Communitech puts brakes on HYPERDRIVE, launches Rev accelerator to push revenue for “highly scalable startups”

Communitech HYPERDRIVE
Unlike HYPERDRIVE, Communitech's True North Fund will not be Communitech portfolio focused.

Communitech announced this morning that its three-year-old startup accelerator, HYPERDRIVE, is set to undergo a massive transformation. This shift will result in the formation of a number of new ventures, the first of which is being announced today and is called Communitech Rev.

Communitech Rev will be a sales-focused program to drive scalability. This “ultra-practical program” will include sales education and mentoring, as well as an opportunity to pitch an investment panel. Communitech also plans to match current capital up to $60K thanks to the OCE SmartStart program and won’t be taking an equity stake in participating startups.

Communitech’s explanation for the shift is simple: the Kitchener-Waterloo area is rich with startups and great products but “it takes sales to scale.” This new program will help already established startups grow.

Communitech plans to match current capital up to $60K and won’t take an equity stake in participating startups.

“We got great feedback from a lot of stakeholders and realized there was a need for a new kind of accelerator,” said Steve McCartney, VP of Startup Services at Communitech. “One less focused on product development and investment, and instead focused on sales and revenue growth.”

Of course, that requires participants and their businesses to be at a certain level before even entering the program. Specifics weren’t offered, but Communitech did mention that it is specifically looking for startups that build authentic technology and already have some revenue.

“The companies should have a product in market,” said McCartney. “This can be supported by some current revenue, paid trials, or a healthy number of unpaid users. Our objective is that their opportunities for growth will be greater than any reasonable organic revenue growth can support. This is what truly justifies taking on equity investments.”

Back in November, Communitech announced its fifth HYPERDRIVE cohort would prioritize startups in the fields of education, advertising, finance, and web-enabled hardware, while also making revenue growth its primary performance metric for startups. When asked if those priorities would remain, McCartney remarked, “The focus on verticals and diverse teams is important, and will remain part of the Rev model, but it wasn’t enough. So we’re definitely still looking for teams with female co-founders, and feel those verticals are real strengths of the Waterloo Region – but the programming in Rev will be much more specifically sales and revenue focused than was the case in Hyperdrive, or in any other accelerator we know of.”

“In 2012, we were worried we would lose our best startups to the U.S. That’s simply not a worry anymore.”

As Communitech continues to shift to better fit the needs of the KW startup climate, one must wonder how the emergence of the Rev reflects the KW community as a whole. In taking no equity and focusing on later-stage startups, Rev has essentially adopted a grant model, which could be taken as a concession that Communitech can’t pick winners. McCartney, however, sees it as a concerted shift to fill a direct need.

“I think this speaks strongly to the growth of the startup scene in KW (and Canada),” he said. “In 2012, we were worried we would lose our best startups to the U.S. and HYPERDRIVE was designed to address the perceived lack of early stage mentorship and investment available in Canada. That’s simply not a worry anymore. We are producing about 500 startups a year in Waterloo Region alone, and most of our companies who go to U.S. accelerators like YC, move back home to build their companies.

“The gap now, is how do we take those successful startups and turn them into globally competitive businesses. And Rev will help to solve the shift from a product focus to a sales focus that many companies face. We’re dedicating six months to helping the companies remove any barrier that stands between them and rapidly growing sales and revenue.”

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