Almost three years ago, New Brunswick Premier David Alward sat down with Robert Hatheway to offer the Fredericton orthodontist and businessman the chair of the New Brunswick Innovation Foundation.
From that discussion, Hatheway understood that innovation and research would soon assume a broader position in the province’s development strategy, and that NBIF would play the quarterback position in that new game plan.
“When the Premier asked me to fill this role, he told me that one of the things we can’t do in New Brunswick is continue to look into the rearview mirror,” Hatheway said in an interview last week in Fredericton. “Then he said that innovation is going to be the rocket fuel in economic development going forward.”
The Premier was as good as his word and has indeed made innovation a pillar of his economic strategy. He not only formed the Premier’s Innovation and Research Council to develop strategy. He also announced the province would a sink an additional $80 million over five years into innovation and research. And he has signaled that NBIF will play a key role in implementing the programs.
NBIF will be responsible for about $60 million of those expenditures and Alward has already outlined in part how it will expand its role. The government has added $14 million to the foundation’s Research Innovation Fund, which will help to finance about $140 applied research projects. And NBIF has announced its new Innovation Voucher Fund, which allows all small to medium-sized businesses in New Brunswick to receive research funding of up to $80,000 for commercial projects.
When the planning for the new innovation strategy got rolling, the message became clear that NBIF would indeed be the one to implement the program, but it would have to continue with its core business of providing seed funding to startups and helping to commercialize university research.
“It was humbling really,” said Hatheway. “It was critical to the working group that if we took on that role, that our core business could not be dismantled. If anything, it would be expanded.”
As a not-for-profit corporation that receives funding from government and other channels, NBIF has proven itself a lean operation that has invested in about 30 companies, recruited about 50 professors to the province and supported more than 300 research projects. The biggest and shiniest trophy in the NBIF cabinet is the exit of Radian6 – it was an early investor in the Fredericton startup and walked away with $9.25 million, or 28 times its investment, when the company sold out to Salesforce.com. What’s incredible – and what will soon change – is that the foundation has achieved all this with a staff of six people.
Hatheway said that the expanded role means that NBIF, whose management is led by CEO Calvin Milbury, will be expanding its staff in the next three to six months, and will do so in a steady, deliberate fashion to ensure it hires the right people for the right positions.
The foundation is still doing what it is best known for – providing seed funding for high-potential companies. Asked if the agency was tempted to provide more money to companies than its traditional $100,000 to $500,000 investments, Hatheway said NBIF prefers to work with the companies to prepare them to find follow-on money from other sources.
“I believe there’s all kinds of money available for great ideas,” he said. “There’s a lot of capital out there that people are just sitting on.”
He added there could be a time when there is sister-fund for NBIF supported by private money that could invest in the larger, follow-on rounds of funding for innovative companies.
Hatheway has just completed his first two-year term as chairman, and has been asked to continue for at least another two years, during which this foundation will undergo a huge growth phase. He’s got his eye on the future and wants to strengthen the foundation, both in terms of structure and finances. He’d even like to get it to the point at which it could prosper on its own investment.
“Ten years from now, if NBIF is an independent body without any funding from the government, I’d be all for that,” he said.
Editor’s note: NBIF is a sponsor of Entrevestor.
