education NB 422. Teleduocom Inc. 423. Telemonotiring Manufacturing 424. TelVision Ltee/Ltd. 12 425. Terra Consultants 426. Terrain Group Inc. 1973 36 427. The Phi Phenomenon 2006 6 428. Theorix.com 429. Theorixe-com inc. 430. Theriault Raymond Graphiste 1981 431. Tima Scientific Inc. 1997 3 432. TMI-MultiHexa (CERVO Inc.) 5 433. Topcoat Solutions Inc. 434. Total Knowledge Workers 2,140 435. Total Pricing Systems Inc. 1991 3 436. Touchie Engineering 1980 437. Tracy's System Development Consulting Inc. 2

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438. Trip Data & Safety Management Inc. 1993 3 439. Tritone Corporation 440. Tullamore e Consulting 441. Unisource 1992 442. Unitex N.B. Company Ltd. 1976 35 443. Valron Engineers Inc. 444. Veridoc Development Corps 445. Vimsoft 1994 446. Virtual World Inc. 447. Virtual-Agent Services 448. Vision Multimedia Inc. 449. VisionMD 450. Vital Knowledge Software Inc. 451. Vivide Consulting 452. VMC Group Atlantic (appropriate?) 453. Voice IQ 454. Wade Company Ltd. 2004 4 455. Web Training Solutions 4 456. WebPower Hosting 457. Whilrteq Inc. 458. Whitehill Technologies Inc. 1997 85 459. Whittaker Design & Associates Inc. 1976 460. Worldwide Webs Inc. 461. Write Choice Virtual Assistants 462. WSI (We Simplify the Internet) 463. xWave 2000 650 464. Yamatech Group, Inc. 2004 465. Zoomnet

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APPENDIX E. BENCHMARKING CITY COMPARISONS

Table C. High-Tech Agglomeration Index and Population for 100 Metro Areas in the U.S.

Charlotte-Gastonia-Rock Hill, NC-SC MSA Orlando, FL MSA San Antonio, TX MSA 0.68 Salt Lake City-Ogden, UT MSA Riverside-San Bernardino, CA PMSA 1,499,293 Fort Lauderdale, FL PMSA Nashville, TN MSA 0.54 0.54 0.55 0.65 3,254,821 1,333,914 0.52 1,592,383 1,644,561 1,623,018 0.47 1,231,311 Pittsburgh, PA MSA Monmouth-Ocean, NJ PMSA Cincinnati, OH-KY-IN PMSA Ventura, CA PMSA 0.81 0.79 0.82 1,126,217 1,646,395 2,358,695 0.70 753,197 Portland-Vancouver, OR-WA PMSA 1.29 1,918,009 Kansas City, MO-KS MSA Detroit, MI PMSA Fort Worth-Arlington, TX PMSA Tampa-St. Petersburg-Clearwater, FL MSA Rochester, NY MSA Cleveland-Lorain-Elyria, OH PMSA 1.11 Milwaukee-Waukesha, WI PMSA 1.28 1.26 Indianapolis, IN MSA 2,395,997 Bergen-Passaic, NJ PMSA 1,776,062 1,702,625 Hartford, CT MSA 1.06 1.27 Columbus, OH MSA 1.03 Sacramento, CA PMSA 2,250,871 4,441,551 Wichita, KS MSA 1.08 1,500,741 1,098,201 0.99 1.02 1,373,167 1,607,486 0.98 0.97 0.87 1,183,110 1,540,157 1,628,197 0.85 545,220

Phoenix-Mesa, AZ MSAAustin-San Marcos, TX MSASan Diego, CA MSARaleigh-Durham-Chapel Hill, NC MSANassau-Suffolk, NY PMSASt. Louis, MO-IL MSABaltimore, MD PMSA 1.71 1.98 1.99 1,187,941 1,249,763 3,251,876 1.88 1.48 2,813,833 2,753,913 1.45 1.31 2,603,607 2,552,994 Middlesex-Somerset-Hunterdon, NJ PMSASan Francisco, CA PMSANewark, NJ PMSA 2.36Denver, CO PMSA 1,169,641 2.27 1,731,183 2.20 2.09 2,032,989 2,109,282 Metro AreaSan Jose, CA PMSA 7.33 Index Population 1,682,585 Metro Area Index Population Chicago, IL PMSAWashington, DC-MD-VA-WV PMSABoston, MA-NH PMSANew York, NY PMSADallas, TX PMSA 4.59Philadelphia, PA-NJ PMSASeattle-Bellevue-Everett, WA PMSA 4,923,153 Los Angeles-Long Beach, CA PMSAAtlanta, GA MSA 5.76Oakland, CA PMSA 4.57174Minneapolis-St. Paul, MN-WI MSA 3.63 8,272,768 4.22 Orange County, CA PMSA 3.51 3,406,829 3.78Houston, TX PMSA 2,414,616 9,314,235 3.93 9,519,338 5,100,931 2.60 3,519,176 2,968,806 2.92 2.75 2.55 4,112,198 2,392,557 2,846,289 2.42 4,177,646 Report B

Memphis, TN-AR-MS MSA 0.22 1,135,614 Mobile, AL MSA Stockton-Lodi, CA MSA 0.12 0.13 563,598 Bakersfield, CA MSA 540,258 0.07 661,645 Knoxville, TN MSA 0.18 687,249 El Paso, TX MSA 0.08 679,622 Columbia, SC MSA 0.21 Fresno, CA MSA 536,691 0.09 922,516 Sarasota-Bradenton, FL MSA 0.12 589,959 Vallejo-Fairfield-Napa, CA PMSA 0.12 518,821 McAllen-Edinburg-Mission, TX MSA 0.02 569,463 Las Vegas, NV-AZ MSA 0.12 1,563,282 Charleston-North Charleston, SC MSA 0.06 549,033 Springfield, MA MSA 0.23 591,932 Scranton--Wilkes-Barre--Hazleton, PA MSA 0.15 624,776 Gary, IN PMSA 0.07 631,362 Ann Arbor, MI PMSA 0.24 578,736 Little Rock-North Rock, AR MSA 0.19 583,845 Youngstown-Warren, OH MSA 0.07 594,746 Grand Rapids-Muskegon-Holland, MI MSA 0.25 1,088,514 Tacoma, WA PMSA 0.21 700,820 Toledo, OH MSA 0.08 618,203 Louisville, KY-IN MSA 0.26 1,025,598 New Orleans, LA MSA 0.21 1,337,726 Honolulu, HI MSA 0.09 876,156 0.41 1,251,509 0.33 1,569,541 A M Norfolk-Virginia Beach-Newport News, VA-NC Dayton-Springfield, OH MSA 0.33 950,558 Population Source: U.S. Census Bureau, 2000. Omaha, NE-IA MSA 0.34Akron, OH PMSA 716,998 0.27 694,960 Jacksonville, FL MSAGreensboro--Winston-Salem--High Point, NC MS 0.42 1,100,491 Miami, FL PMSAWest Palm Beach-Boca Raton, FL MSASyracuse, NY MSA 0.37 1,131,184 0.38 0.35Buffalo-Niagara Falls, NY MSA 2,253,362 New Haven-Meriden, CT PMSA 732,117 0.28 0.27 1,170,111 542,149 Richmond-Petersburg, VA MSA 0.45 996,512 Providence-Fall River-Warwick, RI-MA MSATulsa, OK MSA 0.39 1,188,613 0.38Baton Rouge, LA MSA 803,235 0.29 602,894 Jersey City, NJ PMSA 0.45 608,975 Greenville-Spartanburg-Anderson, SC MSA 0.39 962,441 Oklahoma City, OK MSAHarrisburg-Lebanon-Carlisle, PA MSA 0.29 0.29 629,401 1,083,346 Wilmington-Newark, DE-MD PMSA 0.46 586,216 Allentown-Bethlehem-Easton, PA MSA 0.39 637,958 Birmingham, AL MSA 0.33 921,106 Metro AreaAlbuquerque, NM MSA 0.46 Index 712,738 Population Metro Area Index Population Albany-Schenectady-Troy, NY MSA 0.40 875,583 Tucson, AZ MSA 0.33 843,746 175 Report B

APPENDIX F. THE RESEARCH TEAM

David Gibson, Co-Principal Investigator Ph.D. David V. Gibson is Associate Director and The Nadya Kozmetsky Scott Centennial Fellow at IC² Institute, The University of Texas at Austin. In 1983, he was awarded his Ph.D. by Stanford University in organizational behavior and communication theory. His dissertation was on the management of innovation. Dr. Gibson teaches Knowledge/Technology Transfer and Adoption in IC²'s MSSTC degree program. During 1999-2000, he was a Fulbright Scholar at Instituto Superior Tecnico, Lisbon, Portugal. Dr. Gibson's research and publications focus on technology/knowledge transfer and adoption; cross-cultural communications and management, and the growth and impact of technopoleis or regional technology centers worldwide. He is a consultant to businesses and governments worldwide and has made professional and keynote presentations in the U.S., Europe, South America, and Asia. His papers have been translated into Mandarin, Japanese, Korean, Russian, Spanish, Italian, French, German, Finnish, and Portuguese.

Bruce Kellison, Co-Principal Investigator, Ph.D. J. Bruce Kellison is Associate Director of the Bureau of Business Research at the IC² Institute. He received his doctorate in political science (comparative politics) from The University of Texas at Austin in 1998. Since 1999, he has been responsible for strategic planning and research for the Bureau of Business Research, an applied economic research unit at IC². He also is editor of Texas Business Review, a bi-monthly journal focusing on the business and economic priorities of the state of Texas. At present, he is co-PI on a grant to analyze the effects of Hurricane Katrina on NASA’s Gulf Coast facilities and NASA’s ability to fly out the Space Shuttle Program in 2010. He serves on the Board of Directors of the Association for University Business and Economic Research and Texas Economists.

Elsie Echeverri-Carroll, Research Scientist, Ph.D. Dr. Elsie Echeverri-Carroll is Director of Economic Development at the Bureau of Business Research and Visiting Professor at the LBJ School of Public Affairs and Community and Regional Planning. She holds a Ph.D. in economics from the University of Texas at Austin and a master's degree in Regional and Urban Planning from the University of Los Andes in Bogotá, Colombia and the Netherlands Institute of Social Studies. She has published extensively on high technology in industrialized and developing countries, women in business, and income inequalities in high-tech regions. She has taught manufacturing strategy in the global economy in the MBA Program at the Red McCombs School of Business, and international trade policy at the LBJ School of Public Affairs. She has served on several faculty committees at the Institute of Latin American Studies and the McCombs School of Business. She is part of the editorial board of the Journal of International Business Education. In the Moncton project, she has been responsible for three sections: education, research at universities, and benchmarking in Moncton.

John Green, Research Associate, MBA, MSSTC John is an experienced leader in telecommunication and technology commercialization efforts. He has held senior positions at IBM, DELL and the International Science and Technology Center as well leading several start-up technology companies. He currently is the Chief Operating Officer for AvFinity LCC, an aerospace company focused on machine-to-machine communications.

Darius Mahdjoubi, Research Associate, Ph.D. Darius is a Visiting Scholar at IC² and an Adjunct Professor of innovation and entrepreneurship at St. Edward’s University and at the Innovation School, Norway. Darius has an Interdisciplinary Ph.D. degree from The University of Texas at Austin. His dissertation is entitled “Knowledge, Innovation and Entrepreneurship,” which he conducted under the mentorship of the late Dr. George Kozmetsky.

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Prior to his doctoral studies, he was a senior consultant at DMA, a consulting firm in Toronto, Canada. He specialized in “Innovation Strategies and Management of Technology.” Between 1994 and 1997 he was active in the “Community Innovation Strategy Project,” funded by the Federal Department of Human Resources Development Canada - HRDC. As part of the project he developed “The Mapping of Innovation” which uses the analogy of navigation to explicate the process of innovation. The interdisciplinary Ph.D. on knowledge and innovation is as an extension of “The Mapping of Innovation.”

Robert Meyer, Research Asso c ia te JD, MBA, MSSTC, LLM Robert consults with small entrepreneurial companies, acts as corporate counsel and serves in executive management contributing to decision-making in marketing, finance, and management. He served as Research Commercialization and Licensing Officer for the Office of Technology Transfer of the University of Arkansas in Fayetteville where his duties included the efficient management of the University's intellectual property portfolio particularly in licensing negotiations and in the development of business strategies for start-up companies. During that time he served as a board member of the University of Arkansas Innovation Incubator and as a mentor of the Arkansas Venture Capital Forum. At the University of the South Pacific in Fiji, he served as Acting Department Head where for two years he lectured business law and land development. For many years Robert was a land developer and general contractor.

Rita Wright, Professional Librarian, MSLS Rita J. Wright received her Master of Science in Library Science from East Texas State University (now Texas A&M University--Commerce) in Commerce, Texas. Since 1974, she has been responsible for maintaining the collection of research materials housed at the Bureau of Business Research (BBR). Since 2000 she has been the Manager of the Austin Index, an online service of the BBR. She has represented the BBR in the Texas State Data Center network since 1983. Rita worked with the other members of the Moncton team in finding data and related resources for this project.

Margaret Cotrofeld, Technical Writer/Editor Margaret has worked with IC² Institute Research projects and special publications since 2001. A writer with wide interests, Margaret has studied writing in several specialized forms including screenwriting. She is also a photographer and graphic artist, which are complementary skills to most publishing projects. In addition to her work on reports and special publications for IC², Margaret is Managing Editor for the "Texas Business Review," a bi-monthly publication of the Bureau of Business Research. Her role in the Moncton project is to assist in the coordination of information as well as document design and production of the final report.

Ryan Michael Coster, Graduate Research Assistant, B.Sc. Mt. Allison University Ryan is in his sixth year of study and will complete his Master’s (Business Administration) from Mid Sweden University in late January 2007.

Megan Meyer, Research Assistant, The University of Texas at Austin Megan Meyer is in her fourth year of study and is concurrently pursuing an undergraduate and graduate degree in accounting through a specialized honors program offered by the McCombs School of Business. After graduation, she hopes to pursue a career in tax law.

Gina Philips, Research Assistant, The University of Texas at Austin Gina is in her third year of study toward a degree in Human Relations at UT’s College of Communication Studies. She is in the Plan II Honors Program, and she is an undergraduate research assistant at the IC² Institute.

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APPENDIX G. INTERVIEWS

Special thanks are extended to all those who made themselves available for personal interview by our research team (some on multiple occasions). This study could not have proceeded without the extraordinary courtesy they extended to the members of our research team, and the insight they provided to the assets and challenges they face in their efforts to promote regional prosperity.

Allard, Claude. CCNB-Dieppe Arbow, Michael. NB Securities Commission Arsenault, Brigitte. CCNB-Dieppe Ashrit, Dr. Pandurang. Thin Film and Photonics Research Group, UdeM Ball, Dwight. UNB Baxter, Brian. Oulton College Bhavsar, Dr. Virendra. UNB Black, Barrie. NB Innovation Fund Bouchard, Andre. Credentia Boundreau, Louise. Post-Secondary and Training Policy Bourgeois, Yves. Canadian Institute for Research on Regional Developement, Université de Moncton. Bourque, Benoit. Bureau of International Relations, UdeM Brenscombe, Karen. District 02 (Anglophone District) Brideau, Mathieu. Business NB Brown, Dannie. International Busines Entrepreneurship Center, UNB Carinci, Michelle. Atlantic Lottery Corp. Carter, Brent. Atlantic Innovation Fund Cockshutt, Amanda. Environmental Proteomics, Mt. Allison Colosimo, Paul. South-East Regional Health Authority Corey, Richard. NBCC Corriveau, Georges. NRC-IIT Crowell, Seth. Atlantic Baptist University Cuperlovic-Culf, Miroslava. ACRI Dewitt, Al. NBCC Moncton Dillon, Ryan. Royal Bank of Canada Drummond, Robin. Spielo Duff, Steve. BioNova Duguay, Mireille. Maritime Provinces Higher Ed. Commiss. English, Jock. Intelisys Farrell, Ellen. St. Mary's University Finlay, Ross. First Angel Network Foord, David. UNB Forton, Peter. Growthworks Frenette, Denise. AIF (ACOA) Gagnon, Yves. Université de Moncton. Gallant, Luc. Vimsoft Gaudet, Rachelle. South-East Regional Health Authority Gauthier, Philippe. BMG (Network Centrix) Good, Debbie. Goguen, Rene. CCNB-Dieppe Goguen, Robert. Beausejour Regional Health Authority Grant, Daniel. UdeM, placement office Hall, Rejean. Université de Moncton. Harper, James. Enterprise Greater Moncton Hatchard, Derek. Ardent Development Hicks, Susan. Technology Venture Corp. Kealey, Gregory. UNB Keizer, Elliott. UNB Landry, Jocelyne. Bureau of International Relations, UdeM

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Lang, Denise. ACOA Langley, William. IRAP Lanteigne, Denis. AIF/ACOA Laurie, Robert. Franchophone District Legresley, Michael. Giffels Land Development Company Leung, Michael. TR Labs, Alberta Liddy, Jim. South-East Regional Health Authority Lirette, Jacques. South-East Regional Health Authority Lowe, Brian. First Angel Network Lyndon, Barry. Anglophone District MacDonald, Scot. Tech PEI Maffre, Christelle. Ouest Atlantique Mancuso, Michelina. Moncton Hospital Mancuso, Michelina. South-East Regional Health Authority Manship, Jon. Technology Venture Corp. Manuel, Paul. Vimsoft McDonald, Adam. Spheric Technologies McDonald, Robert. Atlantic Baptist University McKnight, Holly. Moncton Flight College; and NBCC-Moncton McLeod, Ron. TARA (Telecomm Applications Research Alliance) Morley, Fred. GHP Nickerson, Brad. UNB O'Donnell, Mary. Business Development Bank of Canada Ouellette, Rodney. Atlantic Cancer Research Institute (lobster) Palmer, Steve. Whitehill Papillon, Eric. Mindsweep Parrot, Andrew. OAO Technologies Poirier, Charline. OAO Technologies Pond, Gerry. Propel SJ and Mariner Partners, Inc. Power, Mike. IBM Prosser, Craig. Moncton Flight College Reddick, Andrew. NRC--IIT Richard, Gerald. District 01 (Francophone District) Ritchie, Dale. McKenzie College Robertson, Doug. Moncton Roy, Valerie. Greater Moncton Chamber Rybak, Bob. GTECH Rybak, Elizabeth. VE Networks Savoie, Charles. Oulton Savoie, Frank. Connections Media Sheppard, Graham. NBCC-Moncton Small, David. GTECH Snook, Sara Jane. Springboard Soucy, Ann. UNB Placement Office Steele, Stewart. South-East Regional Health Authority Stewart, Jack. BioProspecting NB, Inc. and Mt. Allison Surette, Marc. Université de Moncton. Theriault, Michel. Training and Employment Development Thompson, John. Enterprise Greater Moncton Tye, Pat. Greater Moncton Chamber Vienneau, Daniel. Nanoptix Weeks, Leonard. Business NB Whitehouse-Sheehan, Darlene. Coady, Trisha. MedSenses Wiggers, Richard. Post-Secondary and Training Policy

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APPENDIX H. BIBLIOGRPAHY

Advisory Council on Science and Technology. Public Investments in University Research: Report of the Expert Panel on the Commercialization of University Research, May 4, 1999. Ashrit, Pandurang, Director, Thin Films and Photonic Research Group (GCMP), Université de Moncton. “Innovation In Optics, Photonics, Thin Films & Materials,” undated PowerPoint presentation provided to the IC2 research team by the author. Atlantic Canada Opportunities Agency. A Guide to the Programs and Services of Atlantic Canada Opportunities Agency (ACOA). Brochure. Atlantic Innovation Fund. Atlantic Innovation Fund RFP, Round III, July 2005 and round IV 2006, March 2006. Atlantic Provinces Community College Consortium. ICT Symposium Report: Enabling ICT in Atlantic Canada---A Role for Colleges. November 2006. Black, Barrie, New Brunswick Innovation Foundation Research and Venture Investments. 2006 Bourgeoise, Yves and Samuel LeBlanc. Innovation in Atlantic Canada. Moncton, NB: The Canadian Institute for Research on Regional Development, Université de Moncton, 2002. Business New Brunswick. Planning for Prosperity: Strategic Plan 2004-2007. Fredericton, NB: Business New Brunswick/The Enterprise Network, 2004. Cadenhead, Gary and David Gibson. Plano Talk for TEDC. April 2003. Canada Opportunities Agency. Fast Forward: An Innovation Guide for Small and Medium Enterprises. Brochure. Christian Couturier, Director, NRC-IIT, Canadian Government Executive, "Building a Technology Cluster: Lessons from NRC in New Brunswick.” March 2004. City of Moncton. City of Moncton Annual Report. 2003. City of Moncton. Economic Development Strategy, City of Moncton. November 2005. City of Moncton. City of Moncton's Corporate Strategic Plan, Vision 2010, January 2006. Cornford, Alan. Innovation and Commercialization in Atlantic Canada. March 2002. Cortright, Joseph. Making Sense of Clusters: Regional Competitiveness and Economic Development. Washington, DC: The Brookings Institution, 2006. Council on Competitiveness, U.S. Dept of Commerce. Measuring Regional Innovation: A Guidebook for Conducting Regional Innovation Assessments. October 2005. Crelinsten, Jeffrey. From Research to Commerce: Changing Our Priorities about Commercialization. “Toronto: The Impact Group, for the Information Technology Association of Canada,” June 2005. Enterprise Greater Moncton. Annual Report. 2004-2005. Enterprise Greater Moncton/ShiftCentral. Building on our Success: A Strategic Plan for Moncton. April 2004. Expert Panel on Commercialization, Canadian Ministry of Industry. People and Excellence: The Heart of Successful Commercialization, 2006. First National Wastewater Forum, Ronald J. LeBlanc. Closing the Loop in Water Management: A Cross Canada Look at the State of Wastewater Policy and Legislation, First National Wastewater Forum. 2005. Gardner Pinfold Consulting Economists, Ltd. Economic Impact of the Universities in the Atlantic Provinces. February 2006. Gibson, David, IC² Institute, and Angelou Economics. Assessment & Roadmap for Accelerated Technology-Based Growth in the Waco/McLennan Region. 2003. Grant Thornton, LLP. Taking Charge: A Strategic Economic Development Plan for Moncton. January 2002. Grant Thornton, LLP. Outpacing The Competition: A Marketing And Implementation Plan for the Greater Moncton Area. January 2002. Guthrie, Brian. Picking a Path to Prosperity: A Strategy for Global-Best Commerce. Ottawa, Ontario: Leaders’ Roundtable on Commercialization, The Conference Board of Canada, 2006. Hall, Rejean. “R&D Capabilities at the Université de Moncton.” Undated Powerpoint presentation given to the research team by the author. IC² Institute and TIP Strategies. Auburn Proposal Final PowerPoint. 2003. Industry Canada. Canadian Venture Capital Activity: Trends 1999-2002. 2002. Available at http://strategis.ic.gc.ca/epic/site/sme_fdi-prf_pme.nsf/en/01197e.html.

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Innovation and Knowledge Management. Lessons in Public-Private Research Collaboration, Improving Interactions between Individuals, 7th Annual Innovation Report, “Innovation and Knowledge Management.” March 31, 2006. Jarrett, James E., Rob Smithson. Entrepreneurial Assessment and Feasibility of a Cedar Park Incubator, Executive Summary. 2003. Joseph, Robert, Michael Bordt, and Daood Hamdani. Characteristics of Business Incubation in Canada, 2005. Ottawa: Statistics Canada (Science, Innovation and Electronic Information Division), 2006. Knowledge, Inc. Research & Discovery, Vol. 1, No. 2. 2005. Maclean's. Maclean’s, , University Rankings 2004, November 15, 2004. Maclean's. Maclean's Guide to Canadian Universities, 2006. Market Quest Research. Enterprise Greater Moncton Labour Market Study. March 2003. Martin, Roger L. “The Demand for Innovation in Canada,” unpublished paper, 2002. New Brunswick Community College. Programs and Services 2005-2006. New Brunswick Provincial Government. Progress on Prosperity: New Brunswick's Prosperity Plan. 2006. National Research Council. Building Technology Clusters Across Canada. 2005. Natural Sciences and Engineering Research Council (NSERC). Research Means Business, A Directory of Companies Built on NSERC-supported University Research. 2005. OAO Technology Solutions. Company Overview. January 2006. Ouellette, Rodney, with the Beausejour Medical Research Inst. Personalized Medicine in Cancer, Proposal submitted for Round III of the Atlantic Innovation Fund. October 2005. Parteq Innovations. Advancing Discovery, Annual Report. 2005. Premier’s Advisory Council on Innovation. 5. Red Hot Learning. New Brunswick Capacity Study: Gaming, Simulation, and Animation Report, October 2004. Robertson, Douglas J. Regional Community Technology-Based Growth – Atlantic Canada. 2006. Samuel, Joshua. “The Birth of a Company.” Progress, Vol. 12, No. 9, November 2005. Savoie, Donald. Visiting Grandchildren: Economic Development in the Maritimes. Toronto: University of Toronto Press, 2006. ShiftCentral, Inc. Halifax-Moncton Growth Corridor: Asset Mapping. January 2003. Usher and Steele, Educational Policy Institute. Beyond the 49th Parallel II: Affordability of University Education. 2006.

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