Bankrupt accelerator Wavefront owes $2.1 million to creditors, documents reveal

Wavefront

Bankrupt startup accelerator Wavefront’s creditors are to meet today, seeking settlement of more than $2.1 million they are owed, legal documents obtained by BetaKit show.

The list of claims against the BC-based not-for-profit exceeds its assets by over $800,000, according to a document signed by Wavefront Innovation Society CFO Robert MacDougall.

Creditors are set to meet June 1 in Vancouver.

Wavefront — which once presented itself as a key player facilitating the creation of technological so-called “smart cities” and advancing development of the Internet of Things (Internet-connected objects) through the companies with which it worked — had not paid bills in months, the documents suggest.

According to the documents, dated May 17, Wavefront’s major creditors range from other business and innovation organizations to professional services firms and individuals, to the very startups and enterprises it once assisted and served.

Wavefront faces claims from 264 organizations and individuals, legal documents show.

Among the startups immediately affected by the bankruptcy are those that sublet space in Wavefront’s downtown Vancouver office. At least 22 companies have an address in Wavefront’s 14th floor suite at 1055 West Hastings St., the documents show.
 

In a letter from trustee Grant Thornton Ltd., dated May 16, the subtenants were instructed to immediately return any keys, key cards and fobs, and make their own arrangements with Wavefront’s landlord if they wished to temporarily remain in the space.

In the same letter, startups were advised to make alternate arrangements for Internet, telephone and postal mail services.

“The server, WiFi, and phone lines will remain active for a limited time, but we do not know how long this will continue,” states the letter signed by Mark Wentzell, senior vice-president at Grant Thornton.

Team Accelerate Okanagan

Accelerate Okanagan is one of the many innovation agencies with claims against Wavefront.

The largest claim is from the National Research Council of Canada and its Centres of Excellence for Commercialization and Research program, totalling $958,461.99. The sum — listed as two separate claims of $618,835.62 by the NRC and $339,626.37 by CECR — account for nearly 45 percent of the $2,132,900.45 creditors say Wavefront owes, according to the notice of bankruptcy filed with the BC court. The organization has a $810,954.12 shortfall compared to total claims listed.

The B.C. Innovation Council, a provincial Crown agency, is owed a total of $182,534.15 — about 8.5 percent of Wavefront’s debt, the documents show.

The Victoria Advanced Technology Council (VIATEC) is owed $180,417.86, and Accelerate Okanagan $139,021.58, or 8.5 percent and 6.5 percent respectively of Wavefront’s debt according to the documents. Sources familiar with the matter told BetaKit that Wavefront was responsible for managing VIATEC and Accelerate Okanagan’s CAIP funding.

The government and innovation agencies account for $1,460,435.58 of claims, or almost 68.5 percent of the total owed, the documents show — $138,488.25 more than Wavefront’s $1,321,947.33 in disclosed assets.

Vancouver mobile app, Web and software developer, Two Tall Totems, follows the NRC with the largest claim outside of government, of $250,672.58, the documents show.

Wavefront faces claims from 264 organizations and individuals, legal documents show. As first reported by BetaKit, the not-for-profit suddenly announced on May 14 that it was shutting down “in the face of declining revenue.”

In 2014, Wavefront was one of four BC-based incubators and accelerators to receive government support through the Canada Accelerator and Incubator Program (CAIP). As part of the program, Wavefront was to receive up to $9.5 million over the next five years, with a requirement to demonstrate “matching contributions on at least a 1:1 basis during the period of the contribution funding.” The initiative was part of $100 million committed by the Government of Canada over 2013 and 2014 as part of its Economic Action Plan. Wavefront had also received $19.6 million in NCE funding starting in 2011 through to 2021.

Prior to the posting of its closure notice, the Wavefront website listed multiple government organizations as partners, including the National Research Council Canada (IRAP funding), Global Affairs Canada, and Western Economic Diversification Canada, as well as the governments of British Columbia and Canada.

Creditors registered with the trustee are invited to meet at the Vancouver offices of Dentons Canada LLP on Friday at 2 pm.

Disclosure: BetaKit has used Dentons Canada for legal services.

This story was updated with additional files 06/01/18 at 1:58 pm EDT.

Saleem Khan

Saleem Khan

Saleem Khan is an award-winning journalist and digital news pioneer with a passion for the public interest. Saleem is the founder of the JOVRNALISM open professional resource for virtual reality and related technologies in journalism, editor and project leader at invstg8.net ["Investigate Net"], and leads Toronto-based editorial services, consulting, and research and development practice Technovica, specializing in strategic innovation in media enabled by emergent and disruptive technology.

  • J. J. Toronto

    Overpaid, Incompetent and Dishonest:

    James Maynard, Robert MacDougal, Alan Swain, Brad Lowe and Christian Magsisi were overpaid backslappers. They sucked high salaries out of the Vancouver technology community for years (without doing anything meaningful), then they stiffed their staff, their tenants and their partners at Two Tall Totems. Lets face it dudes – your job was (1) running a mediocre office hotel for startups, (2) organization “social events” for the start-up community (3) buying the pizza and beer. And you were event very good at that. Shameful.

    Maynard and Swain should be banished by Vancouver technology sector in my opinion. They told too many lies to too many people for too long. People turned down jobs to join Wavefront on the assurances that it was a top tier organization with a bright future. It turns out that was a lie.

    Roberts should pay back all half the cost for all those useless overseas trips he took at taxpayer expense. Gross.

    And the CPA organization should investigate MacDougal to find out if his broke any regulations while destroying Wavefront’s finances.

    There is something called integrity. This was in surprisingly short supply at Wavefront.

    By the way: Does anyone have those yachting pictures I requested previously? I bet there are lots of pictures floating around.

    • Yuriy Kolun

      +++ Agreed

      • Anon

        You bet! What a joke. They should refund half of their huge salaries paid over the last decade. Especially Roberts who specialized in taking joke trips around the world at taxpayer expense.

  • Anonymous

    One month since Wavefront shut down, and no staff have received ROEs. This has made it impossible to receive any EI support.

    None of the organization’s leaders, including the ex CFO Robert MacDougall have taken any action to alleviate this unnecessary financial difficulty, on top of orchestrating the sudden shutdown of operations with no advance notice, or severance pay provided.

    With a dedicated staff who have invested close to ten years into the organization, it’s unconscionable that Robert MacDougall, James Maynard, Christian Magsisi and Alan Swain have washed their hands of any accountability surrounding this.

    For any recruiters, organizations or teams considering working with these individuals, take note.

    These folks are masterful at cooking the books, pleasing a crowd and painting a vision, but unethical to the core. The most sure predictor of their future contributions is evident in this past at Wavefront: many years of expertise working to cover a multitude of sins and self-serving decisions, to the tune of $2 million in debt.

    • Anon

      Nobody should hire these guys. They were pigs at the trough.
      They had no clue how to build a tech business, yet were taking millions in government cash and funneling it off into their own commercial purposes with the hope of striking it rich by building their own business. In the end, they stuck taxpayers with the bill.

      Nobody should hire or work with James Maynard, Alan Swain, Brian Roberts, Christian Magsisi or Robert MacDougal. They were greedy and in my view extremely dishonest.

  • Anon

    A detail people may be interested in. The BC Societies Act
    (http://www.bclaws.ca/civix/document/id/complete/statreg/15018_01#division_d1e2978)
    requires that:


    The directors of a society must present the following to the members at each annual general meeting:
    (a) financial statements prepared in accordance with this section;
    (b) the auditor’s report, if any, on those financial statements.

    and

    Reporting on remuneration of directors, employees and contractors…

    Wavefront
    *never* presented financial statements at their AGMs (have been to
    them), and you will not find them posted anywhere on their website past
    or present.

    Seems important for one of the most highly (gov’t) funded non-profits in the province, no?